| Tue 3 Nov 2009, 13:11 | | PGR - Peregrine Holdings Limited - Unaudited Results For The Six Months Ended 30 |
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PGR
PGR
PGR - Peregrine Holdings Limited - Unaudited Results For The Six Months Ended 30
September 2009
PEREGRINE HOLDINGS LIMITED
Registration number 1994/006026/06
Share code: PGR
ISIN code: ZAE000078127
("Peregrine" or "the company" or "the group")
UNAUDITED RESULTS For the six months ended 30 September 2009
CONSOLIDATED INCOME STATEMENT
% change Unaudited for the six
2008 to months ended 30
2009 September
2009
R`000
Operating revenue (22) 640,983
Investment and other income 92,142
Investment contract
benefits/(liabilities) 47,503
Investment contract (expenses)/income (47,503)
Operating expenses (15) (508,032)
Profit from operations 62 225,093
Net interest paid (20,354)
Interest received 22,990
Interest paid (43,344)
Income from associate companies 4,824
Profit from ordinary activities 67 209,563
Capital impairment (1,715)
Profit before taxation 66 207,848
Taxation (37,742)
Profit for the period 66 170,106
Attributable to:
Equity holders of the company 126 123,008
Non-controlling interests 47,098
170,106
Basic earnings per ordinary share (cents) 127 57.4
Number of ordinary shares in issue (`000) 228,129
Treasury shares held (`000) 13,978
Weighted average number of ordinary
shares in issue (`000) 214,151
Unaudited for the six
months ended 30 Audited for the
September year ended 31 March
2008 2009
R`000 R`000
Operating revenue 825,482 1,541,508
Investment and other income (91,732) (89,495)
Investment contract
benefits/(liabilities) 146,273 (193,772)
Investment contract
(expenses)/income (146,273) 193,772
Operating expenses (595,216) (1,144,528)
Profit from operations 138,534 307,485
Net interest paid (18,707) (49,147)
Interest received 53,057 88,716
Interest paid (71,764) (137,863)
Income from associate companies 5,489 9,541
Profit from ordinary activities 125,316 267,879
Capital impairment - (11,043)
Profit before taxation 125,316 256,836
Taxation (23,121) (40,881)
Profit for the period 102,195 215,955
Attributable to :
Equity holders of the company 54,500 118,041
Non-controlling interests 47,695 97,914
102,195 215,955
Basic earnings per ordinary share (cents) 25.3 54.8
Number of ordinary shares in issue (`000) 228,129 228,129
Treasury shares held (`000) 12,853 13,978
Weighted average number of
ordinary shares in issue (`000) 215,276 215,239
DETERMINATION OF HEADLINE EARNINGS
Unaudited for the six
months ended 30
% change September
2008 to 2009
2009 R`000
Profit attributable to equity
holders - IAS 33 earnings 123,008
Adjustments:
Impairment to loan to associate forming part
of the net investment in associate - IAS 36 1,715
Impairment to goodwill - IAS 36 804
Surplus on sale of available-for-sale assets - IAS 39 (1,376)
Surplus on sale of property - IAS 16 -
Headline earnings 128 124,151
Headline earnings per ordinary share (cents) 129 58.0
Headline earnings per ordinary share
excluding intangible amortisation (cents) 108 62.3
Basic earnings per ordinary share excluding
intangible amortisation (cents) 106 61.7
Dividend paid per ordinary share in respect
of the previous year (cents) (77) 13.0
Dividend per ordinary share declared
subsequent to 31 March (cents) -
Unaudited for the six Audited for the
months ended 30 year ended 31
September March
2008 2009
R`000 R`000
Profit attributable to equity
holders - IAS 33 earnings 54,500 118,041
Adjustments:
Impairment to loan to associate
forming part of the net
investment in associate - IAS 36 - 11,043
Impairment to goodwill - IAS 36 - -
Surplus on sale of
available-for-sale assets - IAS 39 - -
Surplus on sale of property - IAS 16 (56,017)
Headline earnings 54,500 73,067
Headline earnings per ordinary share (cents) 25.3 33.9
Headline earnings per ordinary
share excluding intangible
amortisation (cents) 30.0 43.7
Basic earnings per ordinary share
excluding intangible amortisation (cents) 30.0 64.6
Dividend paid per ordinary share
in respect of the previous year (cents) 56.0 45.0
Dividend per ordinary share
declared subsequent to 31 March (cents) - 13.0
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited for the six Unaudited for the Audited for the
months ended 30 six months ended 30 year ended 31
September September March
2009 2008 2009
R`000 R`000 R`000
Profit for the period 170,106 102,195 215,955
Other comprehensive income
for the period net of tax: (153,640) (167,664) (231,749)
Forward exchange
contracts entered into as a
cash flow hedge 9,126 (98,274) (100,433)
Transfer out of revaluation
reserve on disposal of
available-for-sale assets (210) (189) (354)
Currency translation
differences (162,556) (69,201) (130,962)
Total comprehensive income
for the period 16,466 (65,469) (15,794)
Attributable to:
Equity holders of the company 8,235 (85,835) (57,447)
Non-controlling interests 8,231 20,366 41,653
16,466 (65,469) (15,794)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
as at as at as at
30 September 30 September 31 March
2009 2008 2009
R`000 R`000 R`000
Assets
Non - current assets 4,702,667 4,770,808 4,508,958
Property, plant and equipment 38,864 114,047 40,369
Intangible assets 1,307,336 1,532,467 1,455,064
Investment in associate companies 8,020 47,914 8,992
Investments linked to policyholder
investment contracts 3,104,371 2,656,836 2,725,372
Financial investments 159,702 316,269 193,960
Loans and receivables 10,117 55,456 11,729
Deferred taxation 74,257 47,819 73,472
Current assets 7,213,798 9,671,339 5,468,696
Financial investments 565,758 564,329 550,066
Loans and receivables 4,626 15,793 5,917
Trade and other receivables 281,939 397,028 281,305
Amounts receivable in respect of
stockbroking activities 5,553,217 7,982,590 3,898,488
Taxation 10,625 12,650 19,305
Cash and cash equivalents 797,633 698,949 713,615
Total assets 11,916,465 14,442,147 9,977,654
Equity and liabilities
Equity 1,828,741 2,043,353 1,856,868
Equity attributable to holders
of the company 1,398,275 1,398,627 1,417,880
Non-controlling interests 430,466 644,726 438,988
Non - current liabilities 3,755,377 3,548,807 3,476,147
Interest- bearing borrowings 586,874 778,757 674,135
Policyholder investment contract
liabilities 3,104,371 2,656,836 2,725,372
Loans and other payables 52,894 83,892 64,904
Deferred taxation 11,238 29,322 11,736
Current liabilities 6,332,347 8,849,987 4,644,639
Financial instrument liability 5,821 - 4,206
Current portion of interest-bearing
borrowings 200,562 201,210 169,585
Trade and other payables 323,773 469,027 429,735
Amounts payable in respect of
stockbroking activities 5,761,492 8,092,438 3,979,955
Taxation 40,699 87,312 61,158
Total equity and liabilities 11,916,465 14,442,147 9,977,654
Net tangible asset value per
ordinary share 160.3 95.5 119.8
Net asset value per ordinary share 652.9 649.7 662.1
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Treasury Accumulated
capital premium shares profits
R`000 R`000 R`000 R`000
Unaudited - 2009
Balance at 31 March 2009 228 38,024 (42,941) 1,414,765
Minorities arising on
acquisition of subsidiary 1 - - - -
Acquisition of minority
interest in subsidiary 2 - - - -
Total comprehensive income
for the period - - - 123,008
Dividends paid - - - (27,840)
Balance at 30 September 2009 228 38,024 (42,941) 1,509,933
Unaudited - 2008
Balance at 31 March 2008 228 38,024 (37,091) 1,417,860
Minorities arising on
acquisition of
subsidiaries - - - -
Total comprehensive income
for the period - - - 54,500
Dividends paid - - - (120,554)
Share based payments - - - 187
Balance at 30 September 2008 228 38,024 (37,091) 1,351,993
Audited - 2009
Balance at 31 March 2008 228 38,024 (37,091) 1,417,860
Minorities arising on
acquisition of
subsidiaries - - - -
Acquisition of minority
interest in subsidiary - - - -
Total comprehensive income
for the year - - - 118,041
Dividends paid - - - (120,554)
Share based payments - - - (582)
Share repurchases - - (5,850) -
Balance at 31 March 2009 228 38,024 (42,941) 1,414,765
Non -
distributable Share based Total capital
reserves payments and reserves
R`000 R`000 R`000
Unaudited - 2009
Balance at 31 March 2009 7,804 - 1,417,880
Minorities arising on
acquisition of subsidiary 1 - - -
Acquisition of minority
interest in subsidiary 2 - - -
Total comprehensive income
for the period (114,773) - 8,235
Dividends paid - - (27,840)
Balance at 30 September 2009 (106,969) - 1,398,275
Unaudited - 2008
Balance at 31 March 2008 183,292 - 1,602,313
Minorities arising on
acquisition of subsidiaries - - -
Total comprehensive income
for the period (140,335) - (85,835)
Dividends paid - - (120,554)
Share based payments - 2,516 2,703
Balance at 30 September 2008 42,957 2,516 1,398,627
Audited - 2009
Balance at 31 March 2008 183,292 - 1,602,313
Minorities arising on
acquisition of subsidiaries - - -
Acquisition of minority
interest in subsidiary - - -
Total comprehensive income
for the year (175,488) - (57,447)
Dividends paid - - (120,554)
Share based payments - - (582)
Share repurchases - - (5,850)
Balance at 31 March 2009 7,804 - 1,417,880
Non-
controlling
interests Total equity
R`000 R`000
Unaudited - 2009
Balance at 31 March 2009 438,988 1,856,868
Minorities arising on acquisition of subsidiary 1 283 283
Acquisition of minority interest in subsidiary 2 (562) (562)
Total comprehensive income for the period 8,231 16,466
Dividends paid (16,474) (44,314)
Balance at 30 September 2009 430,466 1,828,741
Unaudited - 2008
Balance at 31 March 2008 119,780 1,722,093
Minorities arising on acquisition of subsidiaries 527,151 527,151
Total comprehensive income for the period 20,366 (65,469)
Dividends paid (22,751) (143,305)
Share based payments 180 2,883
Balance at 30 September 2008 644,726 2,043,353
Audited - 2009
Balance at 31 March 2008 119,780 1,722,093
Minorities arising on acquisition of subsidiaries 397,783 397,783
Acquisition of minority interest in subsidiary (931) (931)
Total comprehensive income for the year 41,653 (15,794)
Dividends paid (118,778) (239,332)
Share based payments (519) (1,101)
Share repurchases - (5,850)
Balance at 31 March 2009 438,988 1,856,868
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Unaudited for the Unaudited for the Audited for the
six months ended six months ended year ended 31
30 September 30 September March
2009 2008 2009
R`000 R`000 R`000
Cash flow from
operating activities 93,276 (484,373) (551,399)
Cash generated from
operating activities 163,133 257,314 429,793
Working capital changes 19,768 (483,814) (521,546)
Released/(arising)
from stockbroking
activities 126,808 (345,212) (373,593)
Investment into
working capital (107,040) (138,602) (147,953)
Interest received 22,172 52,389 88,142
Interest paid (48,928) (42,418) (114,024)
Dividends received -
financial investments 26,381 2,150 2,491
Dividends received -
associates 4,580 3,496 37,141
Dividends paid
- equity shareholders (27,840) (120,554) (120,554)
Dividends paid
- minority shareholders (16,474) (22,751) (118,778)
Taxation paid (49,516) (130,185) (234,064)
Cash flow from
investing activities 73,645 (653,823) (376,803)
Cash flow from
financing activities (49,012) 796,513 619,827
Net increase/(decrease)
in cash and
cash equivalents 117,909 (341,683) (308,375)
Cash and cash equivalents
at beginning of the
period 713,615 1,053,646 1,053,646
Effects of exchange rate
changes on cash and cash
equivalents (33,891) (13,014) (31,656)
Cash and cash
equivalents at
end of the period 797,633 698,949 713,615
SEGMENTAL ANALYSIS
Unaudited
for the six months ended 30 September 2009
Revenue,
investment and Interest and
other income associate income
R`000 R`000
Wealth and asset management 214,477 3,350
Wealth management 153,780 1,608
Asset management 60,697 1,742
Broking and structuring 140,771 11,692
Stenham 285,262 896
Profit from operating subsidiaries 640,510 15,938
Group 92,615 (31,468)
Operations 3,471 8,557
Investment returns 89,144 290
Cost of funding (40,315)
733,125 (15,530)
Pro forma profit
from ordinary
Profit from activities before
ordinary intangible
activities as per amortisation
the income adjusted for
statement minorities
R`000 R`000
Wealth and asset management 69,384 60,809
Wealth management 43,573 44,188
Asset management 25,811 16,621
Broking and structuring 45,274 45,274
Stenham 59,951 35,559
Profit from operating subsidiaries 174,609 141,642
Group 34,954 26,182
Operations (13,488) (13,488)
Investment returns 88,757 79,985
Cost of funding (40,315) (40,315)
209,563 167,824
Unaudited
for the six months ended 30 September 2008
Revenue, Interest and
investment and associate
other income income
R`000 R`000
Wealth and asset management 213,312 5,532
Wealth management 156,284 4,348
Asset management 57,028 1,184
Broking and structuring 199,966 27,981
Stenham 408,841 5,340
Profit from operating subsidiaries 822,119 38,853
Group (88,369) (52,071)
Operations 2,717 6,447
Investment returns (91,086) (441)
Cost of funding (58,077)
733,750 (13,218)
Pro forma profit
from ordinary
activities before
Profit from intangibles
ordinary activities amortisation
as per the income adjusted for
statement minorities
R`000 R`000
Wealth and asset management 63,680 57,620
Wealth management 47,972 48,713
Asset management 15,708 8,907
Broking and structuring 86,306 86,306
Stenham 122,692 63,519
Profit from operating subsidiaries 272,678 207,445
Group (147,362) (129,552)
Operations (5,979) (5,979)
Investment returns (83,306) (65,496)
Cost of funding (58,077) (58,077)
125,316 77,893
% of profit from
operating
subsidiaries before
% of profit from intangible
operating amortisation adjusted
subsidiaries for minorities
2009 2008 2009 2008
Wealth and asset management 40 23 43 27
Wealth management 25 17 31 23
Asset management 15 6 12 4
Broking and structuring 26 32 32 42
Stenham 34 45 25 31
Profit from operating subsidiaries 100 100 100 100
Group
% change in
profit from
operating
activities
before
% change in intangible
profit from amortisation
operating adjusted for
activities minorities
2008 to 2009 2008 to 2009
Wealth and asset management 9 6
Wealth management (9) (9)
Asset management 64 87
Broking and structuring (48) (48)
Stenham (51) (44)
Profit from operating subsidiaries (36) (32)
Note: Group funding costs are disclosed as part of "group" and have not been
allocated to the appropriate underlying entities.
NOTES
1. Acquisition of a controlling interest in Citadel Trust Limited, increasing
the group`s interest as at 30 September to 66.67%.
2. Acquisition of an additional 5% interest in PeregrineQuant (Pty) Limited,
increasing the group`s interest as at 30 September to 65%.
COMPLIANCE WITH IAS 34
The results for the six months ended 30 September 2009 have been prepared in
accordance with IAS 34 - "Interim Financial Reporting", the South African
Companies Act of 1973, as amended and the JSE Listings Requirements. The
accounting policies and methods of computation are consistent with those
applied in the annual financial statements for March 2009.These results have
not been audited or reviewed by the company`s auditors, PKF (Jhb) Inc.
COMMENTARY
Highlights
- Basic earnings increase by 126% to R123.0 million
- Headline earnings increase by 128% to R124.2 million
- Basic earnings per share increase by 127% to 57.4 cents per share
- Headline earnings per share increase by 129% to 58.0 cents per share
Environment
During the period under review, participants in global financial markets
started to accept that monetary and fiscal authorities have managed to
prevent the crisis of 2008 from developing into a widely expected and much
feared depression. Whilst economic indicators gradually stabilised only
towards the end of the period, financial markets anticipated this reversal of
fortune in a very strong way from early in the period.
Of the significant amounts of liquidity that were injected into the world
financial system, only a portion found its way into the real economy. The
surplus of available liquidity, together with record low interest rates
around the world, has resulted in a continuous flow of money into capital
markets, especially those of emerging economies. The effect of this
improvement in sentiment not only filtered through to capital markets, but
also led to significant strengthening of emerging market currencies -
including the South African rand. This set of circumstances has, on balance,
been positive for our business.
Financial results
The group produced a satisfactory set of results for the first six months of
the financial year. Operating revenue of R641.0 million fell by 22%,
reflecting the tougher trading environment for our broking and structuring
divisions and our global property investment division, housed within Stenham,
as well as the effect of the stronger rand on our offshore revenue.
Investment and other income showed a marked improvement, adding R92.1 million
to our total income, as opposed to a loss of R91.7 million in the comparative
period. These, together with a reduction in both operating expenses and
interest paid on long term debt, resulted in profit attributable to
shareholders increasing by 126% to R123.0 million.
Segmental results
(Substantial minority interests exist in many of the group`s asset management
and group investment operations. The operating results below are therefore
presented on a pro forma, `after minorities` basis, to better reflect and aid
in the understanding of the specific economic benefit to the shareholders of
the group.)
Wealth and Asset Management
The group`s wealth management division comprises private-client wealth
manager, Citadel. Profit from ordinary activities decreased by 9% to
R44.2 million. The decrease was due to lower average levels of assets under
management and increased spending on growth initiatives, which included the
business substantially growing its team of advisors. Total assets under
management ended the period at R15.1 billion while inflows averaged almost
R200 million per month. The company`s client retention ratio, both by number
of clients and by assets, remains comfortably in line with its long term
retention experience of 98%.
The group`s asset management division comprises a number of different fund
management teams, operating as stand-alone investment managers. The
contribution from the asset management division (excluding Stenham) increased
by 87% to R16.6 million. This reflects a return to performance fees for a
number of mandates under management, compared to a period last year where
lower levels of performance fees were earned.
The group`s hedge-fund flagship, Peregrine Capital, currently manages R3
billion across a range of mandates. After a tough period in 2008, fund
performance in this reporting period improved. At the reporting date over 70%
of the asset base was again in performance fee territory. This positive
performance was achieved despite having moderate net market exposure in the
different mandates, on the back of market valuation concerns.
The Big Rock fund currently has R485 million under management. The team
continued to perform well during the period under review, after delivering
strong performance during the tough 2008 year. The team operated off a stable
asset base, with the first investments into the offshore feeder fund flowing
during this period.
The group`s South African hedge fund of funds business, Caveo, remained
profitable during this period, with assets under management of just over
R2.4 billion. Performance of the funds continued to build on its stable track
record.
Peregrine iQ, the group`s institutional asset manager with a quantitative
focus, experienced a further reduction in assets under management to R10.5
billion, but remained profitable in the period, during which some changes to
the management team and the strategy of the business were implemented.
Stenham, the group`s 53% held offshore wealth and asset management
subsidiary, houses the group`s global hedge fund of funds operation, with
assets under management of $2.5 billion and a global property manager with
assets under management of AGBP1.7 billion All operating divisions remained
profitable, although profits for the 6 month period fell by 31% in pound
sterling terms. The contribution to the group, measured in rand, fell by 44%
to R35.6 million, reflecting the appreciation of the rand over the period.
The fund of funds division continued to generate attractive risk-adjusted
returns to investors, and was recognised for this not only through a return
to net inflows over the period, but also by being nominated for a number of
industry awards. Fees earned by the property division during the period
declined on the back of lower asset values as well as a reduced number of
transactions being executed. The team successfully completed all required
re-financing in the underlying funds over the period, through a combination
of renegotiated bank facilities and rights issues, and also secured and
executed a number of attractive investment opportunities. Current conditions
are producing promising opportunities for the business and its investors in
selected markets.
Broking and Structuring
The group`s broking and structuring activities are housed within Peregrine
Securities. This business experienced a challenging environment during the
period under review. Trading volume on the JSE reduced by 20% and on SAFEX by
as much as 40% compared to the prior year. Our business is a significant
participant in these markets, and therefore could not escape the effects of
this lower activity, with profits from ordinary activities reducing by 48% to
R45.3 million. While flows and client participation has improved markedly
From its lows earlier in the year, trading remains fragmented and the
Marginal profitability of activity remains diminished.
Proprietary investments
The group`s proprietary investment portfolio showed a positive return in this
period, with a net contribution (after accounting for group and funding
costs) of R66.5 million to the overall profitability. The bulk of the profits
were derived from the positive performance of our hedge fund investments,
with the remainder made up from improvement in our private equity portfolio.
Outlook
The group`s businesses are involved in investing our client`s capital,
facilitating investment of our client`s capital and investing the group`s own
capital in financial markets. The fortunes of our group are therefore closely
linked to those of financial markets. Whilst many of our businesses are
structured to earn substantial additional fees when we deliver returns of an
absolute nature, the group is capable of producing an annuity level of profit
from operations regardless of market conditions. Through diversifying our
activities across different markets, geographies and asset classes, we have
reduced our dependence on any individual team or asset class.
The remainder of the financial year holds uncertainty for investors and
participants in markets, as the effects of the events of 2008 and the
responses thereto, continue manifesting in world economies and markets. In
this regard, many of our investment teams are, independently, taking a
cautious view and adopting a capital preservation stance in designing their
strategy for client portfolios. We continue to believe that the 2010
financial year will be one of steady consolidation for the group.
By order of the board
Leonard Harris
Non-executive chairman
Sean Melnick
Chief executive officer
Jan van Niekerk
Deputy chief executive officer
2 November 2009
Sponsor
Java Capital (Proprietary) Limited
Date: 03/11/2009 13:11:01 Produced by the JSE SENS Department.
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