Peregrine Holdings Ltd FY 2013 results

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Peregrine Holdings Ltd FY 2013 results

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Peregrine Holdings Ltd FY 2013 results

  1. 1. Reviewed preliminary consolidated results for the year ended 31 March 2013 Peregrine Holdings Limited Reg No: 1994/006026/06 • JSE Share Code: PGR • ISIN Code: ZAE000078127 Cash generated from operating activities of R312 million Headline earnings per share down 6% to 138,9 cents Final cash dividend unchanged at 72 cents per share Special cash dividend of 28 cents per share • Nala acquired a 20% shareholding in Peregrine SA Holdings. As a consequence of Peregrine Holdings Limited having a 30% shareholding in Nala, the non-controlling interest in Peregrine SA Holdings is an effective 14%; • Peregrine repurchased and cancelled 28 584 059 shares (as more fully referred to below) and accordingly the reduced, after minority, earnings in the South African operating subsidiaries has been compensated for by a substantial reduction in the number of shares in issue. Cash generated from operating activities amounted to R312 million (2012: R188 million), once again outstripping attributable earnings to a significant extent and highlighting the cash generative nature of the group. A good indication of the cash profits of the underlying businesses is that total profit before tax, capital items and non-cash items, adjusted for total minorities, amounted to R325 million. All long-term debt was repaid during the year. Aggregate cash in the group amounted to R585 million at year-end, of which R108 million was available at the centre. The majority of the remaining R477 million is held offshore. The Peregrine group produced a mixed set of results under continued challenging trading conditions for the twelve months ended 31 March 2013. Local operating subsidiaries performed well with Citadel and Peregrine Capital, in particular, producing solid results. Proprietary investments generated strong returns again for the year, notwithstanding the distribution of the CIL shares by way of special dividend and the use of a portion of the investments in the hedge funds to extinguish group debt during the year. Offshore operations continue to struggle which resulted in a significant impairment of the intangible assets in Stenham. While headline earnings remained positive, the Stenham intangible asset impairment of R753 million (after minorities), which is a non cash item, resulted in a basic loss attributable to shareholders. Segmental results Financial results Wealth Management The basic loss attributable to shareholders amounted to R467 million (2012: basic earnings R314 million) with the basic loss per share amounting to 226.4 cents per share (2012: basic earnings per share of 144.2 cents per share). Headline earnings decreased by 11% to R286 million (2012: R321 million) with headline earnings per share decreasing by 6% to 138.9 cents per share (2012: 147.7 cents per share). The results for the year include, for the first time, a 35% non-controlling interest within Peregrine Securities and Nala Empowerment Company’s (Nala) non-controlling interest in Peregrine SA Holdings (being the entity which is the holding company of the South African operating companies).The noncontrolling interest within Peregrine Securities results from the completion of the management buy-in into this business. The Nala non-controlling interest follows from the restructure of the group’s BEE shareholding which became effective at the end of September 2012 and full details of which were incorporated in the circular to shareholders dated 6 August 2012. In terms of the restructure: Substantial non-controlling interests, including Nala’s shareholding in Peregrine SA Holdings, exist in many of the group`s operations. Operating results are therefore presented before tax, reflecting amounts after minorities, before intangible amortisation and impairment and share-based payment costs. This better reflects and aids in the understanding of each division`s specific economic benefit to the shareholders of the group. The inclusion of the Peregrine Securities and Nala non-controlling interests for the first time has the effect of this year’s results not being directly comparable to those of the previous year. The group’s South African Wealth Management division is comprised of private client wealth management company Citadel, whilst the offshore division is comprised of Beauclerc, a UK and Guernsey based multi-family office. Citadel continued to capitalise on its positioning as the leading private client wealth manager in South Africa. Assets under management increased to R23.5 billion (2012: R20.5 billion) with gross inflows for the year amounting to R2.1 billion. The client retention rate remained in excess of 95%. Profits for the year increased by 22% to R133 million (2012: R109 million). On the back of improved investment and positive real returns over the year, many clients are now moving into performance fee territory. The profitability of the wealth management division was negatively impacted by the loss incurred by Beauclerc.
  2. 2. Reviewed preliminary consolidated results for the year ended 31 March 2013 Asset Management The group’s Asset Management division comprises a number of fund management businesses, of which the flagship hedge fund manager Peregrine Capital is the largest. Primarily due to a continued strong performance by Peregrine Capital, profit increased to R76 million (2012: R60 million). Peregrine Capital’s asset base grew to R3.4 billion by year-end (2012: R2.9 billion) largely as a result of its strong returns. All mandates are at their respective high water marks and should continue to earn performance fees on positive returns. Stenham During the year, further share-repurchase transactions took place in the UK and Guernsey based asset management and trust business, Stenham. As a result, Peregrine’s share in Stenham increased from 57.6% to 62.7%. The carrying value of Stenham’s intangible assets, comprising customer relationships, trade name and goodwill were significantly impaired. The remaining carrying value of Stenham’s intangible assets is £31 million at year end. The Asset Management and Property divisions have revised down their long term growth assumptions due to the continued challenges faced by their respective industries which has resulted in a significant reduction in the calculated value of Stenham’s intangibles. As the Trust division continues to perform well, with a 35% increase in earnings for the year, no impairment has been made for this division. Peregrine’s share of Stenham’s earnings (excluding the effects of the intangibles impairment) reduced by 17% to R85 million (2012: R103 million). Stenham Asset Management experienced difficult trading conditions, particularly in the first nine months of the year with net outflows of $668 million, leaving total assets under management at year-end at $2.1 billion (2012: $2.7 billion). The business, which experienced improved investment performance in the final quarter, has however begun to see some meaningful inflows mostly in specialist mandates. Stenham Property delivered a lower trading performance, relative to the previous year, but in line with the average profitability of the three years previous to that. Property assets under management as at the end of the year, the majority of which assets are located in the UK and Germany, amounted to £1.7 billion (2012: £1.7 billion). Notwithstanding the difficult conditions, Stenham remains comfortably profitable and cash-flow generative, with no long-term debt and cash available to augment future growth. Broking and Structuring Peregrine Securities experienced muted trading conditions for much of the financial year tempered with an increase in activity towards year-end. The positioning of the business as one of the few substantial, independent structuring and broking entities in South Africa saw it benefit from positive financial markets. Peregrine Securities generated profits of R58 million (2012: R96 million) for the year. Proprietary Investments Off a lower base primarily as a result of the distribution of 6.984 million CIL shares to shareholders, group investments achieved income of R118 million (2012: R162 million). The value of the CIL shares distributed to shareholders was R84.5 million at the time of distribution and R136.2 million at year end. Restructuring of the group At the special general meeting of shareholders held on 4 September 2012, all necessary resolutions were passed which enabled the group to implement the restructuring, in terms of which Nala effectively switched its 12.5% shareholding in Peregrine Holdings Limited for a 20% shareholding in Peregrine SA Holdings with effect from 12 October 2012. As a result, 28 584 059 shares were cancelled and delisted. Issued share capital As a result of the vesting of the first tranche of shares relating to the share scheme which was implemented during 2010 (comprising an executive incentive scheme and a junior share option scheme with shares vesting in three equal tranches in November 2012, 2013 and 2014), 7 246 182 new Peregrine shares were allotted and issued on 16 January 2013 at a price of R7.64675 per share. Following the issue of such shares and the repurchase and cancellation of the 28 584 059 shares referred to above, the group’s issued shares, net of treasury shares of 10 484 314, amounted to 196 306 573. The second tranche of shares is due to vest on 15 November 2013 and will be issued at a price of R7.36675 per share (after taking into account the special dividend of 28 cents per share referred to below). Prior to year-end, an extension to the executive incentive scheme was implemented, which resulted in senior staff members purchasing approximately 2.7 million shares at R11.30 per share on a deferred basis. These shares will vest on 15 November 2015. Each participant was obliged to pledge a number of Peregrine shares as security for payment of the deferred purchase consideration equal to 50% of the shares purchased. In addition, Jonathan Hertz purchased 1 million shares at R10.00 per share on a deferred basis and was obliged to pledge an equal number of Peregrine shares as security for payment of the deferred purchase consideration. These shares will vest in two equal tranches in November 2013 and 2014.
  3. 3. Reviewed preliminary consolidated results for the year ended 31 March 2013 Ordinary and Special Cash dividend The directors have resolved to declare an ordinary dividend of 72 cents per share for the year. Directorate In line with the policy to return excess capital to shareholders over time, the directors have further resolved to declare a special cash dividend of 28 cents per share. Jan van Niekerk resigned from office with effect from 31 March 2013. The board thanks Jan for his significant contribution to the group over the past 12 years. In compliance with the requirements of STRATE, the following dates are applicable to the ordinary and special dividends: Jonathan Hertz was appointed as the group’s Chief Executive Officer with effect from 1 April 2013. Last date to trade cum dividend Friday, 19 July 2013 Trading ex dividend commences Monday, 22 July 2013 Record date Friday, 26 July 2013 Payment date Monday, 29 July 2013 In terms of the Listings Requirements of the JSE Limited regarding the new Dividends Tax effective 1 April 2012, the following additional information is disclosed: Conclusion In line with the new strategy adopted, Peregrine has built a strong base of profitable, cash generative operating businesses as is evident once again with the release of these results. Special attention is being placed on regenerating growth in the offshore businesses. The group will continue to focus on growing its businesses organically, returning, to shareholders over time, excess capital over and above that which is optimally required to support and grow the underlying businesses , whilst at the same time diversifying and expanding through appropriate transactions. 1. The ordinary cash and special dividends have been declared out of income reserves; 2. The local dividend tax rate is 15%; 3. There are no secondary tax on companies credits available to be utilised for the ordinary and special cash dividends 4. The gross local dividend amount for the ordinary cash dividend is 72 cents per share for shareholders exempt from paying the new Dividends Tax; 5. The net local dividend amount for the ordinary cash dividend is 61.2 cents per share for shareholders liable to pay the new Dividends Tax; 6. The gross local dividend amount for the special cash dividend is 28 cents per share for shareholders exempt from paying the new Dividends Tax; 7. The net local dividend amount for the special cash dividend is 23.8 cents per share for shareholders liable to pay the new Dividends Tax; 8. The issued share capital of Peregrine is 196 306 573 shares of 0.1 cent each; 9. Peregrine’s tax reference number is 9181924847. Shares may not be materialised or rematerialised between Monday, 22 July 2013 and Friday, 26 July 2013, both dates inclusive. Date: Sandton 5 June 2013 Signed: Jonathan Hertz Group CEO Leonard Harris Non-executive Chairman Sean Melnick Deputy Chairman Further detail and a print-friendly version of these results are available from the company’s website at www.peregrine.co.za Directors: LN Harris* (Chairman); SA Melnick (Deputy Chairman); J Hertz (CEO); RE Katz (CFO); BC Beaver*; P Goetsch^; VN Magwentshu*; LM Ndlovu*; SI Stein*; M Yachad ^ Non-executive *Independent non-executive Company Secretary and Registered office: Peregrine Management Services Proprietary Limited, 6A Sandown Valley Crescent, Sandown, Sandton, 2196 (PO Box 650361, Benmore, 2010), Telephone: +27 11 722 7400 Fax: +27 11 722 7410 Transfer Secretaries: Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg, 2001, (PO Box 61051, Marshalltown, 2107) Sponsor: Java Capital (Proprietary) Limited Peregrine Holdings Limited Reg No: 1994/006026/06 • Share Code: PGR • ISIN Code: ZAE000078127 • “Peregrine” or “the group”
  4. 4. Reviewed preliminary consolidated results for the year ended 31 March 2013 Condensed preliminary consolidated income statement % change 2012 to 2013 Operating revenue Investment income Total revenue Fair value gain on linked financial investments Fair value loss on policyholder contract liabilities Operating expenses Profit from operations Net interest received Interest received Interest paid Income from associate companies Profit before intangibles impairment Intangibles impairment (Loss)/profit before taxation and capital items Loss on disposal of interest in associates (Loss)/profit before taxation Taxation 10 -80 -2 6 -19 >100 43 -10 -164 Reviewed 2013 R’000 Audited 2012 R’000 1 690 333 46 972 1 737 305 580 690 (580 690) (1 317 847) 419 458 47 050 47 543 (493) 57 395 523 903 (892 820) (368 917) (368 917) (92 595) 1 533 597 233 492 1 767 089 244 985 (244 985) (1 246 334) 520 755 21 719 50 899 (29 180) 40 081 582 555 (2 946) 579 609 (6 936) 572 673 (106 379) (Loss)/profit for the year -199 (461 512) 466 294 Attributable to : Equity holders of the company Non-controlling interests -249 (466 669) 5 157 313 860 152 434 -199 (461 512) 466 294 -257 -256 (226,4) (222,7) 206 791 10 484 206 099 209 588 144,2 142,9 228 129 10 553 217 655 219 659 Basic (loss)/earnings per ordinary share (cents) Diluted basic (loss)/earnings per share (cents) Number of ordinary shares in issue (’000) Treasury shares held (’000) Weighted average number of ordinary shares in issue (’000) Diluted weighted average number of shares in issue (’000)
  5. 5. Reviewed preliminary consolidated results for the year ended 31 March 2013 Determination of headline earnings Condensed preliminary consolidated statement of comprehensive income % change 2012 to 2013 313 860 892 820 (139 780) - 2 946 6 936 (2 292) -11 286 371 40 972 (17 825) 321 450 35 535 (16 805) Headline earnings excluding amortisation and impairment of intangibles -9 309 518 340 180 -6 -7 138,9 136,6 147,7 146,3 -4 150,2 156,3 -2 150,2 152,8 106 72,0 35,0 - 72,0 72,0 28,0 - Headline earnings per ordinary share (cents) Diluted headline earnings per share (cents) Headline earnings per ordinary share excluding intangible amortisation and impairment (cents) Basic earnings per ordinary share excluding intangible amortisation and impairment (cents) Cash dividend paid per ordinary share in respect of the previous year (cents) Cash dividend per ordinary share declared subsequent to 31 March (cents) Special cash dividend per ordinary share declared subsequent to 31 March (cents) Audited 2012 R’000 (Loss)/profit for the year Other comprehensive income for the year net of tax: Currency translation differences (461 512) 466 294 286 102 195 702 Total comprehensive (loss)/income for the year (175 410) 661 996 Attributable to: Equity holders of the company Non-controlling interests (232 880) 57 470 441 158 220 838 661 996 Audited 2012 R’000 (466 669) Headline earnings Amortisation of intangible assets Non-controlling interest effect on amortisation of intangible assets -249 Reviewed 2013 R’000 (175 410) (Loss)/profit attributable to equity holders Adjustments: 1 Impairment to intangible assets Non-controlling interest effect on impairment to intangible assets Loss on disposal of interest in associates 2 Bargain purchase on acquisition of controlling interest in subsidiary 2 Reviewed 2013 R’000 3 1 None of the adjustments had an effect on tax 2 No effect on non-controlling interest 3 Special dividend distribution of 3.5 CIL shares for every 100 Peregrine shares held was declared subsequent to 31 March 2012
  6. 6. Reviewed preliminary consolidated results for the year ended 31 March 2013 Condensed preliminary consolidated statement of financial position Reviewed 2013 R’000 Audited 2012 R’000 Assets Non-current assets 5 790 092 6 493 000 Property, plant and equipment Intangible assets Investment in associate companies Investments linked to policyholder investment contracts Financial investments Loans and receivables Deferred taxation 35 750 545 796 101 945 4 728 289 306 889 1 987 69 436 19 077 1 293 027 55 440 4 432 561 527 111 100 550 65 234 12 867 002 7 862 242 2 588 026 310 897 697 215 8 291 269 4 111 975 484 1 093 587 29 911 529 361 5 391 069 19 269 799 045 18 657 094 14 355 242 Equity 2 229 742 2 778 728 Equity attributable to holders of the company Non-controlling interests 1 706 938 522 804 2 184 309 594 419 Non-current liabilities 4 752 244 4 680 592 Interest-bearing borrowings Policyholder investment contract liabilities Loans and other payables Financial instrument liability Deferred taxation 4 728 289 19 014 4 941 157 548 4 432 561 60 543 3 653 26 287 11 675 108 6 895 922 1 593 899 919 662 946 330 7 861 260 37 604 316 353 21 688 21 670 583 415 798 031 5 430 803 40 315 - 18 657 094 14 355 242 628,3 869,5 598,7 1 003,9 Current assets Financial investments Loans and receivables Trade and other receivables Amounts receivable in respect of stockbroking activities Taxation Cash and cash equivalents Total assets Equity and liabilities Current liabilities Interest-bearing borrowings Loans and other payables Financial instrument liabilities Trade and other payables Amounts payable in respect of stockbroking activities Taxation Bank overdraft Total equity and liabilities Net tangible asset value per ordinary share Net asset value per ordinary share Condensed preliminary consolidated statement of cash flow Reviewed 2013 R’000 Audited 2012 R’000 Cash flow from operating activities Cash flow from stockbroking activities Cash flow from investing activities Cash flow from financing activities 311 609 (469 743) (378 460) 336 877 188 480 (216 190) (84 605) (486 446) Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of the year Effects of exchange rate changes on cash and cash equivalents (199 717) 799 045 59 803 (598 761) 1 325 300 72 506 659 131 799 045 Cash and cash equivalents at end of the year
  7. 7. Reviewed preliminary consolidated results for the year ended 31 March 2013 Segmental analysis % change in pro forma profit from ordinary activities before intangible impairment and amortisation and share-based payment cost adjusted for minorities 2012 to 2013 Revenue and investment income R’000 Interest and associate income R’000 678 127 493 446 1 933 182 748 385 303 538 580 1 602 010 121 048 2 377 118 671 - 36 562 23 777 3 12 782 21 142 30 817 88 521 15 924 17 791 13 790 (15 657) 243 896 136 039 (15 455) 123 312 95 037 (188 565) 150 368 (519 285) (633 022) 129 939 (16 202) 182 146 133 126 (26 733) 75 753 57 884 84 872 324 902 68 246 (33 174) 117 622 (16 202) 16 22 -155 27 -40 -17 -9 -23 5 -28 -62 1 723 058 104 445 (368 917) 393 148 -12 552 444 401 513 235 150 696 332 424 664 391 1 549 259 205 318 6 448 198 870 - 27 833 20 960 4 6 869 21 872 18 481 68 186 (6 386) 22 777 12 144 (41 307) 177 582 98 536 (17 287) 96 333 95 746 186 923 460 251 119 358 (44 048) 206 030 (42 624) 157 701 108 676 (10 495) 59 520 96 177 102 645 356 523 88 380 (31 455) 162 459 (42 624) 1 754 577 61 800 579 609 444 903 Reviewed – 2013 Wealth and Asset Management Wealth Management – local Wealth Management – offshore Asset Management Broking and Structuring Stenham 2 Total from operating reportable segments Group Operations Investment returns Cost of funding Audited – 2012 Wealth and Asset Management Wealth Management – local Wealth Management – offshore Asset Management Broking and Structuring Stenham Total from operating reportable segments Group Operations Investment returns Cost of funding Note : Group funding costs are disclosed as part of "group" and have not been allocated to the appropriate underlying entities 1 (Loss)/profit from ordinary activities is synonymous with (loss)/profit before taxation and capital items 2 There were significant changes to the assets of Stenham following on the impairment of intangibles at year end. As at 31 March 2013 Stenham's total assets amounted to R1.1 billion (2012: R1.7 billion) and total liabilities amounted to R193 million (2012: R205 million) (Loss)/profit from ordinary activities 1 R’000 Pro forma profit from ordinary activities before intangible impairment and amortisation and share-based payment cost adjusted for minorities R’000
  8. 8. Reviewed preliminary consolidated results for the year ended 31 March 2013 Reconciliation of segmental analysis to income statement Wealth and Asset Management R’000 Broking and Structuring R’000 Stenham Group R’000 Total from operating reportable segments R’000 R’000 Non-reportable segment 1 R’000 For year ended 31 March 2013 Revenue and investment income per segmental analysis Reconciling items: Operating revenue – internal Investment income – internal Investment income of non-reportable segment – external 678 127 (20 827) (20 827) - Revenue and investment income per income statement 385 303 124 984 130 851 (5 867) - 538 580 - 1 602 010 104 157 110 024 (5 867) - 121 048 (78 088) (78 088) - (11 822) 83 955 (95 777) 1 723 058 14 247 110 024 (95 777) 657 300 510 287 538 580 1 706 167 42 960 (11 822) 1 737 305 Profit/(loss) from ordinary activities per segmental analysis Reconciling revenue and investment income items Operating expenses of non-reportable segment – external 243 896 (20 827) - 95 037 124 984 - (188 565) - 150 368 104 157 - (519 285) (78 088) - (11 822) (14 247) (368 917) 14 247 (14 247) Profit/(loss) from ordinary activities per income statement 223 069 220 021 (188 565) 254 525 (597 373) (26 069) (368 917) For year ended 31 March 2012 Revenue and investment income per segmental analysis Reconciling items: Operating revenue – internal Investment income – internal Investment income of non-reportable segment - external 552 444 (17 005) (17 005) - 332 424 (5 265) (3 737) (1 528) - 664 391 - 1 549 259 (22 270) (20 742) (1 528) - 205 318 (52 065) (52 065) 86 847 53 593 33 254 1 754 577 12 512 (20 742) 33 254 Revenue and investment income per income statement 535 439 327 159 664 391 1 526 989 153 253 86 847 1 767 089 Profit from ordinary activities per segmental analysis Reconciling revenue and investment income items Operating expenses of non-reportable segment – external 177 582 (17 005) - 95 746 (5 265) - 186 923 - 460 251 (22 270) - 119 358 (52 065) - 86 847 (12 512) 579 609 12 512 (12 512) Profit from ordinary activities per income statement 160 577 90 481 186 923 437 981 67 293 74 335 579 609 1 Refers to the group's consolidated proprietary hedge fund investments Total R’000
  9. 9. Reviewed preliminary consolidated results for the year ended 31 March 2013 Condensed preliminary consolidated statement of changes in equity Total capital and reserves R’000 Reviewed – 2013 Balance at 31 March 2012 Total comprehensive (loss)/income for the year Dividends paid Share-based payments Subscription of shares in new subsidiaries Contingent consideration received as a result of the disposal of interest in subsidiary1 Purchase of shares in subsidiary from the non-controlling shareholder2 Repurchase of treasury shares Disposal of treasury shares Repurchase and cancellation of shares of holding company3 Issue of additional shares of holding company4 Disposal of 20% of Peregrine SA Holdings to Nala3 Repurchase and cancellation of shares of a subsidiary5 Non-controlling interest share of capital contribution made to subsidiary Balance at 31 March 2013 Non-controlling interests R’000 Total equity R’000 2 184 309 (232 880) (216 177) 19 011 - 594 419 57 470 (232 116) 595 2 778 728 (175 410) (448 293) 19 011 595 (51 166) 60 655 9 559 (242) 949 (294 701) 55 409 236 600 - (20 346) 143 400 (85 006) (10 787) (242) 949 (294 701) 55 409 380 000 (85 006) (3 733) 3 733 1 706 938 522 804 2 229 742 513 699 220 838 (50 644) 51 2 245 722 661 996 (126 861) 22 069 51 Audited – 2012 Balance at 31 March 2011 1 732 023 Total comprehensive income for the year 441 158 Dividends paid (76 217) Share-based payments 22 069 Non-controlling interest arising on formation of subsidiary company Contingent consideration received as a result of 1 the disposal of interest in subsidiary 71 096 Non-controlling interest disposal as a result of the share buy back by a subsidiary of its treasury shares (4 043) Repurchase of treasury shares (1 777) Balance at 31 March 2012 9 489 2 184 309 - - 71 096 (89 525) - (93 568) (1 777) 594 419 2 778 728 Note: Footnotes 1 to 5 are referenced under Explanatory notes to the statement of changes in equity
  10. 10. Reviewed preliminary consolidated results for the year ended 31 March 2013 Notes & Compliance Basis of preparation The condensed preliminary group financial statements are prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards and presented in accordance with the minimum content, including disclosures, prescribed by IAS 34 Interim Financial Reporting applied to year end reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, the JSE Limited's Listings Requirements and the requirements of the Companies Act of South Africa. The accounting policies and methods of computation are consistent with those applied in the annual financial statements for March 2012. The preparation of the results have been under the supervision of R E Katz CA (SA), the Group Chief Financial Officer. Review report The condensed preliminary group financial statements of Peregrine for the year ended 31 March 2013 have been reviewed by the company’s auditor, KPMG Inc. In their review report dated 5 June 2013, which is available for inspection at the Company’s Registered Office, KPMG Inc. state that their review was conducted in accordance with the International Standard on Review Engagements 2410, Review of Interim Information Performed by the Independent Auditor of the Entity, which applies to a review of preliminary group financial information, and have expressed an unmodified conclusion on the condensed preliminary group financial statements. Acquisition Peregrine Securities Proprietary Limited ("Peregrine Securities"), through one of it's subsidiaries, acquired a 40% interest in Southchester Holdings Proprietary Limited effective 1 April 2012. The fair value of assets acquired amounted to R1.1 billion and the fair value of liabilities acquired amounted to R1.1 billion. Although Peregrine Securities only has a 40% shareholding, the entity is required to be consolidated in terms of IAS 27. Contingent liabilities Contingent liabilities as at 31 March 2013 amounted to R14.2 million (2012: R13.7 million). Commitments Operating lease and capital commitments as at 31 March 2013 amounted to R254 million (2012: R181 million) Events subsequent to year-end No material events have occurred subsequent to the balance sheet date which may have an impact on the group’s ability to continue as a going concern in the foreseeable future. Explanatory notes to the statement of changes in equity 1. With effect from 1 April 2010, a consortium, comprising management of Peregrine Securities, purchased a 35% stake in the group's broking and structuring subsidiary. The transaction comprised an immediate cash payment, plus a number of payments over a period of three years from 1 April 2010 which are linked to the financial performance of the business (“the outstanding payments”). During the previous year, loan funding from the consortium of R60 million (and Peregrine of R112 million) was capitalised into shares, which amount from the consortium was reflected as a non-distributable reserve. Following the payment of the last of the outstanding payments during the year, the amount reflected as a non-distributable reserve has been reflected as a non-controlling interest with Peregrine's rights to the share of the profits of Peregrine Securities being 65%. 2. During the year a shareholder of a subsidiary company of Stenham Limited ceased to be employed by the company, and the shares were subsequently purchased by the subsidiary company of Stenham Limited for a consideration of R10.8 million (£802,600). 3. Following the restructure of its BEE shareholding, Peregrine repurchased from Nala 28.5 million Peregrine shares for an aggregate purchase price of R295 million, following which such shares were cancelled. Nala then acquired, by way of subscription, a 20% shareholding in Peregrine SA Holdings (the entity which houses the restructured South African operating subsidiaries) for a subscription price of R380 million. In terms of IFRS 3, the non-controlling interest is measured at the recognised amount of its proportionate interest in the identifiable net assets, being R143.4 million and the excess above this amount, being R236.6 million, has been accounted for in equity as a gain on disposal. 4. The company issued 7.2 million new shares at R7.65 per share in terms of the first tranch of the share scheme which vested on 15 November 2012. 5. During the course of the year Stenham Limited purchased 76 215 shares from its shareholders and subsequently cancelled such shares. The effect of these transactions has been to increase the group's effective interest in Stenham Limited from 57.62% to 62.71%. Applicable exchange rates Average rates Closing rates USD:ZAR 31 March 2013 31 March 2012 8,50 7,45 9,17 7,67 GBP:ZAR 31 March 2013 31 March 2012 13,44 11,87 13,93 12,26
  11. 11. Reviewed preliminary consolidated results for the year ended 31 March 2013 Condensed preliminary consolidated income statement Normalised disclosure % change 2012 to 2013 Statutory IFRS disclosure Total revenue Fair value gain on linked financial investments Fair value loss on policyholder contract liabilities Operating expenses Profit from operations Net interest received Interest received Interest paid Income from associate companies Profit before intangibles impairment Intangibles impairment For the year ended 31 March 2012 R’000 Operating revenue Investment and other income For the year ended 31 March 2013 R’000 2 -29 1 580 307 142 750 1 554 339 200 238 10 -80 1 690 333 46 972 -2 1 723 057 580 690 (580 690) (1 303 599) 1 754 577 244 985 (244 985) (1 233 822) -2 419 458 47 050 47 543 (493) 57 395 520 755 21 719 50 899 (29 180) 40 081 -19 >100 523 903 (892 820) 582 555 (2 946) -10 (368 917) - 579 609 (6 936) 6 -19 >100 43 -10 (Loss)/profit before taxation and capital items Capital items % change 2012 to 2013 For the year ended 31 March 2013 R’000 Impact of consolidation of hedge funds For the year ended 31 March 2012 For the year ended 31 March 2013 For the year ended 31 March 2012 R’000 R’000 R’000 43 110 026 (95 778) (20 742) 33 254 1 737 305 580 690 (580 690) (1 317 847) 1 767 089 244 985 (244 985) (1 246 334) 14 248 (14 248) 12 512 (12 512) 419 458 47 050 47 543 (493) 57 395 520 755 21 719 50 899 (29 180) 40 081 - - 523 903 (892 820) 582 555 (2 946) - - (368 917) - 6 1 533 597 233 492 579 609 (6 936) - - (Loss)/profit before taxation Taxation -164 (368 917) (92 595) 572 673 (106 379) -164 (368 917) (92 595) 572 673 (106 379) - - (Loss)/profit for the year -199 (461 512) 466 294 -199 (461 512) 466 294 - - Attributable to: Equity holders of the company Non-controlling interests -249 (466 669) 5 157 313 860 152 434 -249 (466 669) 5 157 313 860 152 434 - - -199 (461 512) 466 294 -199 (461 512) 466 294 - -
  12. 12. Reviewed preliminary consolidated results for the year ended 31 March 2013 Condensed preliminary consolidated statement of financial position Normalised disclosure Statutory IFRS disclosure Impact of consolidation of hedge funds As at 31 March 2013 R’000 As at 31 March 2012 R’000 As at 31 March 2013 R’000 As at 31 March 2012 R’000 As at 31 March 2013 R’000 As at 31 March 2012 R’000 Non - current assets 5 790 092 6 493 000 5 790 092 6 493 000 - - Property, plant and equipment Intangible assets Investment in associate companies Investments linked to policyholder investment contracts Financial investments Loans and receivables Deferred taxation 35 750 545 796 101 945 4 728 289 306 889 1 987 69 436 19 077 1 293 027 55 440 4 432 561 527 111 100 550 65 234 35 750 545 796 101 945 4 728 289 306 889 1 987 69 436 19 077 1 293 027 55 440 4 432 561 527 111 100 550 65 234 - - 11 650 833 6 974 898 12 867 002 7 862 242 1 216 169 1 804 533 301 627 368 274 8 296 022 4 111 876 266 511 811 21 086 296 045 5 398 402 19 269 728 285 2 588 026 310 897 697 215 8 291 269 4 111 975 484 1 093 587 29 911 529 361 5 391 069 19 269 799 045 783 493 9 270 328 941 (4 753) 99 218 17 440 925 13 467 898 18 657 094 14 355 242 1 216 169 Equity 2 229 742 2 778 728 2 229 742 2 778 728 Equity attributable to holders of the company Non-controlling interests 1 706 938 522 804 2 184 309 594 419 1 706 938 522 804 2 184 309 594 419 Non - current liabilities Interest-bearing borrowings Policyholder investment contract liabilities Loans and other payables Financial instrument liability Deferred taxation 4 752 244 4 728 289 19 014 3 653 4 941 4 680 592 157 548 4 432 561 60 543 26 287 4 752 244 4 728 289 19 014 3 653 4 941 4 680 592 157 548 4 432 561 60 543 26 287 10 458 939 6 008 578 11 675 108 6 895 922 1 216 169 1 593 899 5 291 558 124 7 947 668 37 604 316 353 21 688 21 670 450 383 5 474 522 40 315 - 1 593 899 919 662 946 330 7 861 260 37 604 316 353 21 688 21 670 583 415 798 031 5 430 803 40 315 - 914 371 388 206 (86 408) - 17 440 925 13 467 898 18 657 094 14 355 242 1 216 169 Assets Current assets Financial investments Loans and receivables Trade and other receivables Amounts receivable in respect of stockbroking activities Taxation Cash and cash equivalents Total assets 887 344 581 776 8 825 233 316 (7 333) 70 760 887 344 Equity and liabilities Current liabilities Interest-bearing borrowings Loans and other payables Financial instrument liabilities Trade and other payables Amounts payable in respect of stockbroking activities Taxation Bank overdraft Total equity and liabilities 522 804 - 887 344 583 415 347 648 (43 719) 887 344

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