| Fri 26 Oct 2001, 0:00 | | Peregrine - Unaudited Results |
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PEREGRINE HOLDINGS LIMITED
Registration number 1994/006026/06
Share Code: PGR ISIN code ZAE000015152
("Peregrine")
Unaudited results for the six months ended 30 September 2001
Group income statement
Unaudited Audited
six months ended Increase year ended
30 Sept 2000 to 31 March
2001 2000 2001 2001
R'000 R'000 % R'000
Revenue 118 792 92 824 28 189 050
Operating expenses (46 111) (30 287) 52 (64 997)
Profit from operations 72 681 62 537 16 124 053
Net interest received 2 871 4 435 (35) 9 041
Profit before taxation 75 552 66 972 133 094
Taxation (13 807) (12 457) 11 (22 927)
Profit after taxation 61 745 54 515 13 110 167
Income from associate
companies (886) 4 001 2 871
Amortisation of intangibles (3 125) - (556)
Net profit 57 734 58 516 (1) 112 482
Minority interest (3 087) (243) (5 428)
Attributable earnings 54 647 58 273 (6) 107 054
Headline earnings1 per
share (cents) 29,7 27,0 10 49,9
Earnings per share (cents) 28,1 27,0 4 49,6
Diluted headline earnings
per share (cents) 29,3 27,0 49,9
Number of shares in
issue ('000) 215 825 215 825 215 825
Weighted average number
of shares in issue2 ('000) 194 243 215 825 215 825
Diluted weighted average
number of shares in
issue ('000) 197 450 215 825 215 825
1Adjusted for amortisation of intangibles
2Adjusted for treasury shares
Group
balance
sheet
Audited
Unaudited as at as at
30 Sept 30 Sept 31 March
2001 2000 2001
R'000 R'000 R'000
Assets
Non-current assets 383 276 260 219 326 913
Property, plant
and equipment 10 758 11 578 11 573
Intangible assets 45 376 3 200 6 839
Deferred taxation - 1 649 -
Investment in associate
companies 40 286 31 159 68 127
Investments 251 341 198 853 226 594
Employee share
incentive scheme 35 515 13 780 13 780
Current assets 167 065 184 456 148 560
Trading assets 26 941 12 050 25 228
Accounts receivable 29 743 128 287 44 421
Cash and cash equivalents 110 381 44 119 78 911
Total assets 550 341 444 675 475 473
Equity and liabilities
Capital and reserves 417 988 364 565 395 953
Share capital and
distributable reserves 260 017 226 732 275 513
Non-distributable reserves 42 340 2 430 2 430
Amounts due to vendors 112 976 127 438 112 700
Deferred income reserve 2 655 7 965 5 310
Minority interest 13 822 7 578 11 716
Non-current liabilities 12 707 6 574 7 741
Interest-bearing
borrowings 10 500 6 574 5 299
Deferred taxation 2 207 - 2 442
Current liabilities 105 824 65 958 60 063
Accounts payable 92 909 54 989 49 220
Taxation 12 915 10 969 10 843
Total equity and
liabilities 550 341 444 675 475 473
Group
cash flow
statement
Unaudited six months ended
30 Sept 30 Sept
2001 2000
R'000 R'000
Cash flow from operating activities 95 524 (30 217)
Cash generated from operations 126 182 (17 349)
Net interest received 2 871 4 435
Dividends paid (21 367) (3 176)
Taxation paid (12 162) (14 127)
Cash flow from investing activities 22 155 31 684
Acquisition of property, plant and
equipment (2 460) (8 886)
Expenditure on intangibles - (3 200)
Acquisition of subsidiaries, investments
and associate companies (59 016) (73 403)
Proceeds on sale of investments 49 167 28 621
Proceeds on sale of property, plant
and equipment 49 166
Proceeds on unwinding of associate 34 415 88 386
Cash flow from financing activities (86 209) 321
Acquisition of treasury shares (48 776) -
Increase in loan to employee share
incentive scheme (21 735) -
Payments to vendors and minorities (5 640) -
Increase in loans to associate
companies (4 759) -
(Decrease)/increase in interest-bearing
borrowings (5 299) 321
Net increase in cash or cash equivalents 31 470 1 788
Cash and cash equivalents at beginning
of the period 78 911 42 331
Cash and cash equivalents at end
of the period 110 381 44 119
statement of
changes in
equity
Unaudited six months ended
30 Sept 30 Sept
2001 2000
R'000 R'000
Equity at beginning of the period 395 953 313 693
Changes in share capital and
distributable reserves (15 496) 55 097
Attributable earnings 54 647 58 273
Dividends paid (21 367) (3 176)
Acquisition of treasury shares (48 776) -
Changes in reserves 37 255 (225)
Increase in non-distributable reserves 39 910 2 430
Decrease in deferred income reserve (2 655) (2 655)
Changes in amounts due to vendors 276 (4 000)
Equity at end of the period 417 988 364 565
segmental
analysis
Six months ended 30 September 2001
Profit from operations
R'000 %
Asset management and related services 45 157 62
Corporate and financial advisory 12 705 18
Investment banking and private equity 14 081 19
Financial software development 738 1
Total 72 681 100
Introduction
Peregrine has produced satisfactory results for the six months to
30 September 2001, achieving reasonable growth in headline earnings per
share in a difficult operating environment. In the same period the group
completed the specific repurchase of 21,6 million Peregrine shares,
representing 10% of the company's capital, and obtained general authority
permitting the group to purchase a further 20% of its own shares. The
unwinding of McCarthy Bank Holdings and the acquisition of Mercury
Consolidated Holdings (Mercury) were also effected during the period.
Results
The group increased revenue by 28% to R118,8 million from
R92,8 million. Profit from operations was 16% higher at R72,7 million,
tempered by an increase of 52% in the group's operating expenses for the
period. The primary reasons for the increase in expenses were the
implementation of Peregrine's new remuneration structure for the full
interim period, initiation of new business ventures, as well as operating
expenses linked to the acquisition of Mercury.
Profit after taxation increased by 13% to R61,7 million from
R54,5 million, with goodwill amortisation, a small loss from associates and
a greater participation by minority interests reducing attributable earnings
for the period by 6% to R54,6 million from R58,3 million. Headline earnings
per share for the period increased by 10% to 29,7 cents from 27,0 cents in
the previous period, with the weighted average number of shares in issue
falling from 215,8 million to 194,2 million.
Operating highlights
The asset management and related services division produced an outstanding
performance for the six months, contributing 62% of the group's profit from
operations. Peregrine Capital, the group's hedge fund management business,
was the biggest contributor to this division, with monthly and performance
fees earned by the management company and realised returns on proprietary
funds invested all contributing to the excellent performance of this
operation. Once again the management team proved its resilience in coping
with extremely difficult market conditions. Returns were positive for all
four funds under management for both quarters within the period.
The acquisition of Mercury and subsequent integration of its operations into
Peregrine Securities has produced a marked increase in the level of
Peregrine's market penetration in the areas of equity and derivative
structuring and broking and has substantially boosted the profitability of
this area.
PeregrineQuant, the group's quantitative asset management arm, increased its
visibility in the market and is making steady progress in winning several
new mandates. Prosperity Holdings, an empowerment multi-manager and related
services business, remains well placed to receive substantial flows of
parastatal, government and union controlled pension fund money. Both
businesses are, however, unlikely to be profitable in the current financial
year.
The group has also made strides in increasing its equity investment in
Citadel, a high-net-worth private client wealth management business, with
just under R6,5 billion under management. It is Peregrine's intention to
continue to build its interest in Citadel, which will add further depth to
the range of asset management activities within this division. It is
expected that Citadel will make an initial contribution to Peregrine's
earnings in the ensuing year.
The corporate and financial advisory division produced R12,7 million or 18%
of the group's profit from operations. The areas of specialised finance,
asset finance, TW Ferguson and corporate advisory all produced modest
profits in the context of a difficult operating environment. The set up
costs of the newer businesses in the division, including property
structuring, treasury services and securitisation, reduced the performance
of the division. All of these new businesses, however, have good potential
to materially augment the income base of the division going forward. It is
anticipated that this division will increase its percentage contribution to
the group during the second half of the year.
Whilst the current environment is not conducive to investment banking
operations, the group managed to achieve profitability in this area, with
profit of R14,1 million comprising 19% of the group's profit from
operations. A large portion of the positive contribution emanated from the
unwinding of interests in McCarthy Bank and disposal of associated
investments at profitable levels. Despite the difficult conditions and a
potential loss of R3 million on Africam, the second half of the year is
expected to yield a similar level of profitability.
Peregrine Systems managed to maintain its profitability, contributing 1% to
the group's profit from operations, notwithstanding the difficult time
experienced by technology companies in general. The business continues to
have a strong presence in the local stockbroking and asset management
community with offshore expansion planned for the latter half of the
financial year.
Prospects
The operating environment in which Peregrine currently finds itself is
undoubtedly the most uncertain experienced by the group since inception.
Despite these circumstances, the group anticipates producing growth in
earnings for the year to 31 March 2002.
The group's positioning of its businesses and its potential for medium and
long-term sustainable growth have never been better. We remain committed to
building a significant and well respected entity in the financial services
industry.
Dividend
It is the policy of Peregrine to declare an annual dividend in June each
year.
By order of the board
S M Levenberg S A Melnick
Chairman Chief Executive Officer
Sandton
25 October 2001
Directors
S M Levenberg (Chairman)*, S A Melnick (CEO), K D Cimring,
A P Faure*, P Goetsch, L Harris*, J Hertz, R Stumpf*
*Non-executive
Transfer secretaries Registered address
Mercantile Registrars Limited 6A Sandown Valley Crescent
8th Floor, 11 Diagonal Street Sandown
Johannesburg, 2001 Sandton
www.peregrine.co.za
