| Tue 4 Jun 2002, 0:00 | | Peregrine Holdings Limited - Audited Results |
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Peregrine Holdings Limited - Audited results for the year ended 31 March
2002
PEREGRINE HOLDINGS LIMITED
Group
income statement
Year Year Change
ended ended
31 March 31 March 2001
2002 2001 to
2002
R`000 R`000 %
Revenue 230,931 189,050 22
Operating expenses (100,026) (64,997) 54
Profit from operations 130,905 124,053 6
Amortisation of goodwill (8,077) (556)
Net interest received 4,289 9,041
Profit before taxation 127,117 132,538 -4
Taxation (24,437) (22,927)
Profit after taxation 102,680 109,611 -6
Income from associate companies 1,830 2,871
Net profit 104,510 112,482
Minority interest (4,349) (5,428)
Attributable earnings 100,161 107,054 -6
Headline earnings adjustment 8,077 556
Headline earnings 108,238 107,610 1
Headline earnings per share 52.2 49.9 5
(cents)
Earnings per share (cents) 48.3 49.6 -3
Dividend per ordinary share - 11.0
(cents)
Number of shares in issue (`000) 201,357 215,825
Weighted average number of shares 207,215 215,825
in issue (`000)
Notes
Basis of accounting
The results have been prepared in
accordance with the statements of
Generally Accepted Accounting
Practice in South Africa
The accounting policies as set
out in the financial statements
for the year ended 31 March 2001
have been consistently applied in
producing the results.
PEREGRINE HOLDINGS LIMITED
Group
balance sheet
31 March 31 March
2002 2001
R`000 R`000
Assets
Non - current assets 357,109 326,913
Property, plant and equipment 10,169 11,573
Intangible assets 88,958 15,175
Investment in associate companies 48,222 59,791
Investments 197,065 226,594
Employee share incentive scheme 12,695 13,780
Current assets 347,485 180,677
Trading assets 18,358 25,228
Accounts receivable 58,670 41,485
Amounts receivable in respect of 195,150 35,053
stockbroking activities
Cash and cash equivalents 75,307 78,911
Total assets 704,594 507,590
Equity and liabilities
Capital and reserves 371,543 395,953
Share capital 216 222
Share premium 9,995 24,189
Accumulated profits 329,896 251,102
Treasury shares (34,607) -
Non-distributable reserves 42,340 2,430
Amounts due to vendors 23,703 112,700
Deferred income reserve - 5,310
Minority interest 11,585 11,716
Non - current liabilities 4,605 7,741
Interest- bearing borrowings - 5,299
Deferred taxation 4,605 2,442
Current liabilities 316,861 92,180
Accounts payable 119,675 49,220
Amounts payable in respect of 185,316 32,117
stockbroking activities
Taxation 11,870 10,843
Total equity and liabilities 704,594 507,590
*Where necessary,comparative
figures have been adjusted to
conform with changes in
presentation in the current year.
PEREGRINE HOLDINGS
LIMITED
Statement of
changes in equity
Year ended Year
ended
31 March 31 March
2002 2001
Equity at beginning 395,953 313,693
of the year
Changes in share (48,807) -
capital and share
premium
Redemption of (14,200) -
preference
shares
Acquisition of (34,607) -
treasury shares
Changes in 78,794 103,878
accumulated profits
Attributable 100,161 107,054
earnings
Dividends (21,367) (3,176)
Changes in reserves 34,600 (2,880)
Increase in non 39,910 2,430
distributable
reserves
Decrease in (5,310) (5,310)
deferred income
reserve
Changes in amounts (88,997) (18,738)
due to vendors
Decrease in (88,997) (18,738)
amounts due to
vendors
Equity at end of the 371,543 395,953
year
PEREGRINE HOLDINGS LIMITED
Group
cash flow statement
Year ended Year
ended
31 March 31 March
2002 2001
R`000 R`000
Cash flow from operating activities 99,558 74,184
Cash generated from operations 138,118 88,951
Net interest received 4,289 9,041
Dividends paid (21,367) (3,176)
Taxation paid (21,482) (20,632)
Cash flow from investing activities 28,259 (29,901)
Acquisition of property,plant and (4,475) (13,489)
equipment
Development costs incurred (3,569) (6,839)
Acquisition of subsidiaries, investments (64,854) (121,677)
and associate companies
Increase in loans to associate companies (9,862) (13,142)
Proceeds from sale of property, plant 193 2,374
and equipment
Proceeds from sale of investments 76,411 34,486
Proceeds from unwinding of associate 34,415 88,386
Cash flow from financing activities (131,421) (7,703)
Acquisition of treasury shares (72,862) -
Payments to vendors and minorities (31,525) (6,749)
Increase in loan to employee share (21,735) -
incentive scheme
Decrease in interest bearing borrowings (5,299) (954)
Net (decrease)/increase in cash and cash (3,604) 36,580
equivalents
Cash and cash equivalents at beginning 78,911 42,331
of the year
Cash and cash equivalents at end of the 75,307 78,911
year
Segmental analysis
31 March 31 March
2002 2001
Profit % Profit %
from contribu from cont
operations tion operations utio
Asset management and related 64,390 49 61,851 50
services
Investment banking and private 32,626 25 19,941 16
equity
Financial software development 3,449 3 1,776 1
Financial and corporate advisory 30,440 23 40,485 33
130,905 100 124,053 10
Associates 1,830 2,871
132,735 126,924
Peregrine Holdings Limited
(Registration number 1994/006026/06)
("Peregrine")
JSE code: PGR ISIN code: ZAE000015152
AUDITED RESULTS FOR THE TWELVE MONTHS ENDED 31 MARCH 2002
Highlights
Profit from operations +6%
Headline EPS +5%
Group assets under management R12 billion
Introduction
Peregrine has produced reasonable results for the year ended 31 March 2002,
achieving modest growth in headline earnings per share, despite an extremely
difficult period for small financial services companies.
The most positive feature of the 2002 financial year has been the growth in
assets under management within the Peregrine group - from less than R 1
billion under management at the beginning of the financial year, to a
cumulative R 12 billion under management at year end across the group`s
various asset management subsidiaries and associates.
Two factors accounted for the growth in assets under management:
PeregrineQuant, the groups` quantitative asset management business,
attracted almost R3 billion of new mandates during the year.
The Peregrine group`s stake in Citadel Holdings Limited (Citadel) was raised
to that of associate level during the period. This, together with the
acquisition of options in Citadel during the period, now places Peregrine in
a position to secure a controlling interest in Citadel. Shareholders are
referred to the accompanying cautionary announcement in this regard. Citadel
currently manages just under R9 billion of high-net-worth private client
money.
Other corporate activity during the period included the acquisition of
Mercury Consolidated Holdings Limited (Mercury) and the completion of the
unwinding of McCarthy Bank Limited. In addition, the group repurchased a
total of 14% of the company`s share capital, comprising a specific
repurchase of 21,6 million shares and a further general repurchase of 9,1
million shares for a total consideration of R72,9 million.
Results
Despite a difficult second half of the financial year, profit from
operations increased by 6% for the full year to R130,9 million from R124,1.
Attributable earnings of R 100,2 million were down 6% on the previous year
as a result of an increased level of goodwill amortisation, lower net
interest received, a higher tax bill and a lower contribution from
associates. A small first time contribution from Citadel was partially
offset by disappointing results from two of Peregrine`s other associates,
Prosperity and Agio.
After stripping out the effect of goodwill, however, headline earnings
increased by 1% to R108,2 million from R107,6 million. A lower number of
shares in issue resulted in an increase in headline earnings per share of 5%
to 52,2 cents per share.
Operations
Asset Management and related services
The asset management capability of this division comprises Peregrine
Capital, the group`s hedge fund management company which manages
approximately R 400 million and PeregrineQuant which currently manages R3,2
billion. Citadel, with its R 9,0 billion of private-client assets, was
accounted for as an associate during the 2002 financial year (Peregrine`s
stake in Citadel at year-end was 16,25%). It is envisaged that Citadel will
become a subsidiary and hence a core component of the group`s asset
management division during the course of the current year. The `related
services` in the division are housed in Peregrine Securities (following the
acquisition of Mercury), which includes the group`s stockbroking activities,
derivative and commodity broking and equity derivative structuring
capabilities.
This division`s contribution of 49% to the group`s profit from operations
matched that of the previous year, with profit from operations of R64,4
million 4% higher than R 61,8 million reported in the previous year.
Operating in an environment where most South African equity hedge funds
experienced significant drawdowns over the period, Peregrine Capital managed
to produce marginally positive returns in all but one of its funds during
the latter half of the financial year. This difficult period, however,
resulted in Peregrine Capital`s contribution to the division being
substantially below that of the first half of the year. An additional R 100
million has been committed under mandate during the course of the current
year.
PeregrineQuant had an excellent year. Funds under management grew from R200
million at the beginning of the year to R3,2 billion, with almost all the
asset growth coming in the last six months. The business is now the low-risk
manager of choice for several of the larger multimanagers, wealth managers
and life insurers.
The vindication of the PeregrineQuant business model over the past period
has resulted in the decision to step-up the level of investment in this
business in order to entrench PeregrineQuant as a dominant player within the
quantitative asset management industry. This will have the effect of
delaying a contribution to profitability by another year. Growth in assets
for the current year is, however, expected to be significant.
The acquisition of Mercury during the year and the subsequent merger of its
business with Peregrine Securities bolstered the group`s capabilities within
the areas of broking and structuring . The stockbroking, derivative broking,
commodity broking and structuring businesses within Securities all had a
good year and are expected to continue augmenting the diversity of the
income streams within the division.
Advisory
The only division which decreased its profit from operations compared to the
previous year, was the corporate and financial advisory division. A 25%
decline in the division`s profit from operations to R 30,4 million, resulted
in the division`s contribution to the group declining to 23% from 33% the
previous year. This decline was largely as a result of a lower level of deal
flow due to negative sentiment towards smaller financial services companies
as well as visibly reduced corporate activity in the prevailing uncertain
environment. Cost increases in setting up new businesses such as
securitisation and property structuring also dampened profits, as did
indifferent financial performances from asset finance and treasury services.
The latter two businesses will be sold to management during the current
year. This will not have a material impact on the division`s profitability.
TW Ferguson once again made a positive contribution for the year under
review.
Investment Banking
Investment banking proved to be resilient to subdued market conditions,
producing a 63% increase in profit to R32,6 million in 2002 from R 19,9
million the previous year. The successful securitisation by SA Home Loans in
November 2001 gave Peregrine an opportunity to sell a portion of its stake
in the business at attractive levels. Peregrine was a co-founder of SA Home
Loans. The unwinding of interests in McCarthy Bank also led to several
profitable disposals of private equity interests. A write-off of R3 million
was taken on Africam during the year.
Financial Software Design
Peregrine Systems (PereSys) had an good second half of the year which helped
boost full year profit from operations by 94% to R3,4 million from R1,8
million the previous year. The JSE Securities Exchange South Africa`s tie
up with the London Stock Exchange has been highly beneficial for Peresys`
front-end trading system, Hermes, which now dominates the stockbroking
community by number of terminals. Growth in this and associated areas is
expected to be meaningful in ensuing years.
Dividend
As a result of:
- the fact that Peregrine disbursed an amount of R91 million in capital
in increasing its stake in Citadel to the present level (refer the
accompanying announcement);
- the likelihood of securing a controlling interest in Citadel and the
cash which will be required to be expended by Peregrine in the near future
in order to achieve this;
- the resultant requirement, in terms of the Securities Regulation Code
and the Rules of the Securities Regulation Panel, to extend a cash offer to
the shareholders of Citadel in the event of Peregrine acquiring control of
Citadel, which offer may require a substantial amount of cash;
the fact that Peregrine has, during the past year, effectively returned
capital of R 72,9 million to shareholders by undertaking substantial share
buybacks,
the board has decided not to declare a dividend for the year ended 31 March
2002.
Prospects
Peregrine remains committed to continuing to build a significant and well
respected entity within the financial services sector, with a specific focus
on asset management and advisory services. The acquisition of a controlling
stake in Citadel is a core and integral part of this initiative.
The environment for small financial services companies remains highly
uncertain. Despite this, the directors are confident that the positioning of
the group and the strength of its individual businesses will lead to
continued growth.
By order of the board
Stephen M Levenberg Sean A Melnick
Chairman Chief Executive Officer
4 June 2002
