Unaudited results
For the six months ended 30 September 2016
Peregrine Holdings Limited • Incorporated in the Republic of South Africa • Registration Number 1994/006026/06 • JSE share code: PGR • ISIN code: ZAE000078127 • “Peregrine” or “the Group”
• Normalised basic earnings up 10% to R270 million
• Normalised headline earnings up 4% to R255 million
• Normalised cash generated from operating activities of R302 million
The Group continued to build on its strategy of delivering higher quality, diversified earnings during the six
month period ended 30 September 2016. There was growth in earnings from all the operating businesses
namely Citadel, Peregrine Capital, Peregrine Securities, Stenham and Java Capital, resulting in a
significantly improved Group operating performance. Higher returns from proprietary investments within the
hedge funds were however offset by a decrease in the value of proprietary listed investments.
Annuity earnings grew across all business segments and account for an increasing majority of Group
earnings with the contribution from offshore continuing to play a meaningful role in diversifying Group
income.
Financial results
accounted investees decreasing slightly to R48 million (2015: R49 million). An annexure disclosing IFRS
and normalised earnings is available on the Group’s website.
A good indication of the cash generating capacity of the underlying operating businesses is that normalised
total profit before tax, capital items and non-cash amortisations, adjusted for total minorities, amounted to
R332 million (2015: R317 million). Normalised cash generated from operating activities amounted to R302
million (2015: R306 million), once again highlighting the cash generative nature of the Group.
Aggregate normalised cash in the Group amounted to R826 million at half year-end (March 2016: R786
million), of which R11 million (March 2016: R21 million) was available at the centre, R499 million (March
2016: R451 million) held offshore and the balance of R316 million (March 2016: R314 million) held by local
subsidiaries.
Basic profit attributable to shareholders increased by 12% to R268 million (2015: R240 million) with basic
earnings per share amounting to 125.3 cents per share (2015: 112.6 cents per share). Headline earnings
increased by 6% to R242 million (2015: R228 million) with headline earnings per share increasing by 5%
to 118.5 cents per share (2015: 112.5 cents per share).
Consistent with the prior year, the board of directors feels that, in addition to providing the above disclosed
IFRS earnings (which do not accurately reflect the true economic results due to the accounting treatment
relating to share based payments and employee benefits which resulted in enhanced IFRS earnings),
normalised earnings (which more accurately reflect the true economic results), are disclosed as follows:
- normalised headline earnings increased by 4% to R255 million (2015: R246 million);
- normalised headline earnings per share increased by 3% to 118.5 cents (2015: 115.4 cents per share).
Group normalised operating revenue increased by 3% to R1.16 billion (2015: R1.13 billion). Income
from proprietary investing activities increased to R93 million (2015: R45 million) with income from equity
Segmental results
Substantial non-controlling interests, including Nala’s shareholding in Peregrine SA Holdings, exist in many
of the Group`s operations. Management believes that headline earnings per reportable segment (which
is the basis for the commentary below) better reflects and aids in the understanding of each division`s
specific economic benefit to the shareholders of the Group. In addition, operating results are presented
before tax and before non-controlling interests in the financial table below. Management believes this
further aids in the understanding of each division’s profitability.
Unaudited results for the six months ended 30 September 2016
Wealth Management
In a continuingly difficult investment environment, Citadel continued to capitalise on its position as a
leading private client wealth manager in South Africa. Assets under management as at half year-end were
R44.95 billion (March 2016: R44.93 billion) with gross inflows for the six months amounting to R2.4 billion
(September 2015: R1.7 billion). The client retention rate in the traditional business amounts to 98%.
Notwithstanding significantly lower performance fees earned, headline earnings for the six months
increased by 1% to R83 million (2015: R82 million) with very pleasing annuity earnings growth, costs
controls and healthy inflows.
Asset Management
The Group’s Asset Management division comprises a number of fund management businesses. The
largest contributor to the division is the Group’s flagship hedge fund manager, Peregrine Capital. Headline
earnings increased to R32 million (2015: R23 million) as a result of Peregrine Capital’s increased
management and performance fees earned by higher returns on a larger asset base. Peregrine Capital’s
asset base grew to R8.1 billion by half year-end (March 2016: R7.3 billion) largely as a result of strong
inflows.
Peregrine disposed of its minority shareholding in Caveo Fund Solutions Proprietary Limited and realised a
net capital gain of R12.7 million on disposal.
Stenham
Post year-end, further share purchase and repurchase transactions took place in Stenham, the group’s UK
and Guernsey based asset management and trust business, subsidiary. As a result, Peregrine’s share in
Stenham increased from 85.08% to 88.19%.
Peregrine’s share of Stenham’s profit increased by 28% to R56 million (2015: R44 million).
Excluding the once off costs of settling a claim which arose in prior periods, Stenham Asset Management
performed reasonably against a backdrop of muted global market returns. Core revenues in Sterling
terms have decreased primarily due to the decrease in assets under advisory with total assets under
management and advice amounting to $3.2 billion (March 2016: $3.4 billion), with net outflows amounting
to $151 million during the period under review. Operating costs have decreased significantly due to cost
savings initiatives.
There was a strong performance from the Stenham property portfolio including significant dividends
received from Stenham’s investment in Stenprop Limited, which acquired the Stenham Property business
in exchange for Stenprop Limited shares with effect from 1 October 2014. Despite the effect of the material
drop in the market value of Stenprop Limited in the period under review, earnings were enhanced by the
significant gain made on the sale of certain properties that were retained by Stenham with the intention
being to realise the remaining properties over time.
Stenham Trustees performed satisfactorily in an ever increasing regulatory cost environment and now
incorporates the results of the newly established Bellerive 50% joint venture to which a portion of the trust
business was transferred with effect from 1 April 2016.
Stenham remains strongly cash-flow generative, with no long-term debt and cash available to augment
future growth.
Broking and Structuring
The positioning of Peregrine Securities as one of the few substantial, independent structuring and broking
entities in South Africa enabled the business to once again perform exceptionally well. It has built several of
the industry’s leading franchises in the areas of prime broking and derivative broking and structuring, which
have benefited from increased financial market trading volumes. Earnings for the brokering and structuring
segment which now includes an offshore element grew by 22% to R63 million (2015: R51 million).
Advisory
Java Capital is widely regarded as the premier independent corporate advisory house in South Africa
competing directly, and successfully, for mandates against local and international banks. It is also the
industry leader in the provision of corporate finance services in the listed property sector.
Java Capital’s headline earnings contribution for the six months amounted to almost R18 million (2015:
R12 million) with Java Capital still having a significant amount of unbilled work in progress and pipeline of
new business as at the end of the reporting period.
Page 2
Unaudited results for the six months ended 30 September 2016
Group
Despite higher returns generated on the Groups’ proprietary investments in hedge funds, Group investment
returns, net of Group costs, decreased to R4 million (2015: R33 million) primarily as a result of the earnings
effect of the material drop in the market value of Stenprop Limited post year end coupled with the Group’s
share of associated losses, after tax, in Nala.
Issued share capital
The Group’s shares in issue amounts to 226.066 million and, net of 19.772 million treasury shares (which
includes the 9.288 million Peregrine shares purchased by the Citadel Share Trust), amounts to 206.294
million.
Directorate
During the period under review, while there have been no changes to the board of directors, shareholders
were notified, in terms of a SENS announcement published on 22 September 2016, that Jonathan Hertz,
the Group CEO, had advised the board of his intention to step down with effect from 30 June 2017.
Conclusion
In continuing difficult and challenging global market conditions, Peregrine has again managed to deliver a
set of results which has capitalised on its strong base of profitable, cash generative operating businesses
and which highlight the diversified nature of the earnings streams. Whilst certain proprietary returns and
performance fees have decreased in an environment characterised by weak markets, annuity income
continues to grow. The Group continues to focus on growing its businesses organically and driving cross
business revenue synergies and remains well positioned to capitalise on further growth opportunities.
Date:
17 NOV
2016
JHB
Signed:
Directors: SA Melnick^ (Chairman); J Hertz (CEO); RE Katz (CFO); M Yachad; BC Beaver*; P Goetsch^; LN Harris#; S Sithole*; SI Stein*
Jonathan Hertz
Group CEO
Sean Melnick
Non-executive Chairman
Further detail and a print-friendly version of these results are available from the company’s website at
www.peregrine.co.za on Thursday, 17 November 2016.
^ 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, 70 Marshall Street,
Johannesburg, 2001, (PO Box 61051, Marshalltown, 2107)
Joint Sponsor: Java Capital
Joint Independent Sponsor: Deloitte & Touche Sponsor Services Proprietary Limited
Page 3
Unaudited results for the six months ended 30 September 2016
Condensed consolidated statement of comprehensive income
% change
2015 to 2016
Unaudited for the
six months ended 30
September 2016
R'000
Operating revenue
Investment and other income
Total revenue
Fair value (loss)/gains on linked financial investments
Fair value gains/(loss) on policyholder contract liabilities
Operating expenses
Profit from operations
Net interest received
Interest received
Interest paid
Share of profits from equity accounted investees
Profit before taxation and capital items
Capital items
Profit before taxation
Taxation
Profit for the period
R'000
1 091 125
111 791
1 202 916
(295 374)
295 374
(889 369)
313 547
47 571
49 173
(1 602)
49 483
410 601
502
411 103
(86 019)
379 063
325 084
818 096
(253 583)
215 541
246 790
125 480
540 625
1 064 886
12
31
267 631
111 432
239 854
85 230
592 668
225 428
17
379 063
325 084
818 096
44 994
80 486
421 962
118 663
801 069
263 817
125 480
540 625
1 064 886
125,3
125,3
112,6
111,8
275,9
275,9
2
25
-57
-3
17
17
Total comprehensive income for the period
Total comprehensive income for the period attributable to :
Equity holders of the company
Non-controlling interests
Basic earnings per ordinary share (cents)
Diluted earnings per ordinary share (cents)¹
R'000
Audited for the year
ended 31 March 2016
1 150 898
150 610
1 301 508
(88 664)
88 664
(909 282)
392 226
20 632
50 307
(29 675)
48 104
460 962
21 066
482 028
(102 965)
5
35
8
Other comprehensive income for the period net of taxation
Items that may be reclassified subsequently to profit or loss:
Currency translation differences
Profit for the period attributable to :
Equity holders of the company
Non-controlling interests
Unaudited for the
six months ended 30
September 2015
11
12
2 421 874
310 107
2 731 981
268 827
(268 827)
(1 877 114)
854 867
86 855
98 658
(11 803)
70 196
1 011 918
502
1 012 420
(194 324)
Page 4
Unaudited results for the six months ended 30 September 2016
Reconciliation of headline earnings
% change
2015 to 2016
Unaudited for the
six months ended 30
September 2016
R'000
Profit for the period attributable to equity holders
Adjustment relating to earnings attributable to participating treasury shares
Profit attributable to ordinary shareholders
Gross effect of gain on disposal of investment in equity accounted investee
Tax effect of gain on disposal of investment in equity accounted investee
Non-controlling interest effect of gain on disposal of investment in equity accounted investee
Gross effect of gain on disposal of intangible assets²
Non-controlling interest effect of gain on disposal of intangible assets
12
Headline earnings
Headline earnings per ordinary share (cents)
Diluted headline earnings per ordinary share (cents)¹
Cash dividend paid per ordinary share in respect of the previous year (cents)
Cash dividend per ordinary share declared subsequent to 31 March (cents)
Number of ordinary shares in issue ('000)
Treasury shares held ('000)
Weighted average number of ordinary shares in issue ('000)
Diluted weighted average number of ordinary shares in issue ('000)¹
Unaudited for the
six months ended 30
September 2015
R'000
Audited for the year
ended 31 March 2016
R'000
267 631
(11 531)
256 100
(18 206)
4 078
1 978
(1 954)
391
239 854
(11 260)
228 594
(478)
90
171
-
592 668
(31 242)
561 426
(475)
89
170
-
6
242 387
228 377
561 210
5
6
50
3
118,5
118,5
150,0
155,0
226 066
19 772
204 462
204 462
112,5
111,7
100,0
150,0
223 505
20 484
203 021
204 514
275,8
275,8
150,0
155,0
226 066
21 848
203 465
203 465
12
1 Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding assuming conversion of all dilutive potential ordinary shares.
At reporting date there were no potentially dilutive ordinary shares still to be issued (2015: 1 520 442).
As at 30 September 2016 7 088 279 (2015: 8 521 281) participating treasury shares were excluded from the diluted weighted-average number of ordinary shares calculation because their effect
would have been anti-dilutive.
2 No tax effect.
Page 5
Unaudited results for the six months ended 30 September 2016
Condensed consolidated statement of financial position
Unaudited as at
30 September 2016
Audited as at
31 March 2016
R’000
R’000
Non-current assets
7 705 080
8 003 468
Property, plant and equipment
Intangible assets
Investment in equity accounted investees
Investments linked to policyholder investment contracts
Financial investments
Loans and receivables
Deferred taxation
131 112
688 783
324 788
5 879 911
556 667
24 610
99 209
91 085
767 370
318 969
5 862 496
841 305
16 095
106 148
Current assets
23 620 301
20 750 978
Financial investments
Loans and receivables
Trade and other receivables
Amounts receivable in respect of stockbroking activities
Taxation
Cash and cash equivalents
689 379
83 628
430 284
20 554 920
12 276
1 849 814
2 499 193
28 871
910 936
14 625 911
18 484
2 667 583
Total assets
31 325 381
28 754 446
Equity
3 447 407
3 775 534
Equity attributable to equity holders of the company
Non-controlling interests
2 958 473
488 934
3 227 760
547 774
Non-current liabilities
6 232 289
6 422 799
Policyholder investment contract liabilities
Interest-bearing borrowings
Loans and other payables
Deferred taxation
5 879 911
202 298
117 100
32 980
5 862 496
277 288
265 411
17 604
Current liabilities
21 645 685
18 556 113
Interest-bearing borrowings
Loans and other payables
Financial instrument liabilities
Trade and other payables
Amounts payable in respect of stockbroking activities
Taxation
272 008
161 200
210 993
1 309 844
19 653 675
37 965
49 751
108 506
2 195 876
1 442 573
14 721 859
37 548
Total equity and liabilities
31 325 381
28 754 446
1 061,5
1 372,3
1 156,0
1 497,2
Assets
Equity and liabilities
Net tangible asset value per ordinary share (cents)
Net asset value per ordinary share (cents)
Page 6
Unaudited results for the six months ended 30 September 2016
Condensed consolidated statement of changes in equity
Total capital and
reserves
Non-controlling
interests
Total equity
R'000
R'000
R'000
Unaudited - 2016
Balance at 31 March 2016
Profit for the period
Other comprehensive income for the period
Transactions with owners recorded directly in equity:
Dividends paid ¹
Share-based payments
Disposal of participating treasury shares ²
Repurchase and cancellation of shares of subsidiary
3 227 760
267 631
(222 637)
(314 281)
(316 538)
(19 971)
22 228
-
547 774
111 432
(30 946)
(139 326)
(108 553)
(30 773)
3 775 534
379 063
(253 583)
(453 607)
(425 091)
(19 971)
22 228
(30 773)
Balance at 30 September 2016
2 958 473
488 934
3 447 407
Unaudited - 2015
Balance at 31 March 2015
Profit for the period
Other comprehensive income for the period
Transactions with owners recorded directly in equity:
Dividends paid
Share-based payments
Disposal of shares in subsidiary to non-controlling shareholders
Repurchase and cancellation of shares of subsidiary
2 660 901
239 854
182 108
(286 180)
(304 531)
8 021
10 330
-
569 382
85 230
33 433
(181 462)
(143 846)
5 371
(42 987)
3 230 283
325 084
215 541
(467 642)
(448 377)
8 021
15 701
(42 987)
Balance at 30 September 2015
2 796 683
506 583
3 303 266
1 Dividends paid to equity holders of the company relate to the 155 cents per share paid on the 8 August 2016.
2 During the course of September 2016 2 076 000 shares were disposed of on behalf of the participants in the Citadel 2013 deferred remuneration scheme.
Page 7
Unaudited results for the six months ended 30 September 2016
Condensed consolidated statement of cash flow
Unaudited for the
six months ended 30
September 2016
R'000
Unaudited for the
six months ended 30
September 2015
R'000
(774 308)
323 593
(425 091)
(672 810)
(496 166)
533 320
(948 214)
(145 095)
(438 045)
(365 074)
(158 317)
425 354
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Effects of exchange rate changes on cash and cash equivalents
(737 154)
2 667 583
(80 615)
(681 177)
2 459 337
51 976
Cash and cash equivalents at end of the period
1 849 814
1 830 136
Cash flow from operating activities
Cash flow from operating activities excluding stockbroking activities
Cash dividends paid
Cash flow from stockbroking activities
Cash flow from investing activities
Cash flow from financing activities
Page 8
Unaudited results for the six months ended 30 September 2016
Segmental analysis
Total revenue
Interest and share
of profits from equity
accounted investees
Profit from
ordinary activities ¹
R'000
R'000
R'000
524 881
417 591
107 290
422 004
262 706
1 209 591
50 509
14 411
6 878
7 533
24 960
8 306
20 338
68 015
4 063
1 260 100
Headline earnings
% change in
headline earnings
R'000
2015 to 2016
208 561
120 246
88 315
130 874
79 041
20 338 ²
438 814
25 923
114 747
82 870
31 877
62 791
56 259
17 491
251 288
4 164
9
1
38
22
28
48
18
-88
72 078
464 737
255 452
4
447 100
370 266
76 834
415 386
276 258
1 138 744
38 060
22 266
15 893
6 373
25 016
361
13 768
61 411
33 458
177 427
114 911
62 516
127 438
57 632
13 768 ²
376 265
44 219
105 178
82 001
23 177
51 410
43 902
11 841
212 331
33 414
1 176 804
94 869
420 484
245 745
Unaudited for the six months ended 30 September 2016
Wealth and Asset Management
Wealth Management
Asset Management
Broking and Structuring
Stenham
Advisory
Total from operating reportable segments
Group
Unaudited for the six months ended 30 September 2015
Wealth and Asset Management
Wealth Management
Asset Management
Broking and Structuring
Stenham
Advisory
Total from operating reportable segments
Group
Note : Group funding costs are disclosed as part of “group” and have not been allocated to the underlying operating reportable segments.
1 Profit from ordinary activities is synonymous with profit before taxation and capital items per reconciliation of segmental analysis to statement of comprehensive income.
2 Represents 50% of profit after taxation.
Page 9
Unaudited results for the six months ended 30 September 2016
Reconciliation of segmental analysis to statement of comprehensive income
Wealth and Asset
Management ¹
R'000
Broking and
Structuring
R'000
Group
R'000
For the six months ended 30 September 2016
Total revenue per segmental analysis
Reconciling items:
Operating revenue - internal
Investment income - internal
Investment income of non-reportable segment - external
524 881
(37 932)
(39 794)
1 862
-
422 004
21 445
23 568
(2 123)
-
262 706
-
-
1 209 591
(16 487)
(16 226)
(261)
-
50 509
(68 541)
(68 541)
-
126 436
68 802
57 634
1 260 100
41 408
(16 226)
57 634
Total revenue per statement of comprehensive income
486 949
443 449
262 706
-
1 193 104
(18 032)
126 436
1 301 508
Profit before taxation and capital items per segmental analysis
Reconciling total revenue items per above
Operating expenses of non-reportable segment - external
Deferred profit participation ³
Share based payment charge ³
Interest paid - internal
Interest paid - external
208 561
(37 932)
(1 862)
(6 154)
(5 702)
(3 721)
130 874
21 445
379
-
79 041
-
20 338
-
438 814
(16 487)
(1 862)
(6 154)
(5 702)
379
(3 721)
25 923
(68 541)
-
126 436
(28 123)
-
464 737
41 408
(29 985)
(6 154)
(5 702)
379
(3 721)
Profit before taxation and capital items per statement of comprehensive income
153 190
152 698
79 041
20 338
405 267
(42 618)
98 313
460 962
For the six months ended 30 September 2015
Total revenue per segmental analysis
Reconciling items:
Operating revenue - internal
Investment income - internal
Investment income of non-reportable segment - external
447 100
(28 163)
(27 748)
(415)
-
415 386
(15 199)
(12 709)
(2 490)
-
276 258
-
-
1 138 744
(43 362)
(40 457)
(2 905)
-
38 060
(28 543)
(28 543)
-
98 017
31 448
66 569
1 176 804
26 112
(40 457)
66 569
Total revenue per statement of comprehensive income
418 937
400 187
276 258
-
1 095 382
9 517
98 017
1 202 916
Profit before taxation and capital items per segmental analysis
Reconciling total revenue items per above
Operating expenses of non-reportable segment - external
Share based payment charge ³
Interest paid - internal
177 427
(28 163)
(8 021)
-
127 438
(15 199)
2 185
57 632
-
13 768
-
376 265
(43 362)
(8 021)
2 185
44 219
(28 543)
-
98 017
(30 159)
-
420 484
26 112
(30 159)
(8 021)
2 185
Profit before taxation and capital items per statement of comprehensive income
141 243
114 424
57 632
13 768
327 067
15 676
67 858
410 601
Advisory
R'000
Non-reportable
segments ²
R'000
IFRS reported
information
R'000
Total from operating
reportable segments
R'000
Stenham ¹
R'000
1 The capital item of R21 million disclosed on the statement of comprehensive income pertains partly to the Wealth and Asset Management operating reportable segment (R19 million) and partly to the Stenham operating reportable segment (R2 million).
2 Refers to the group’s consolidated proprietary hedge investments which do not meet the quantitative thresholds for determining reportable segments.
3 Management treats the 2013 deferred profit scheme 1 (which is settled in PGR shares) as an expense as profits are earned, but for IFRS purposes, it is a share-based payment arrangement, in which the grant date fair value is recognised over the vesting period. In addition,
management treats the 2015 deferred profit scheme 2 (which is partially settled in PGR shares) as an expense as profits are earned, but for IFRS purposes it is recognised as an employee benefit in terms of IAS 19 and partially as a share-based payment arrangement under IFRS 2,
in which the liability has been measured using the projected unit method. Service conditions attached to the arrangement were taken into account in measuring the fair value of the liability. The expense is recognised over the service period.
Page 10
Unaudited results for the six months ended 30 September 2016
Analysis of assets and liabilities by financial instrument classification
Financial instruments at fair value
through profit or loss
Loans and receivables
at amortised cost
Non-financial
instruments & financial
Financial liabilities
instruments beyond
at amortised cost
the scope of IFRS 7
Total
Fair value of
financial instrument
Held–for–trading
Designated
at Inception
R’000
R’000
R’000
R’000
R’000
R’000
R’000
Non-current assets
-
6 436 578
33 888
-
1 234 614
7 705 080
6 436 578
Property, plant and equipment
Intangible assets
Investment in equity accounted investees
Investments linked to policyholder investment contracts
Financial investments
Loans and receivables
Deferred taxation
-
5 879 911
556 667
-
9 278
24 610
-
-
131 112
688 783
315 510
99 209
131 112
688 783
324 788
5 879 911
556 667
24 610
99 209
5 879 911
556 667
-
Current assets
12 751 606
432 777
10 404 813
-
31 105
23 620 301
13 184 383
Financial investments
Loans and receivables
Trade and other receivables
Amounts receivable in respect of stockbroking activities
Taxation
Cash and cash equivalents
256 602
12 495 004
-
432 777
-
83 628
411 455
8 059 916
1 849 814
-
18 829
12 276
-
689 379
12 495 004 *
-
Total assets
12 751 606
6 869 355
10 438 701
-
1 265 719
689 379
83 628
430 284
20 554 920
12 276
1 849 814
31 325 381
Non-current liabilities
-
5 879 911
-
302 290
50 088
6 232 289
5 879 911
Policyholder investment contract liabilities
Interest-bearing borrowings
Loans and payables
Deferred taxation
-
5 879 911
-
-
202 298
99 992
-
17 108
32 980
5 879 911
202 298
117 100
32 980
5 879 911
- **
- ***
-
Current liabilities
12 953 046
185 370
-
8 095 805
411 464
21 645 685
13 138 416
Interest-bearing borrowings
Loans and payables
Financial instrument liabilities
Trade and other payables
Amounts payable in respect of stockbroking activities
Taxation
25 623
12 927 423
-
185 370
-
-
272 008
161 200
936 345
6 726 252
-
373 499
37 965
272 008
161 200
210 993
1 309 844
19 653 675
37 965
- **
- ***
210 993
12 927 423 *
-
Total liabilities
12 953 046
6 065 281
-
8 398 095
461 552
27 877 974
19 018 327
Unaudited as at 30 September 2016
19 620 961
Fair value information has not been provided for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.
*
The fair value disclosed for this item only relates to the held-for-trading portion and therefore excludes the financial instruments that are measured at amortised cost.
* * R414 million of the total amount of interest bearing borrowings of R474 million were entered into close to year end on market-related terms with a third party. Consequently, the carrying amount is deemed to be a reasonable approximation of the fair value.
The fair value of the balance of the interest bearing borrowings of R60 million approximates its carrying value and was determined using discounted cash flow models, applying a market related interest rate linked to JIBAR, together with the expected settlement amounts of the loan.
* * * The loans were entered into close to year end on market-related terms with a third party. Consequently, the carrying amount is deemed to be a reasonable approximation of the fair value.
The fair value of financial assets classified as loans and receivables at amortised cost and financial liabilities classified as financial liabilities at amortised cost are classified as level 2 in terms of the fair value hierarchy. Page 11
Unaudited results for the six months ended 30 September 2016
Fair value hierarchy
The fair value of a financial instrument is the price that would be received for the sale of an asset or paid
for the transfer of a liability in an orderly transaction between market participants at the measurement
date. Underlying the definition of fair value is a presumption that an entity is a going concern without any
intention or need to liquidate, to curtail materially the scale of its operations or to undertake a transaction
on adverse terms. Fair value is not, therefore, the amount that an entity would receive or pay in a forced
transaction, involuntary liquidation or distressed sale.
The fair values of financial instruments traded in active markets are based on unadjusted quoted market
prices at reporting date. A market is regarded as active if quoted prices for identical assets or liabilities are
readily available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency,
and those prices represent actual and regularly occurring market transactions on an arm’s length basis.
The quoted market price used for financial assets held by the group is the mid price. These instruments
are included in level 1.
The fair value of financial instruments that are not traded in an active market is determined using
valuation techniques. These valuation techniques maximise the use of observable data where it is
available and rely as little as possible on entity specific estimates. If all significant inputs required to fair
value the instrument are observable, the instruments are included in level 2.
If one or more significant inputs are not based on observable market data, the instrument is included in
level 3.
Page 12
Unaudited results for the six months ended 30 September 2016
Fair value hierarchy (continued)
The table presents the group’s assets and liabilities that are measured at fair value as at 30 September 2016
Unaudited
30 September 2016
Total
Level 1
Level 2
Level 3
R’000
R’000
R’000
R’000
12 751 606
12 495 004
256 602
-
-
12 751 606
12 495 004
256 602
468 009
468 009
20 619
17 474
5 314
424 602
-
6 341 329
5 879 911
461 418
65 649
4 489
318
1 000
43 835
13 834
332 293
60 017
60 017
60 017
-
6 869 355
5 879 911
989 444
86 268
4 489
17 474
318
5 314
1 000
424 602
103 852
13 834
332 293
13 219 615
6 341 329
60 017
19 620 961
-
-
(12 953 046)
(12 927 423)
(25 623)
(6 065 281)
(5 879 911)
(185 370)
-
(6 065 281)
(5 879 911)
(185 370)
(6 065 281)
-
(19 018 327)
Financial assets at fair value through profit or loss
Held-for-trading:
Amounts receivable in respect of stock broking activities : Equities
Equities and bonds held by Hedge funds (included in financial investments)
Designated at inception:
Investments linked to policyholder investment contracts
Financial investments
Unit trusts
Variable rate debenture
Share portfolio investments - listed
Share portfolio investments - unlisted
Private equity investments - listed
Private equity investments - unlisted
Property fund investments - listed
Property fund investments - unlisted
Preference shares - unlisted
Hedge fund investments - unlisted
Total financial assets carried at fair value
Financial liabilities at fair value through profit or loss
Held-for-trading:
Amounts payable in respect of stock broking activities: Equities
Instruments held by Hedge Funds: Short equity positions, options and bonds (included in financial instrument liabilities)
Designated at inception:
Policyholder investment contract liabilities
Financial instruments: Net assets attributable to outside investors in the Hedge Funds
Total financial liabilities carried at fair value
(12 953 046)
(12 927 423)
(25 623)
(12 953 046)
Page 13
Unaudited results for the six months ended 30 September 2016
Level 3 reconciliations per class
Unaudited 30 September 2016
Financial instruments at fair value through profit or loss:
Financial assets
Designated at inception
Unlisted Property fund
investments
Opening balance
Total gains recognised in:
Profit or loss: Unrealised investment and other income
Other comprehensive income : Currency translation differences
Purchases
Disposals
Unlisted equities and bonds derecognised as a result of loss of control of hedge fund
Closing balance
Unlisted Equities and
bonds held by Hedge
funds
Total
R'000
R'000
R'000
240 431
49 147
289 578
42 638
(20 317)
3 927
(206 662)
-
8 602
393
(1 149)
(56 993)
51 240
(20 317)
4 320
(207 811)
(56 993)
60 017
-
60 017
At 30 September 2016 a change of one or more of the inputs used in the fair value measurement calculation of the level 3 instruments did not result in a significant change to
the fair values of these instruments.
The fair value of the participatory interests and debt securities included in the unlisted equities and bonds held by the Hedge Funds are determined using a discounted cash
flow model, applying a risk-adjusted discount rate. This rate takes into account factors such as credit risk, liquidity risk and regulatory risk.
Page 14
Unaudited results for the six months ended 30 September 2016
Valuation techniques applied and inputs to valuation techniques:
Financial assets at fair value
through profit or loss
Valuation technique used to
determine fair value
Description of significant observable inputs
used in valuation technique
Description of significant unobservable inputs used in valuation
technique (not applicable for Level 1)
Value of significant unobservable
inputs used in valuation technique
(not applicable for Level 1)
Recurring or Non-recurring fair
value measurement
Amounts receivable in respect of stock
broking activities : Equities
Quoted market prices
Unadjusted quoted prices in an active market of
listed equities
N/A
N/A
Recurring
Equities and bonds held by hedge
funds : Listed
Quoted market prices
Unadjusted quoted prices in an active market of
listed equities and bonds
N/A
N/A
Recurring
Investments linked to policyholder
investment contracts
Quoted market prices
The sum of unadjusted quoted prices in an
active market of underlying investments that
consist of listed equities, listed bonds and
hedge fund investments that make up the
portfolio of policyholder assets
N/A
N/A
Recurring
Unit trusts
Quoted market prices
The sum of the unadjusted quoted prices in an
active market of listed underlying investments
linked to units in unit trusts
N/A
N/A
Recurring
Variable rate debenture
Quoted market prices
The sum of unadjusted quoted prices in an
active market of listed underlying investments
linked to variable rate debentures
N/A
N/A
Recurring
Share portfolio investments - listed
Quoted market prices
The sum of unadjusted quoted prices in an
active market of underlying listed shares and
cash
N/A
N/A
Recurring
Share portfolio investments - unlisted
Quoted market prices
The sum of unadjusted quoted prices in an
active market of underlying listed preference
shares
N/A
N/A
Recurring
Private equity investments - listed
Quoted market prices
Unadjusted quoted prices in an active market of
underlying investments
N/A
N/A
Recurring
Property fund investments - listed
Quoted market prices
Unadjusted quoted prices in an active market of
underlying investments
N/A
N/A
Recurring
Property fund investments - unlisted
Valued on an open market basis by
independent external valuators, in
accordance with the Royal Institution
of Chartered Surveyors Appraisal and
Valuation Standards
N/A
Open market value is based on the estimated amount for which
a property should exchange on the date of the valuation between
a willing buyer and a willing seller in an arm’s length transaction
Note 1
Recurring
Preference shares - unlisted
Valued as a debt instrument by
calculating the amortised cost at a
market related interest rate
1 Month Jibar interest rate
Risk premium used to adjust market related interest rate
Market related interest rate
adjusted with 2.5% for risk
premium
Recurring
Hedge fund investments - unlisted
Quoted market prices
The fair value is determined by an independent
administrator, based on the quoted market
prices of the underlying investments held by the
hedge funds
Unobservable inputs are mostly expense accruals of the hedge
fund entities that are deducted from the sum of the fair values of
net investments held by the hedge funds
N/A
Recurring
Note 1 - Unlisted property fund investments are valued using two methods. 2. Open market value is determined using the discounted cash flow model, net of market buyers costs, the appropriate risk-adjusted discount rate equals the un-leveraged
1. Open market value is determined using the market rent capitalised by the market investment yield, net of market buyers costs. Open market value is based
Internal Rate of Return of the cash flow stream. The terminal capitalisation rate adopted in the valuation is used to capitalise the stabilised net operating income in the
on the estimated amount for which a property should exchange on the date of the valuation between a willing buyer and a willing seller in an arm’s length
final cash flow year into perpetuity. These rates, which is a growth explicit yield, are appropriate market yields for the specific properties, predominately reflecting the
transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.
sustainability of the properties, the locations, use and quality of the buildings, depreciation from wear and tear as well as the investment market environment.
Page 15
Unaudited results for the six months ended 30 September 2016
Valuation techniques applied and inputs to valuation techniques (continued):
Financial liabilities at fair value
through profit or loss
Valuation technique used to determine
fair value
Description of significant observable inputs
used in valuation technique
Description of significant unobservable inputs used
in valuation technique (not applicable for Level 1)
Value of significant unobservable inputs used in
valuation technique (not applicable for Level 1)
Recurring or Non-recurring fair
value measurement
Amounts payable in respect of
stock broking activities: Equities
Quoted market prices
Unadjusted quoted prices in an active market of
listed equities
N/A
N/A
Recurring
Instruments held by Hedge
Funds: Short equity positions,
options and bonds
Quoted market prices
Unadjusted quoted prices in an active market of
listed instruments
N/A
N/A
Recurring
Policyholder investment contract
liabilities
Quoted market prices
The sum of the quoted market prices of policyholder assets less related tax liability
N/A
N/A
Recurring
Net assets attributable to outside
investors in the hedge funds
Quoted market prices
The fair value is determined by an independent
administrator, based on the quoted market
prices of the underlying investments held by the
hedge funds
Unobservable inputs are mostly expense accruals
of the hedge fund entities that are deducted from
the sum of the fair values of net investments held
by the hedge funds
N/A
Recurring
Page 16
Unaudited results for the six months ended 30 September 2016
Notes & compliance
The condensed consolidated unaudited interim financial statements of the Peregrine Group as at and
for the six months ended 30 September 2016 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 and
containing the information required by IAS 34: Interim Financial Reporting, as well as the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements
as issued by Financial Reporting Standards Council, the JSE Limited Listing Requirements and the
requirements of the Companies Act of South Africa. The accounting policies applied in the preparation
of the condensed consolidated financial statements are in terms of International Financial Reporting
Standards and are consistent with those applied in the previous consolidated financial statements as at
and for the year ended 31 March 2016.
In preparing these condensed consolidated unaudited interim financial statements management made
judgements, estimates and assumptions that affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
The significant judgements made by management in applying the Group’s accounting policies and the key
sources of estimation uncertainty were the same as those applied to the consolidated financial statements
as at and for the year ended 31 March 2016.
The Group’s results are prepared under the supervision of R E Katz CA (SA), the Group Chief Financial
Officer.
These financial statements have not been reviewed or reported on by the company’s auditors, Deloitte &
Touche.
The prior year audited results are a summary of the consolidated financial statements as at and for the
year ended 31 March 2016, which were prepared under the supervision of R E Katz CA (SA), the Group
Chief Financial Officer. A copy of these financial statements can be obtained from the issuer’s registered
office.
Auditor’s report for the year ended 31 March 2016
The consolidated and separate financial statements of Peregrine Holdings Limited (“Peregrine”) for the
year ended 31 March 2016 have been audited by the company’s previous auditor, KPMG Inc. In their
report dated 12 August 2016, which is available for inspection at the Company’s Registered Office, KPMG
Inc. state that their audit was conducted in accordance with the International Standards on Auditing and
have expressed an unmodified conclusion on the consolidated and separate financial statements of
Peregrine.
Acquisitions
1. Peregrine’s shareholding in Stenham increased from 85.08% to 88.19% in August 2016 following the repurchase and subsequent cancellation of 24 815 Stenham shares.
Disposals
1. Stenham Trust Limited (“Stenham”) entered into a final agreement whereby an independent Trust and Fiduciary company and Stenham have formed a 50/50 joint venture (“JV”), with effect from
1 April 2016. Stenham has transferred to the JV, that part of its fiduciary trust business that includes the relationships and engagements with the trusts and trust structures managed by Stenham that relate to the gaming business and its entire fiduciary trust business relating to certain Family Office client for a total aggregate cash consideration of £1 million, payable in four equal bi-annual instalments of £250 000 over the two years ending 31 March 2018. A non-taxable capital profit of R2 million (£101 471) has been recognised in the Statement of Comprehensive Income.
2. With effect from 1 April 2016, Peregrine SA Holdings Proprietary Limited disposed of its 49.99% shareholding in Caveo Fund Solutions Proprietary Limited for a cash consideration of
R20 million, resulting in a gross capital profit of R19 million which has been recognised in the Statement of Comprehensive Income, of which R18 million is attributable to ordinary shareholders.
Page 17
Unaudited results for the six months ended 30 September 2016
Notes & compliance (continued)
Consolidation of Hedge Funds in terms of IFRS 10
In terms of current International Financial Reporting Standards certain of the group’s proprietary hedge
fund investments are required to be consolidated due to the fact that the group has effective control both
in terms of kick-out rights and with direct and indirect holdings being greater than 50%. In cases which
fall within or along the IFRS 10 marginal zone a reasoned judgement as to whether the fund manager is
a principal or an agent is required to be made by management, one such case being the Peregrine High
Growth En Commandite Partnership (“High Growth Fund”), in which the group held an interest as at 31
March 2016 which required consolidation. Following management’s assessment for the six month period
ended 30 September 2016, management concluded that control no longer existed as the group currently
owns a smaller percentage of the whole fund and as a result now falls outside the IFRS 10 marginal zone.
Thus the High Growth Fund was de-consolidated with effect from 31 August 2016, the net asset value of
which amounted to R2.4 billion (March 2016: R1.9 billion). Events subsequent to reporting date
The directors are not aware of any matters or circumstances arising since the end of the reporting period
which significantly affect the financial position of the Peregrine Group or the results of its operations.
Applicable exchange rates
Average rates
Closing rates
USD:ZAR
30 September 2016
31 March 2016
30 September 2015
14,53
13,78
12,55
13,75
14,71
13,83
GBP:ZAR
30 September 2016
31 March 2016
30 September 2015
19,98
20,72
19,33
17,86
21,14
20,94
Page 18
Unaudited results for the six months ended 30 September 2016
Annexure A – Normalised Income Statement vs. IFRS Statement of Comprehensive Income
For the six months ended
Normalised disclosure
Unaudited for the six months
ended 30 September 2016
R’000
Statutory IFRS disclosure
Unaudited for the six months
ended 30 September 2015
R’000
Unaudited for the six months
ended 30 September 2016
R’000
Unaudited for the six months
ended 30 September 2015
R’000
Impact 1
Unaudited for the six months Unaudited for the six months
ended 30 September 2016
ended 30 September 2015
R’000
R’000
Operating revenue
Investment and other income
1 167 124
92 976
1 131 582
45 222
1 150 898
150 610
1 091 125
111 791
(16 226)
57 634
(40 457)
66 569
Total revenue
Fair value loss on linked financial investments
Fair value gains on policyholder contract liabilities
Operating expenses
1 260 100
(88 664)
88 664
(867 441)
1 176 804
(295 374)
295 374
(851 189)
1 301 508
(88 664)
88 664
(909 282)
1 202 916
(295 374)
295 374
(889 369)
41 408
(41 841)
26 112
(38 180)
Profit from operations
Net interest received
Interest received
Interest paid
Share of profits from equity accounted investees
392 659
23 974
50 307
(26 333)
48 104
325 615
45 386
49 173
(3 787)
49 483
392 226
20 632
50 307
(29 675)
48 104
313 547
47 571
49 173
(1 602)
49 483
(433)
(3 342)
(3 342)
-
(12 068)
2 185
2 185
-
Profit before taxation and capital items
Capital items
464 737
21 066
420 484
502
460 962
21 066
410 601
502
(3 775)
-
(9 883)
-
485 803
(103 819)
420 986
(88 786)
482 028
(102 965)
411 103
(86 019)
(3 775)
854
(9 883)
2 767
Profit for the year
381 984
332 200
379 063
325 084
(2 921)
(7 116)
Profit for the year attributable to :
Equity holders of the company
Non-controlling interests
269 782
112 202
245 973
86 227
267 631
111 432
239 854
85 230
(2 151)
(770)
(6 119)
(997)
381 984
332 200
379 063
325 084
(2 921)
(7 116)
269 782
255 452
245 973
245 745
256 100
242 387
228 594
228 377
(13 682)
(13 065)
(17 379)
(17 368)
125,1
118,5
125,1
118,5
115,5
115,4
114,7
114,6
125,3
118,5
125,3
118,5
112,6
112,5
111,8
111,7
226 066
10 484
215 581
215 581
223 505
10 484
213 021
214 514
226 066
19 772
204 462
204 462
223 505
20 484
203 021
204 514
Profit before taxation
Taxation
Basic earnings
Headline earnings
Basic earnings per ordinary share (cents)
Headline earnings per ordinary share (cents)
Diluted earnings per ordinary share (cents)
Diluted headline earnings per ordinary share (cents)
Number of ordinary shares in issue ('000)
Number of treasury shares ('000)
Weighted average number of ordinary shares in issue ('000)
Diluted weighted average number of ordinary shares in issue ('000)
0,2
0,2
9 288
(11 119)
(11 119)
(2,9)
(2,9)
(2,9)
(2,9)
10 000
(10 000)
(10 000)
1 Refer to Reconciliation of segmental analysis to statement of comprehensive income for reconciling items.
Page 19
Unaudited results for the six months ended 30 September 2016
Annexure B – Reconciliation of Segment Normalised Statement of Financial Position to IFRS Statement of Financial Position
As at
Normalised disclosure
Statutory IFRS disclosure
Unaudited as at
30 September 2016
R’000
Audited as at
31 March 2016
R’000
Non - current assets
7 840 478
8 163 674
Property, plant and equipment
Intangible assets
Investment in equity accounted investees
Investments linked to policyholder investment contracts
Financial investments
Loans and receivables
Deferred taxation
131 112
688 783
324 788
5 879 911
677 665
24 610
113 609
Current assets
Unaudited as at
30 September 2016
R’000
Impact 1
Audited as at
31 March 2016
R’000
Unaudited as at
30 September 2016
R’000
Audited as at
31 March 2016
R’000
7 705 080
8 003 468
(135 398)
(160 206)
91 085
767 370
318 969
5 862 496
985 002
16 095
122 657
131 112
688 783
324 788
5 879 911
556 667
24 610
99 209
91 085
767 370
318 969
5 862 496
841 305
16 095
106 148
(120 998)
(14 400)
(143 697)
(16 509)
23 563 196
18 114 669
23 620 301
20 750 978
57 105
2 636 309
Financial investments
Loans and receivables
Trade and other receivables
Amounts receivable in respect of stockbroking activities
Taxation
Cash and cash equivalents
867 655
5 582
364 835
20 571 069
12 276
1 741 779
877 016
2 516
428 495
14 655 380
18 484
2 132 778
689 379
83 628
430 284
20 554 920
12 276
1 849 814
2 499 193
28 871
910 936
14 625 911
18 484
2 667 583
(178 276)
78 046
65 449
(16 149)
108 035
1 622 177
26 355
482 441
(29 469)
534 805
Total assets
31 403 674
26 278 343
31 325 381
28 754 446
(78 293)
2 476 103
Equity
3 419 017
3 760 867
3 447 407
3 775 534
28 390
14 667
Equity attributable to equity holders of the company
Non-controlling interests
2 928 115
490 902
3 212 346
548 521
2 958 473
488 934
3 227 760
547 774
30 358
(1 968)
15 414
(747)
Non - current liabilities
6 230 428
6 422 799
6 232 289
6 422 799
1 861
-
Policyholder investment contract liabilities
Interest-bearing borrowings
Loans and other payables
Deferred taxation
5 879 911
202 298
115 239
32 980
5 862 496
277 288
265 411
17 604
5 879 911
202 298
117 100
32 980
5 862 496
277 288
265 411
17 604
1 861
-
-
Current liabilities
21 754 229
16 094 677
21 645 685
18 556 113
(108 544)
2 461 436
Interest-bearing borrowings
Loans and other payables
Financial instrument liabilities
Trade and other payables
Amounts payable in respect of stockbroking activities
Taxation
272 008
161 200
1 374 513
19 908 543
37 965
49 751
925
1 007 307
14 999 146
37 548
272 008
161 200
210 993
1 309 844
19 653 675
37 965
49 751
108 506
2 195 876
1 442 573
14 721 859
37 548
210 993
(64 669)
(254 868)
-
107 581
2 195 876
435 266
(277 287)
-
Total equity and liabilities
31 403 674
26 278 343
31 325 381
28 754 446
(78 293)
2 476 103
Assets
Equity and liabilities
1 Refers to the group's consolidated proprietary hedge fund investments which do not meet the quantitative thresholds for determining reportable segments and the Citadel deferred remuneration schemes which management treats as an expense as profits are earned for
internal reporting purposes and not in terms of IFRS 2.
Page 20