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PGR
PGR
Peregrine - Unaudited interim results for the six months ended 30 September 2006
Peregrine Holdings Limited
Registration number 1994/006026/06
Share code: PGR
ISIN code: ZAE000078127
("Peregrine" or "the company")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006
HIGHLIGHTS
Group assets under management now exceed R 28 billion
Profit from ordinary activities up 68% to R196,6 million
Attributable earnings up 39% to R139,4 million
Earnings per share up 40% to 72,6 cents
Headline earnings up 54% to R113,1 million
Headline earnings per share up 55% to 58,9 cents
INCOME STATEMENT
For the For the
six months six months
% change ended ended For the
2005 to 30 September 30 September year ended
2006 2006 2005 31 March 2006
R"000 R"000 R"000
Operating
revenue 41 314,186 223,498 538,017
Investment
income 31 49,968 38,219 90,463
Investment
contract
benefits 80,722 129,456 360,020
Investment
contract
expenses (80,722) (129,456) (360,020)
Operating
expenses 37 (231,599) (169,146)
(379,838)
Profit from
operations 43 132,555 92,571 248,642
Net interest
Received 61,932 25,440 68,395
Interest
received 138,419 45,392 117,088
Interest paid (76,487) (19,952) (48,693)
Income/loss)
from associate
companies 2,143 (1,029) 2,947
Profit from
ordinary
activities 68 196,630 116,982 319,984
Capital
surplus 5,455 26,939 36,016
Profit before
taxation 40 202,085 143,921 356,000
Taxation (55,587) (34,228) (80,432)
Profit for the
period 34 146,498 109,693 275,568
Attributable
to :
Equity holders
of the company 39 139,415 100,434 251,811
Minority
interest 7,083 9,259 23,757
146,498 109,693 275,568
Determination
of headline
earnings
Profit
attributable to
equity holders
of the company 139,415 100,434 251,811
Adjustments:
Capital surplus
on repayment
of loan
previously
impaired (5,455) - -
Capital surplus
on sale of
available-for-sale
financial investment (20,862) - -
Capital
surplus on
sale of
subsidiaries - (26,939) (36,016)
Headline
earnings 54 113,098 73,495 215,795
Headline
earnings per
ordinary share
(cents) 55 58.9 37.9 111.7
Basic earnings
per ordinary
share (cents) 40 72.6 51.9 130.4
Diluted
headline
earnings per
share (cents) 53 54.7 35.7 104.3
Diluted basic
earnings per
share (cents) 38 67.5 48.8 121.8
Dividend paid
per ordinary
share (cents) 30.0 12.0 12.0
Dividend per
ordinary share
declared
subsequent to
31 March 2006
(cents) - - 30.0
Number of
shares in
issue ("000) 228,129 229,970 229,971
Number of
treasury
shares ("000) 36,552 37,609 37,300
Weighted
average number
of shares in
issue ("000) 191,956 193,684 193,128
Diluted
weighted
average number
of shares in
issue ("000) 206,596 205,648 206,801
BALANCE SHEET
As at 30 As at 30 As at ended 31
September 2006 September 2005 March 2006
R"000 R"000 R"000
Assets
Non - current assets 2,457,477 2,124,644 2,493,659
Property, plant and
equipment 84,777 85,029 85,301
Intangible assets 256,529 238,253 245,591
Investment in
associate companies 4,919 3,249 1,449
Investments linked to
policyholder
investment contracts 1,999,722 1,727,789 2,055,472
Financial investments 84,698 41,764 77,567
Loans and receivables 17,760 19,520 17,608
Deferred taxation 9,072 9,040 10,671
Current assets 6,149,500 2,726,287 3,909,728
Financial investments 392,933 252,987 332,614
Trade and other
receivables 81,254 76,259 118,463
Amounts receivable in
respect of
stockbroking
activities 5,111,872 1,955,022 3,037,915
Taxation 3,494 - 988
Cash and cash
equivalents 559,947 442,019 419,748
Total assets 8,606,977 4,850,931 6,403,387
Equity and liabilities
Capital and reserves 858,905 590,515 759,592
Share capital,retained
earnings and reserves 932,559 670,273 834,206
Treasury shares (84,297) (87,071) (86,220)
Minority interest 10,643 7,313 11,606
Non - current
liabilities 2,144,552 1,843,018 2,181,803
Interest bearing
borrowings 93,597 98,198 78,836
Policyholder investment
contract liabilities 1,999,722 1,727,789 2,055,472
Loans and payables 27,975 2,942 22,705
Deferred taxation 23,258 14,089 24,790
Current liabilities 5,603,520 2,417,398 3,461,992
Trade and other
payables 163,354 107,909 174,851
Amounts payable in
respect of
stockbroking
activities 5,362,133 2,259,388 3,248,724
Current portion of
interest bearing
borrowings 24,228 1,779 2,708
Taxation 53,805 48,322 35,709
Total equity and
liabilities 8,606,977 4,850,931 6,403,387
Net asset value per
share (cents) 442.8 303.2 388.2
STATEMENT OF CHANGES IN EQUITY
Share
capital and Accumulated Non
share Treasury distributable
premium shares profits reserves
2007 R"000 R"000 R"000 R"000
Balance as at 31
March 2006 52,608 (86,220) 684,321 62,130
Write-down in
value of
treasury shares
on vesting - 2,122 (255) -
Currency
translation
differences - - - 33,965
Net movement in
revaluation
reserve - - - (2,943)
Revaluation of
Available-for-
sale assets - - - 11,698
Transfer to
income statement
on sale of
available-for-
sale assets - - - (14,921)
Deferred tax on
revaluation of
available-for-
sale assets - - - (1,697)
Reversal of
deferred tax on
sale of
available-for
sale assets - - - 1,977
Net gains and
losses not
recognised in
the income
statement 52,608 (84,098) 684,066 93,152
Profit for the
period - - 139,415 -
Dividends paid - - (57,473) -
Share repurchases (14,356) - - -
Treasury shares
acquired - (199) - -
Balance as at 30
September 2006 38,252 (84,297) 766,008 93,152
2006
Balance as at 31
March 2005 52,667 (83,693) 461,378 38,907
Write-down in
value of
treasury shares
on vesting - 14,378 (5,437) -
Currency
translation
differences - - - (2,510)
Revaluation of
Available-for-
sale assets - - - 29,648
Deferred tax on
revaluation of
available-for-
sale assets - - - (3,915)
Net gains and
losses not
recognised in
the income
statement 52,667 (69,315) 455,941 62,130
Profit for the
period - - 251,811 -
Dividends paid - - (23,431) -
Share repurchases (59) - - -
Treasury shares
acquired - (16,905) - -
Balance as at 30
September 2005 52,608 (86,220) 684,321 62,130
Obligation to Total capital Minority
issue shares and reserves interest Total equity
2007 R"000 R"000 R"000 R"000
Balance as at
31 March 2006 35,147 747,986 11,606 759,592
Write-down in
value of
treasury
shares on
vesting - 1,867 - 1,867
Currency
translation
differences 33,965 - 33,965
Net movement in
revaluation
reserve - (2,943) - (2,943)
Revaluation
of available-
for-sale
assets - 11,698 - 11,698
Transfer to
income
statement on
sale of
available-for-
sale assets - (14,921) - (14,921)
Deferred tax on
revaluation
of available-
for-sale
assets - (1,697) - (1,697)
Reversal of
deferred tax
on sale of
available-for-
sale assets - 1,977 - 1,977
Net gains and
losses not
recognised in
the income
statement 35,147 780,875 11,606 792,481
Profit for
the period - 139,415 7,083 146,498
Dividends paid - (57,473) (8,046) (65,519)
Share
repurchases - (14,356) - (14,356)
Treasury
shares
acquired - (199) - (199)
Balance as at
30 September
2006 35,147 848,262 10,643 858,905
2006
Balance as at
31 March 2005 35,147 504,406 6,573 510,979
Write-down in
value of
treasury
shares on
vesting - 8,941 - 8,941
Currency
translation
differences - (2,510) - (2,510)
Revaluation
of available-
for-sale
assets - 29,648 - 29,648
Deferred tax
on
revaluation
of available-
for-sale
assets - (3,915) - (3,915)
Net gains and
losses not
recognised in
the income
statement 35,147 536,570 6,573 543,143
Profit for
the period - 251,811 23,757 275,568
Dividends paid - (23,431) (18,724) (42,155)
Share
repurchases - (59) - (59)
Treasury
shares
acquired - (16,905) - (16,905)
Balance as at
30 September
2006 35,147 747,986 11,606 759,592
CASH FLOW STATEMENT
For the six months For the six months
ended 30 September ended 30 September For the year ended
2006 2005 31 March 2006
R"000 R"000 R"000
Cash flow
from
operating
activities 113,735 252,505 270,090
Cash
generated
from
operating
activities 115,376 101,342 221,988
Working
capital
changes 33,808 165,194 73,078
Net
interest
received 61,874 24,248 66,726
Dividends
paid (57,473) (23,431) (23,431)
Taxation
paid (39,850) (14,848) (68,271)
Cash flow from
investing
activities 11,410 (8,248) (14,204)
Cash flow
from
financing
activities 15,054 14,822 2,162
Share
repurchases and
treasury
shares
acquired (14,555) (16,964) (16,964)
Proceeds
on vesting
of shares held by
staff share trust 1,867 8,138 8,941
Share
incentive
scheme
payments
received - 16,905 16,905
Payments to
minorities (8,046) (8,519) (18,724)
Increase
in loans
payable 3,256 12,986
Decrease
in loans
receivable 8,265 - -
Increase/(decrease)
in interest bearing
borrowings 24,267 15,262 (982)
Net
increase
in cash
and cash
equivalents 140,199 259,079 258,048
Cash and
cash
equivalents at
beginning
of the period 419,748 182,940 161,700
Cash and cash
equivalents
at end
of the
period 559,947 442,019 419,748
SEGMENTAL ANALYSIS
For the six months ended 30 September 2006
Interest and Profit from
Revenue associate income ordinary 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
Structuring, broking
and distribution 108,552 61,464 75,179
Group investments (net
of group costs) 49,121 (1,792) 32,568
364,154 64,075 196,630
For the six months ended 30 September 2005
Interest and Profit from
associate ordinary
Revenue income activities
R"000 R"000 R"000
Wealth and asset management 172,811 2,370 67,036
Wealth management 96,542 1,976 26,512
Asset management 76,269 394 40,524
Structuring, broking and
distribution 47,362 28,193 30,855
Group investments (net
of group costs) 41,544 (6,152) 19,091
261,717 24,411 116,982
For the year ended 31 March 2006
Interest and Profit from
associate ordinary
Revenue income activities
R"000 R"000 R"000
Wealth and asset management 412,828 6,040 182,813
Wealth management 221,461 5,200 73,441
Asset management 191,367 840 109,372
Structuring, broking and
distribution 121,671 74,963 82,326
Group investments (net
of group costs) 93,981 (9,661) 54,845
628,480 71,342 319,984
Introduction
The Peregrine group has produced an excellent set of results for the six months
under review increasing headline earnings per share by 55% to 58,9 cents per
share. Growth in earnings of 144% in Peregrine Securities, the group"s equity,
derivative and prime broking arm and of 137% in Citadel, the group"s wealth
management entity were the drivers behind the group"s strong performance.
Results
Revenue of R364,2 million was 39% higher than the previous comparable period,
boosted by an overall increase in the group"s assets under management,
increased activity within Peregrine Securities and substantially increased
performance fees earned in the Citadel business. The profitable realisation of
half the group"s investment in JSE Limited shares also contributed to increased
revenue, with this profit being excluded from headline earnings.
Whilst the income statement reflects a 37% increase in operating expenses, this
is primarily as a result of profit participations paid. Costs at the group
level have been well contained and actually decreased relative to the
comparable period.
Ongoing growth in the group"s hedge fund related prime broking operations
within Peregrine Securities and continued strong cash generation within the
group resulted in net interest of R61,9 million being earned for the period
compared to R25,4 million in the previous period.
With the inclusion of a capital profit of R5,5 million, profit before tax
climbed 40% to R202,1 million for the period.
Attributable earnings increased by 39% to R139,4 million and with a slightly
lower number of shares in issue due to share repurchases over the period,
earnings per share increased by 40% to 72,6 cents per share. Headline earnings
increased by 54% to R113,1 million, with headline earnings per share up 55% to
58,9 cents.
Operating highlights
Private-client wealth manager, Citadel, produced a 137% increase in profit from
ordinary activities to R62,9 million. Strong investment performance, aided by a
weaker local currency, saw Citadel"s asset base rise to over R11,5 billion with
the business accruing an increasing stream of performance fees over the period.
New inflows into this business grew by 20% over the comparable period with
monthly inflows averaging R120 million per month.
The contribution from the asset management division fell by 36% to R26,0
million as a result of a reduction in performance fees earned within the
group"s hedge fund businesses. Despite the decline in earnings and a difficult
and mooted period for the hedge fund industry as a whole, the group"s returns
were positive for the period under review, with an acceptably low level of
volatility.
Peregrine is currently the country"s largest single strategy hedge fund
manager, managing in excess of R3 billion in single strategy hedge funds. The
group"s hedge- fund flagship, Peregrine Capital, currently manages R2,4
billion, with the group"s newer range of hedge funds within Peregrine
Investment Managers (PIM) managing an additional R700 million.
Caveo, the group"s fund of hedge fund joint venture with Investment Solutions,
incurred a small start-up loss for the period. In its first six months of
operation assets under management have grown to almost R1 billion, boding well
for flows and profitability going forward.
PeregrineQuant (PQ), the group"s institutional asset manager with a
quantitative focus, grew its assets under management by 37% to R13,2 billion
over the six month period to 31 September 2006, resulting in an increased
annuity profit from ordinary activities of R4,8 million, an increase of 208%
over the comparable period.
The structuring, broking and distribution activities housed within Peregrine
Securities produced a 144% increase in profitability to R75,2 million. The
focus on building the group"s hedge-fund related prime broking capacity within
Peregrine Equities, increased transactional activity in the derivative business
and volatile market conditions were the reasons behind the increase in
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 71% to R32,6
million augmented by the sale of approximately half of the group"s interest in
the JSE Limited. Returns across the group"s hedge fund investments were below
those of the comparable period. During the period no withdrawals of group
capital were made from the group"s hedge fund investments. New investments were
made in seeding hedge funds and capital was invested into several private
equity and empowerment funding opportunities. Improved efficiencies at the
group level were evidenced by costs at the centre being lower than those of the
previous period.
Prospects
Notwithstanding a reduction in profitability in the group"s flagship hedge fund
business, the Peregrine group managed to produce a substantial increase in
earnings for the period with outstanding growth in contributions from its
broking and wealth management businesses.
The period under review provides some evidence of robustness in the group"s
earnings, provided by its mix of niche businesses. 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 will continue to provide Peregrine with a platform for meaningful
growth in earnings over time.
Appreciation
The board of directors would like to express their appreciation to Louis Fourie
who steps down as group Chairman today. Louis, a co-founder of Citadel 13
years ago has played a pivotal role in guiding the Peregrine group to its
current position as one of South Africa"s leading wealth and asset management
operations. Sean Melnick will replace Louis as group Executive Chairman, with
Keith Betty taking over as group CEO, whilst retaining his role as CEO of
Citadel.
The board would also like to welcome Mr Ethan Dube and Ms Khosi Sibisi as non
executive directors, whose recent appointments mark the successful conclusion
of Peregrine"s BEE equity deal, which was implemented after the end of the
period under review and details of which were included in the circular to
shareholders dated 28 September 2006.
By order of the board
Louis Fourie Sean Melnick
Chairman Chief Executive Officer
Sandton
31 October 2006
BASIS OF PREPARATION:
These consolidated interim results have been prepared in accordance
with, and comply with IFRS, AC500 statements and the South African Companies Act
of 1973.
These results have not been audited or reviewed by the company"s auditors, PKF
(Jhb) Inc.
www.peregrine.co.za
Date: 31/10/2006 02:00:27 PM Produced by the JSE SENS Department
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