| Wed 31 Oct 2007, 13:18 | | PGR - Peregrine Holdings Limited - Unaudited Conso |
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PGR
PGR
PGR - Peregrine Holdings Limited - Unaudited Consolidated Interim Results For
The Six Months Ended 30 September 2007
PEREGRINE HOLDINGS LIMITED
Registration number 1994/006026/06
Share code: PGR & ISIN code: ZAE000078127
UNAUDITED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER
2007
Highlights
- Group assets under management now exceed R 40 billion
- Profit from ordinary activities up 113% to R418.3 million
- Headline earnings up 124% to R253.7 million
- Headline earnings per share up 116% to 127.0 cents
INCOME STATEMENT
Unaudited Unaudited
for the for the
six months six months Audited
% change ended ended year ended
2006 to 30 September 30 September 31 March
2007 2007 2006 2007
R`000 R`000 R`000
Operating revenue 64 600,733 366,262 911,193
Investment income 186 138,491 48,402 201,330
Total revenue 78 739,224 414,664 1,112,523
Investment contract benefits 57,226 80,722 354,931
Investment contract expenses (57,226) (80,722) (354,931)
Operating expenses 49 (345,934) (231,599) (573,363)
Profit from operations 115 393,290 183,065 539,160
Net interest received 73 19,800 11,422 16,005
Interest received 31,934 18,517 32,347
Interest paid (12,134) (7,095) (16,342)
Income from associate
companies 144 5,227 2,143 7,645
Profit from ordinary
activities 113 418,317 196,630 562,810
Capital surplus 5,500 5,455 5,455
Profit before taxation 110 423,817 202,085 568,265
Taxation (112,184) (55,587) (148,777)
Profit for the period 113 311,633 146,498 419,488
Attributable to :
Equity holders of the company 86 259,210 139,415 374,663
Minority interest 52,423 7,083 44,825
311,633 146,498 419,488
Determination of headline
earnings
Profit attributable to equity
holders of the company 259,210 139,415 374,663
Adjustments :
Reversal of impairment to
loan receivable - (5,455) (5,455)
Surplus on sale of
available-for-sale investment - (20,862) (47,340)
Surplus on sale of shares in
subsidiary (5,500) - -
Headline earnings 124 253,710 113,098 321,868
Headline earnings per
ordinary share (cents) 116 127.0 58.9 166.3
Basic earnings per ordinary
share (cents) 79 129.7 72.6 193.6
Diluted headline earnings per
share (cents) 132 127.0 54.7 153.8
Diluted basic earnings per
share (cents) 92 129.7 67.5 179.1
Dividend paid per ordinary
share - in respect of the
previous year (cents) 45.0 30.0 30.0
Dividend per ordinary share
declared subsequent to 31
March (cents) - - 45.0
Number of ordinary shares in
issue (`000) 228,129 228,129 228,129
Treasury shares held (`000) 12,869 36,552 32,440
Weighted average number of
ordinary shares in issue (`000) 199,819 191,956 193,556
Diluted weighted average
number of ordinary shares in
issue (`000) 199,819 206,596 209,243
BALANCE SHEET
Unaudited Unaudited Audited
as at as at as at
30 September 30 September 31 March
2007 2006 2007
R`000 R`000 R`000
Assets
Non - current assets 3,063,852 2,457,477 2,920,084
Property, plant and equipment 89,787 84,777 88,553
Intangible assets 268,899 256,529 269,694
Investment in associate companies 16,477 4,919 4,805
Investments linked to policyholder
investment contracts 2,419,061 1,999,722 2,403,454
Financial investments 243,826 84,698 137,517
Loans and receivables 9,971 17,760 4,421
Deferred taxation 15,831 9,072 11,640
Current assets 10,621,964 6,149,500 8,316,502
Financial investments 700,359 392,933 587,838
Trade and other receivables 131,505 81,254 171,305
Amounts receivable in respect of
stockbroking activities 9,123,792 5,111,872 6,899,391
Taxation 1,149 3,494 2,862
Cash and cash equivalents 665,159 559,947 655,106
Total assets 13,685,816 8,606,977 11,236,586
Equity and liabilities
Equity 1,331,076 858,905 1,128,190
Share capital, retained earnings
and reserves 1,259,296 848,262 1,090,353
Minority interest 71,780 10,643 37,837
Non - current liabilities 2,603,340 2,144,552 2,564,137
Interest bearing borrowings 62,183 93,597 65,472
Policyholder investment contract
liabilities 2,419,061 1,999,722 2,403,454
Loans and payables 68,244 27,975 52,998
Deferred taxation 53,852 23,258 42,213
Current liabilities 9,751,400 5,603,520 7,544,259
Trade and other payables 234,608 163,354 246,268
Amounts payable in respect of
stockbroking activities 9,427,757 5,362,133 7,175,641
Current portion of interest bearing
borrowings 6,176 24,228 39,881
Taxation 82,859 53,805 82,469
Total equity and liabilities 13,685,816 8,606,977 11,236,586
Net asset value per share (cents) 585.0 442.8 557.2
STATEMENT OF CHANGES IN EQUITY
Total capital Minority
and reserves interest Total equity
R`000 R`000 R`000
2008
Balance at 31 March 2007 1,090,353 37,837 1,128,190
Net gains and losses not
recognised in the income
statement: (1,606) (8) (1,614)
Write-down in value of treasury
shares on vesting 2,978 - 2,978
Movement in treasury shares 6,768 - 6,768
Currency translation differences (11,484) (31) (11,515)
Revaluation of
available-for-sale assets 154 27 181
Deferred tax on revaluation of
available-for-sale assets (22) (4) (26)
Profit for the period 259,210 52,423 311,633
Dividends paid (88,661) (18,472) (107,133)
Balance at 30 September 2007 1,259,296 71,780 1,331,076
2007
Balance at 31 March 2006 747,986 11,606 759,592
Net gains and losses not
recognised in the income
statement: 39,533 186 39,719
Write-down in value of treasury
shares on vesting 2,068 - 2,068
Movement in treasury shares 39,400 - 39,400
Currency translation differences 22,694 8 22,702
Revaluation of
available-for-sale assets 765 207 972
Deferred tax on revaluation of
available-for-sale assets (112) (29) (141)
Transfer from revaluation on
disposal of available-for-sale
assets (29,144) - (29,144)
Deferred tax in respect of
available-for-sale assets
disposed of 3,862 - 3,862
Profit for the period 374,663 44,825 419,488
Dividends paid (57,473) (18,780) (76,253)
Share repurchases (14,356) - (14,356)
Balance at 31 March 2007 1,090,353 37,837 1,128,190
CASH FLOW STATEMENT
Unaudited Unaudited
for the for the
six months six months Audited
ended ended year ended
30 September 30 September 31 March
2007 2006 2007
R`000 R`000 R`000
Cash flow from operating activities 117,989 110,732 339,572
Cash generated from operating
activities 303,095 199,933 476,218
Net interest received 19,034 11,364 15,677
Dividends received - financial
investments 242 4,804 3,210
Dividends received - associates 5,325 - 4,576
Dividends paid to equity shareholders (88,661) (57,473) (57,473)
Dividends paid to minority shareholders (18,472) (8,046) (18,780)
Taxation paid (102,574) (39,850) (83,856)
Cash flow from investing activities (100,549) (487) (132,944)
Cash flow from financing activities (8,546) 23,100 25,939
Share repurchases - (14,555) (14,356)
Proceeds on vesting of shares held by
staff share trust 2,978 1,867 2,068
Proceeds on sale of treasury shares - - 4
(Decrease)/increase in loans payable (23,976) 3,256 32,457
Decrease in loans receivable 14,446 8,265 8,474
(Decrease)/increase in interest
bearing borrowings (1,994) 24,267 (2,708)
Net increase in cash and cash
equivalents 8,894 133,345 232,567
Cash and cash equivalents at beginning
of the period 655,106 419,748 419,748
Effects of exchange rate changes on
cash and cash equivalents 1,159 6,854 2,791
Cash and cash equivalents at end of
the period 665,159 559,947 655,106
SEGMENTAL ANALYSIS
Unaudited
For the six months ended 30 September 2007
Profit from
Interest and ordinary
Revenue associate income activities
R`000 R`000 R`000
Wealth and asset management 375,136 9,490 201,402
Wealth management 209,620 8,408 101,216
Asset management 165,516 1,082 100,186
Broking and structuring 222,809 16,942 101,838
Group investments (net of
group costs) 141,279 (1,405) 115,077
739,224 25,027 418,317
Unaudited
For the six months ended 30 September 2006
Interest and Profit from
associate ordinary
Revenue income activities
R`000 R`000 R`000
Wealth and asset management 206,481 4,403 88,883
Wealth management 148,080 3,808 62,874
Asset management 58,401 595 26,009
Broking and structuring 160,628 9,388 75,179
Group investments (net of group
costs) 47,555 (226) 32,568
414,664 13,565 196,630
% change in
% of profit from profit from
ordinary ordinary
activities activities
2006 to
2007 2006 2007
Wealth and asset management 48 45 127
Wealth management 24 32 61
Asset management 24 13 285
Broking and structuring 24 38 35
Group investments
(net of group costs) 28 17 253
100 100 113
BASIS OF PREPARATION
The results for the six months ended 30 September 2007 have been prepared in
accordance with IFRS and comply with IAS 34 - "Interim Financial Reporting" and
the South African Companies Act of 1973. The accounting policies are consistent
with those applied in the annual financial statements for March 2007. The group
will apply IFRS 7 - "Financial Instruments : Disclosures" in its financial
statements for the year ending 31 March 2008.These results have not been
audited or reviewed by the company`s auditors, PKF (Jhb) Inc.
COMPARATIVE FIGURES
Comparative figures have been restated in accordance with the reclassifications
applied in preparation of the results for the financial year ended 31 March
2007. The reclassifications are as detailed in the March 2007 annual report.
COMMENTARY
Introduction
The Peregrine group has produced an excellent set of results for the six months
under review, increasing headline earnings per share by 116% to 127.0 cents per
share. Strong growth across all divisions is the highlight of this set of
results. Particularly impressive growth from the asset management and group
investment divisions, when compared to the relatively lower bases of the
previous interim period, has been the main catalyst for the extent of the
increase in earnings.
Better than expected trading conditions during the month of September were
responsible for earnings per share and headline earnings per share exceeding,
by 4% and 1% respectively, the upper end of the range announced in the
trading update released on 6 September 2007.
Results
Revenue of R739.2 million was 78% higher than the comparable period, boosted by
an overall increase in the group`s assets under management, increased activity
within Peregrine Securities, higher performance fees in Citadel and
substantially better investment returns generated by the core hedge fund
operation, Peregrine Capital.
The 49% increase in operating expenses, is primarily as a result of profit
participations paid across the group. In addition, Peregrine Securities
experienced an increase in costs of 50% (excluding profit participation), most
of which is attributable to an increase in variable costs directly related to
increased revenues.
Net interest received increased to R19.8 million from R11.4 million, largely as
a result of increased cash resources. Net interest earned from the group`s
broking activities, previously disclosed as part of interest received has been
reclassified as part of operating revenue. The change more appropriately
classifies the interest as part of revenue generating activities rather than as
part of the group`s financing activities.
With the inclusion of a capital profit of R5.5 million, profit before tax
climbed 110% to R423.8 million for the period. This capital profit relates to
the sale of a 10% interest in PeregrineQuant (PQ) to that division`s management
team.
Headline earnings increased by 124% to R253.7 million and with a 4.1% increase
in the weighted average number of shares in issue, due to the issue of shares in
terms of the staff deferred purchase scheme, headline earnings per share
increased by 116% to 127.0 cents per share.
Attributable earnings increased by 86% to R259.2 million, with basic earnings
per share up 79% to 129.7 cents per share.
Operating highlights
Private-client wealth manager, Citadel, produced a 61% increase in profit from
ordinary activities to R101.2 million. Strong investment performance saw
Citadel`s asset base rise to just under R14 billion with the business accruing
a steady stream of performance fees over the period. New inflows into this
business grew by a very pleasing 70% over the comparable period, with monthly
inflows averaging R200 million per month.
The contribution from the asset management division grew by a particularly
pleasing 285%, to R100.2 million as a result of increased performance fees
earned off a bigger asset base within the group`s hedge fund businesses.
Despite the turbulent market conditions and a relatively difficult period for
the hedge fund industry as a whole, the group`s returns were meaningfully
positive for the period under review, and were generated with an acceptably low
level of volatility.
Peregrine is currently the country`s largest single strategy hedge fund
manager, managing just over R4.7 billion in single strategy hedge funds. The
group`s hedge fund flagship, Peregrine Capital, currently manages R3.4
billion, with the group`s newer range of hedge funds housed within Peregrine
Investment Managers (PIM) managing an additional R1.3 billion.
Caveo, the group`s fund of hedge funds joint venture with Investment Solutions,
generated a profit for the period, with assets under management of just under
R1.4 billion. The prospects for this business are positive and bode well for
flows and profitability going forward.
PQ, the group`s institutional asset manager with a quantitative focus, grew its
assets under management by 67% to R20 billion over the six month period to 30
September 2007. As a result of the asset inflows occurring predominantly in the
latter half of the period, annuity profit from ordinary activities was only 10%
higher at R5.3 million.
The broking and structuring activities housed within Peregrine Securities
produced a 35% increase in profitability to R101.8 million. The focus on
building the group`s hedge fund related prime broking capacity within Peregrine
Equities, increased transactional activity in the Equity and Derivative units
and volatile market conditions augmented profitability. Notwithstanding the
dramatic growth in this business over the past two years, the prime broking
business is anticipated to continue to grow off the current platform as the
South African hedge fund industry continues to expand.
Return on group investments (net of group costs) increased by 253% to R115.1
million due to the increased proprietary asset base, the strong returns from
the hedge fund investments and the substantially increased returns generated by
the private equity and investment banking activities. Core costs at the centre
increased by 13% as a result of changes in the management structure made during
the latter part of the previous financial year. During the period, no
withdrawals of group capital were made from the group`s hedge fund investments
and new capital was invested into several private equity and empowerment
funding opportunities.
Acquisition
During the period under review, the group announced the conclusion of a non-
binding heads of agreement in terms of which Peregrine will, subject to
entering into formal acquisition and shareholder agreements and the fulfilment
of certain conditions, acquire at least 65% of the Stenham group, a wealth and
asset management business serving both high net worth private clients and
institutions.
Stenham currently has in excess of US$ 4 billion under management, with over
US$ 2 billion in its funds of hedge funds and a further US$ 2 billion in
property investments. It has core operating offices in the Channel Islands and
the United Kingdom.
The transaction is seen as being highly complementary to the existing business
philosophy of the Peregrine group and will manifest in the local operations
being able to better serve their clients through the sharing of global
perspectives, methodologies and intellectual capital. This transaction will
also provide a foundation for members of the group to internationalise their
businesses over time.
In this regard, Sean Melnick, in his capacity as group Chairman, will take
responsibility for further initiating and overseeing the Peregrine group`s
international expansion and in doing so, will spend the next year based in
London.
Prospects
These results support the consistently held view of the Peregrine directors
that the group`s positioning in the niche areas of private wealth management,
hedge fund management and trading and execution will continue to provide
Peregrine with a platform for meaningful growth in earnings over time.
By order of the board
Sean Melnick Keith Betty
Executive Chairman Chief Executive Officer
Sandton
31 October 2007
Sponsor
Java Capital (Proprietary) Limited
Date: 31/10/2007 13:18:23 Produced by the JSE SENS Department.
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