| The directors present their report which forms part of the audited annual
financial statements for the year ended 31 March 2009. Peregrine is
a wealth and asset management group. View the annual financial statements set out fully the financial position, results
of operations and cash flow for the group for the financial year ended
31 March 2009. Financial highlights The Peregrine group has produced an acceptable set of results for the year under review, given the highly uncertain environment. All of the group’s operating divisions remained comfortably profitable for the period. With effect from 4 April 2008, Peregrine acquired a controlling interest in international wealth and asset manager, Stenham Ltd, which contributed R84,290 million to the group’s attributable earnings for the year. Whilst operating revenue increased by 41%, boosted by the acquisition of Stenham, total income of R1,452 billion was only 9% higher than the previous year as a result of the negative returns earned on the group’s proprietary investments. If Stenham is excluded, operating revenue declined by 29%, due largely to the lack of performance fees earned in the group’s wealth and asset management businesses. Interest costs on external funding raised at the beginning of the year resulted in the group moving into a net interest paid position for the year of R49,147 million from net interest received of R64,541 million in the previous year. Earnings attributable to equity holders in the company decreased by 75% to R118,041 million (2008: R467,754 million), after deducting taxation of R40,881 million (2008: R160,313 million) and minority interests of R97,914 million (2008: R112,956 million). The lower effective tax rate is as a result of the consolidation of Stenham Ltd. Attributable earnings were also impacted by the amortisation of intangible assets resulting from the Stenham transaction in the amount of R19,497 million. Headline earnings decreased by 84% to R73,067 million (2008: R462,254 million) after adjusting for the surplus of R56,017 million arising on the sale of the group’s Sandton head office property as required by Circular 8/2007 “Headline earnings” (2008: R5,500 million) and a R11,043 million impairment to a loan receivable from an associate (2008: nil). If the effect of the amortisation of intangible assets resulting from the Stenham transaction is excluded, headline earnings decreased by 80% to R94,047 million. Share capital Issued shares As at 31 March 2009, the issued share capital of the company comprised 228 128 764 (2008: 228 128 764) ordinary shares of 0.1 cent each. The group held 13 978 142 treasury shares (2008: 12 853 142) at year end with a book value of R42,941 million (2008: R37,091 million). Of these, 5 281 565 shares (2008: 5 281 565) are held by the group’s staff share trusts and 8 696 577 (2008: 7 571 577) by three of the group’s subsidiaries. Unissued shares The authorised, but unissued, shares were placed under the control of the directors at the last annual general meeting. In terms of this authority, the directors may not issue in any one financial year for cash, more than 10% of the company’s issued ordinary share capital less the aggregate number of shares, if any, held by the company and its subsidiaries (but specifically excluding any share trusts) from time to time, as treasury shares. Shareholders will be requested to renew this authority at the forthcoming annual general meeting. Authority for the repurchase of shares The conditions relating to the repurchase by the company of its own shares are governed by the company’s articles of association which provide, inter alia, that this authority shall not extend beyond the date of the forthcoming annual general meeting or 15 months from the date on which the special resolution authorising such repurchase was passed, whichever is the earlier date. The approval limits the repurchase, in any one financial year, to 20% of the issued share capital of the company on the date on which the special resolution authorising such repurchase was passed. Shareholders will be requested to renew this authority at the forthcoming annual general meeting. The company and its subsidiaries are currently, in terms of facility agreements entered into with Investec Bank Ltd ("Investec"), restricted from repurchasing further shares. Any further purchase is thus subject to obtaining prior approval from Investec. Dividend A cash dividend of 13 cents per share (2008: 56 cents per share) was declared by the directors for the year ended 31 March 2009. The following dates are applicable to such dividend: |
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| Shares may not be dematerialised or rematerialised between Monday,
27 July 2009, and Friday, 31 July 2009, both dates inclusive. Acquisition On 4 April 2008, Peregrine Financial Services Holdings Ltd ("PFS") acquired 51% of the shares in Stenham Ltd ("SL"), the holding company of the Stenham group of companies, for a purchase price of R1,158 billion (£75,705 million). Taking account of the shares held by the SL employee share trust, which is consolidated at balance sheet date, Peregrine acquired an effective stake of 52.84%. R1,047 billion (£68,532 million) of the purchase price was settled in cash via transfer of funds from PFS. The balance, in the amount of R111,189 million (£7,173 million), was settled via a dividend declared by SL at the time of the transaction, out of preacquisition reserves of the company ("the SL dividend"). Full details of the acquisition are set out in note 12 to the financial statements. In the 12 months to 31 March 2009 the Stenham group contributed revenue of R758,631 million (£50,677 million) and net profit after tax and minorities of R84,290 million (£5,631 million) to the consolidated earnings. The contribution, after adding back the amortisation of intangibles is R103,787 million (£6,933 million). Directorate and secretary The name and address of the company secretary are set out in administration. At the annual general meeting held on 29 October 2008, in terms of article 52.1 of the company’s articles of association, Leonard Harris, Ethan Dube and Khosi Sibisi retired. Having made themselves eligible for re-election, they were re-elected to office. On 31 March 2009 Keith Betty, the former CEO, resigned from the board following his emigration to Australia. In terms of the company’s articles of association, Steven Stein, Clive Beaver, Pauline Goetsch and Jan van Niekerk (who was appointed to the board with effect from 1 April 2009) retire at the forthcoming annual general meeting. All of them, being eligible, will offer themselves for re-election. Material increase in borrowings The Stenham acquisition has been funded through an Investec Bank loan taken out by PFS in the amount of R150 million and from the repayment of existing loans to PFS by subsidiaries of the group. In certain instances, the subsidiaries have raised funding via replacement loans from Investec. Subsidiaries View details of the company’s principal subsidiaries. The aggregate profit after taxation of subsidiaries attributable to the company amounted to R285 993 876 (2008: R470 131 440). The aggregate losses after taxation attributable to subsidiaries amounted to R167 967 197 (2008: R2 040 559). The profits and losses include the company’s attributable share of income of associates, which are accounted for in the results of the company’s underlying subsidiaries. All companies within the Peregrine group are incorporated within the Republic of South Africa, with the exception of Citadel Offshore Holdings Ltd and its subsidiaries, which are incorporated in Guernsey, Peregrine Capital Management (BVI) Ltd and Peregrine Direct Ltd, which are incorporated in the British Virgin Isles, and Stenham Ltd and its subsidiaries which are incorporated in the British Virgin Isles, the UK and in Guernsey. Special resolutions At its annual general meeting on 29 October 2008, the company passed a resolution authorising the company to acquire shares issued by it and to enable its subsidiary companies to acquire shares in its share capital. Share incentive schemes The group currently has no share incentive schemes in place. Borrowing limitations In terms of the articles of association, the borrowing powers of the directors are unlimited and the directors may exercise all powers of the company to borrow money, as they consider appropriate. The borrowing powers of the directors are, however, subject to restrictions in terms of the Investec facilities. Events subsequent to balance sheet date No material events have occurred subsequent to the balance sheet date. |
Peregrine annual report 2009 » Financials » Directors’ report