Segmental Information

  • Operating Segments
  • Comprehensive Income
  • Financial Position
  • Group
     
    International Financial Reporting Standard, IFRS 8, requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Operating Decisions Makers in order to allocate resources to the segments and to assess their performance.

    Management of the Peregrine Group (refer Group snapshot of this integrated report) reviews the Group results monthly under the segments of Wealth and Asset management, Broking and Structuring, Stenham, Advisory and Group, comprising operations, investment returns and borrowing costs. As a result of the restructure and unbundling of the Group's surplus non-operating assets during the period under review (note 12.2), for ease of comparability, the Group's segment statement of comprehensive income for the 12 months ended 31 March 2018 has been presented in such a way so as to separate earnings from the Group's operating businesses from earnings that arose from the Group's surplus non-operating assets. Included in the segment results for the last time are earnings from proprietary investments of R65 million (2017: R58 million).

    In terms of IFRS 10 certain of the Group's proprietary hedge fund investments are required to be consolidated. The consolidated proprietary hedge fund investments do not meet the quantitative thresholds for determining reportable segments in 2018 and 2017. These have been grouped together as non-reportable segments and are presented in the reconciliation of the segments to the financial statements in annexures D and E. As part of the restructure and unbundling, the Group’s proprietary investments into hedge funds, except for a seed investment into a hedge fund managed under the auspices of the Natural Selection Hedge Fund platform driven by Peregrine Securities, were de-consolidated with effect from 2 October 2017.

    The other reconciling items between the segment statements of comprehensive income and IFRS statements of comprehensive income relate primarily to the difference in classification of Citadel's long term deferred remuneration schemes (notes 29.2.1 and 29.2.2) for IFRS purposes and that applied for purposes of providing information to the Chief Operating Decision Makers. Management treats the 2013 scheme (which was initiated during 2014 financial year and is settled in Peregrine Holdings Limited ("PGR") shares) as an expense as profits are earned, but for IFRS purposes, it is a share-based payment arrangement, in which the grant date fair value is recognised over the five year vesting period to 31 March 2018. The Citadel 2015 deferred remuneration scheme 2 was initiated during the 2016 financial year, the terms of which provide the participants with the right to participate in an asset pool, partly comprising of PGR shares, which is settled through an attribution of profits over the service period (with the first application thereof being in the March 2017 financial year). As a result of the obligation being initially measured using the projected unit method in the year of inception (March 2016 financial year), a reconciling difference arises between the segmental information provided to the Chief Operating Decision Makers and the IFRS reported information.

    As a result of the IFRS 2 effects discussed above the IFRS headline and basic earnings per share disclosed in note 8 do not accurately reflect the board's view of the Group's economic results. Accordingly, information provided to the Chief Operating Decision Makers adjusts for the impact of these transactions. The reconciliation of segmental attributable profit to IFRS attributable profit has been set out in annexure D.

    A reconciliation between the segment statements of comprehensive income and statements of financial position and the IFRS statements of comprehensive income and statements of financial position can be found in annexures C and E.
                       
    Operating segments*                  
                       
    WEALTH AND ASSET MANAGEMENT
                       
    Revenue is derived from fees earned on assets under management. Major operating subsidiaries within this segment are Citadel Holdings Limited and its subsidiaries ("Citadel Group") and Peregrine Capital Proprietary Limited.
                       
    BROKING AND STRUCTURING
                       
    Revenue comprises brokerage, scrip lending income, interest and dividend income earned on trading, equities and futures transactions and fees charged for consulting and executing derivative strategies on behalf of clients. The operating subsidiary within this segment is Peregrine Securities Proprietary Limited and its subsidiaries, Peregrine Fund Platform Proprietary Limited and Peresec International Limited ("Securities Group").

    At its board meeting held on 12 June 2018, the Board received, and accepted, a non-binding proposal to acquire the Group's 65% shareholding in its Securities business with effect from 1 October 2018 (note 41).
                       
    STENHAM
                       
    Revenue represents amounts receivable for services provided in the normal course of business, including management fees, asset performance fees, company formation and annual trust and fiduciary fees, net of trade discounts. The operating subsidiary within this segment is Stenham Limited and its subsidiaries ("Stenham Group").
                       
    ADVISORY
                       
    The segment represents the returns on corporate finance, advisory and investment business generated from services which range from financial, commercial and legal advisory and transaction execution services. The contributor within this segment is Java Capital Proprietary Limited, which is one of South Africa's leading independent corporate finance and advisory businesses.
                       
    GROUP
                       
    This segment incorporates the returns on proprietary investments, the employment of capital outside of that employed within the Group’s operating segments and corporate costs. Major operating subsidiaries within this segment are Peregrine Financial Services Holdings Limited, Peregrine SA Holdings Proprietary Limited and its subsidiaries and Peregrine Guernsey Limited.
                       
    Other disclosures                  
                       
    The accounting policies of the reportable segments are the same as the Group’s accounting policies, except for those relating to the deferred remuneration schemes as discussed above. Segment profit represents the profit earned by each segment without allocation of certain corporate costs, which are central to the Group and are not allocated. Other than for Stenham Group, Citadel Group and Securities Group, borrowing costs are disclosed as part of the Group segment and have not been allocated to the appropriate operating segments. This is the measure reported to management for the assessment of segment performance.

    Assets are allocated to reportable segments. The same applies to the depreciation/amortisation of these assets. Refer to Segment report - Statement of financial position.

    No customer was responsible individually for more than 10% of the Group’s total revenue.

    Details of principal subsidiaries and geographical information is disclosed in annexure A.

    * Refer to Business segments review of this integrated report.
  • Statement of comprehensive income
    For the year ended 31 March

      Group
                     
      Wealth Management Asset Management Stenham Broking and Structuring Advisory Total from operating reportable segments Group (operations, investment returns and borrowing costs) Segment reported information
                     
      R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000
                     
    2018                
                     
    Total revenue   942,695   266,091   518,522   740,410   -     2,467,718   74,712   2,542,430
    Fair value adjustments on linked financial investments and contract liabilities   -     -     -     -     -     -     -     -  
    Operating expenses   (674,101)   (76,999)   (413,744)   (647,071)   -     (1,811,915)   (75,920)   (1,887,835)
                     
    Profit from operations   268,594   189,092   104,778   93,339   -     655,803   (1,208)   654,595
    Net interest income   (4,035)   2,646   1,077   45,875   -     45,563   52,020   97,583
      Interest income   10,218   2,931   1,083   57,479   -     71,711   69,129   140,840
      Interest expense   (14,253)   (285)   (6)   (11,604)   -     (26,148)   (17,109)   (43,257)
    Share of profits from equity accounted investees   24,875   8,908   19,502   33,699   43,814   130,798   -     130,798
                     
    Profit before taxation   289,434   200,646   125,357   172,913   43,814   832,164   50,812   882,976
    Taxation   (48,852)   (53,844)   (4,411)   (38,107)   -     (145,214)   (27,103)   (172,317)
                     
    Profit for the year   240,582   146,802   120,946   134,806   43,814   686,950   23,709   710,659
                     
    Attributable to:                
    Equity holders of the company ¹   206,605   68,024   110,824   88,549   37,680   511,682   22,803   534,485
    Non-controlling interests   33,977   78,778   10,122   46,257   6,134   175,268   906   176,174
                     
        240,582   146,802   120,946   134,806   43,814   686,950   23,709   710,659
                     
    Comprising:                
    Operating Businesses ²   240,582   146,802   95,226   134,806   43,814   661,230   (26,314)   634,916
    Surplus Balance Sheet ²   -     -     25,720   -     -     25,720   50,023   75,743
                     
        240,582   146,802   120,946   134,806   43,814   686,950   23,709   710,659
                     
    Headline earnings   206,605   68,024   110,824   88,549   37,680   511,682   22,803   534,485
    Operating Businesses   206,605   68,024   92,017   88,549   37,680   492,875   (23,044)   469,831
    Surplus Balance Sheet   -     -     18,807   -     -     18,807   45,847   64,654
                     
    % change in headline earnings (2017 to 2018) 19% 9% 49% (23)% (4)% 10% (33)% 7%
    Operating Businesses 19% 9% >100% (23)% (4)% 16% >100% 7%
    Surplus Balance Sheet   -     -   (54)%   -     -   (54)% >100% 11%

    1 Refer to annexure D for reconciliation between the Segment Statement of comprehensive income and the IFRS Statement of comprehensive income.

    2 Refer to annexure F which discloses the Segment Statement of comprehensive income split between Operating Businesses and Surplus Balance Sheet.        

    Statement of comprehensive income
    For the year ended 31 March
      Group
                     
      Wealth Management Asset Management Stenham Broking and Structuring Advisory Total from operating reportable segments Group (operations, investment returns and borrowing costs) Segment reported information
                     
      R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000
                     
    2017                
                     
    Total revenue   821,763   217,162   506,330   803,857   -     2,349,112   67,086   2,416,198
    Fair value adjustments on linked financial investments and contract liabilities   -     -     -     -     -     -     -     -  
    Operating expenses   (609,655)   (53,503)   (423,609)   (610,070)   -     (1,696,837)   (34,237)   (1,731,074)
                     
    Profit from operations   212,108   163,659   82,721   193,787   -     652,275   32,849   685,124
    Net interest received   (5,818)   1,382   484   20,452   -     16,500   31,581   48,081
      Interest received   9,125   1,382   633   49,458   -     60,598   45,162   105,760
      Interest paid   (14,943)   -     (149)   (29,006)   -     (44,098)   (13,581)   (57,679)
    Share of profits from equity accounted investees   18,137   11,764   16,705   28,796   45,494   120,896   (20,890)   100,006
                     
    Profit before taxation and capital items   224,427   176,805   99,910   243,035   45,494   789,671   43,540   833,211
    Gain on disposal of interest in equity accounted investee   -     19,026   -     -     -     19,026   -     19,026
    Gain on disposal of intangible assets - customer relationships   -     -     2,279   -     -     2,279   -     2,279
                     
    Profit before taxation   224,427   195,831   102,189   243,035   45,494   810,976   43,540   854,516
    Taxation   (20,429)   (50,475)   (3,019)   (59,283)   -     (133,206)   (3,500)   (136,706)
                     
    Profit for the year   203,998   145,356   99,170   183,752   45,494   677,770   40,040   717,810
                     
    Attributable to:                
    Equity holders of the company ¹   173,927   75,302   76,200   115,082   39,125   479,636   34,141   513,777
    Non-controlling interests   30,071   70,054   22,970   68,670   6,369   198,134   5,899   204,033
                     
        203,998   145,356   99,170   183,752   45,494   677,770   40,040   717,810
                     
    Comprising:                
    Operating Businesses ²   203,998   145,356   41,741   183,752   45,494   620,341   16,631   636,972
    Surplus Balance Sheet ²   -     -     57,429   -     -     57,429   23,409   80,838
                     
        203,998   145,356   99,170   183,752   45,494   677,770   40,040   717,810
                     
    Headline earnings   173,927   62,604   74,369   115,082   39,125   465,107   34,141   499,248
    Operating Businesses   173,927   62,604   33,110   115,082   39,125   423,848   17,213   441,061
    Surplus Balance Sheet   -     -     41,259   -     -     41,259   16,928   58,187
                     
    % change in headline earnings (2016 to 2017) (5)% (3)% (48)% 6% 46% (12)% (48)% (16)%

    1 Refer to annexure D for reconciliation between the Segment Statement of comprehensive income and the IFRS Statement of comprehensive income.

    2 Refer to annexure F which discloses the Segment Statement of comprehensive income split between Operating Businesses and Surplus Balance Sheet.        

  • Statement of Financial Position
    As at 31 March
      Group
                   
      Wealth Management Asset Management Stenham¹ Broking and Structuring Advisory Group (operations, investment returns and borrowing costs) Total
                   
      R’000 R’000 R’000 R’000 R’000 R’000 R’000
                   
    2018              
                   
    Segment assets              
    Property, plant and equipment   102,672   399   691   11,199   -     6,716   121,677
    Goodwill   305,336   -     143,357   25,460   -     -     474,153
    Intangible assets   100,787   -     83,115   -     -     -     183,902
    Investment in equity accounted investees   6,842   24,872   16,867   94,361   230,652   -     373,594
    Investments linked to policyholder investment contracts   5,670,093   -     -     -     -     -     5,670,093
    Non-current financial investments²   107,214   -     -     -     -     36,590   143,804
    Non-current loans and receivables   -     -     -     25,086   -     6,682   31,768
    Deferred taxation²   49,343   4,888   3,396   16,559   -     16,480   90,666
    Current financial investments²   82,169   2,893   -     10,577   -     3,825   99,464
    Current loans and receivables²   -     -     -     1,285   -     139,737   141,022
    Trade and other receivables²   132,235   28,477   137,779   131,452   -     8,477   438,420
    Amounts receivable in respect of stockbroking activities²   -     -     -     15,301,799   -     -     15,301,799
    Taxation   5,473   -     129   10,028   -     2,688   18,318
    Cash and cash equivalents²   315,618   10,170   260,122   2,050,476   -     24,915   2,661,301
                   
        6,877,782   71,699   645,456   17,678,282   230,652   246,110   25,749,981
                   
    Segment liabilities              
    Policyholder investment contract liabilities   5,670,093   -     -     -     -     -     5,670,093
    Non-current interest-bearing borrowings   170,428   -     -     -     -     252,830   423,258
    Non-current loans and payables²   4,674   8,491   -     425   -     1,656   15,246
    Deferred taxation   853   -     -     -     -     8,471   9,324
    Current interest-bearing borrowings   52,468   -     -     -     -     -     52,468
    Trade and other payables²   196,197   15,345   233,281   323,039   -     43,682   811,544
    Amounts payable in respect of stockbroking activities²   -     -     -     16,125,208   -     -     16,125,208
    Taxation   1,189   1,991   -     3,449   -     37,804   44,433
                   
        6,095,902   25,827   233,281   16,452,121   -     344,443   23,151,574
                   
    Capital expenditure (note 11)   4,277   65   -     8,431   -     3,207   15,980
    Depreciation (note 11)   13,553   310   367   5,598   -     3,015   22,843
    Amortisation of intangibles (note 13)   10,284   -     12,462   -     -     -     22,746

    1  Refer to note 40.1.1 for the allocation of intangible assets to the CGU's within Stenham.       

    2  Refer to annexure E for reconciliation between the Segmental Statement of financial position and IFRS Statement of financial position and annexure G which discloses the Segment Statement of financial position split between Operating Businesses and Surplus Balance Sheet.       

    Statement of Financial Position
    As at 31 March
      Group
                   
      Wealth Management Asset Management Stenham ¹ Broking and Structuring Advisory Group (operations, investment returns and borrowing costs) Total
                   
      R’000 R’000 R’000 R’000 R’000 R’000 R’000
                   
    2017              
                   
    Segment assets              
    Property, plant and equipment   111,970   643   1,054   9,143   -     6,525   129,335
    Goodwill   291,353   -     144,651   25,460   -     -     461,464
    Intangible assets   105,071   -     96,001   -     -     -     201,072
    Investment in equity accounted investees   6,270   28,009   11,444   62,453   233,249   -     341,425
    Investments linked to policyholder investment contracts   6,013,781   -     -     -     -     -     6,013,781
    Non-current financial investments²   127,273   -     343,816   -     -     131,428   602,517
    Non-current loans and receivables   -     -     -     8,583   -     6,682   15,265
    Deferred taxation²   78,371   2,352   3,274   21,970   -     2,441   108,408
    Current financial investments²   107,034   4,272   118,725   16,852   -     581,840   828,723
    Current loans and receivables²   -     -     8,264   1,249   -     7,026   16,539
    Trade and other receivables²   117,682   56,249   156,863   54,502   -     10,083   395,379
    Amounts receivable in respect of stockbroking activities²   -     -     -     15,819,357   -     -     15,819,357
    Taxation   5,410   -     -     7,254   -     6,198   18,862
    Cash and cash equivalents²   273,148   9,983   425,435   1,898,687   -     55,452   2,662,705
                   
        7,237,363   101,508   1,309,527   17,925,510   233,249   807,675   27,614,832
                   
    Segment liabilities              
    Policyholder investment contract liabilities   6,013,781   -     -     -     -     -     6,013,781
    Non-current interest-bearing borrowings   174,479   -     -     -     -     175,500   349,979
    Non-current loans and payables²   4,674   6,919   -     100,723   -     4,788   117,104
    Deferred taxation   713   -     -     -     -     10,223   10,936
    Current interest-bearing borrowings   42,800   -     -     -     -     -     42,800
    Current loans and payables²   -     -     -     161,050   -     -     161,050
    Trade and other payables²   274,198   12,337   179,312   476,496   -     21,283   963,626
    Amounts payable in respect of stockbroking activities²   -     -     -     16,333,527   -     -     16,333,527
    Taxation   130   4,452   3,499   690   -     24,209   32,980
                   
        6,510,775   23,708   182,811   17,072,486   -     236,003   24,025,783
                   
    Capital expenditure (note 11)   49,444   48   275   7,972   -     2,310   60,049
    Depreciation (note 11)   12,146   329   479   4,771   -     3,565   21,290
    Amortisation of intangibles (note 13)   8,284   -     13,323   -     -     -     21,607

    1 Refer to note 40.1.1 for the allocation of intangible assets to the CGU's within Stenham.

    2  Refer to annexure E for reconciliation between the Segmental Statement of financial position and IFRS Statement of financial position and annexure G which discloses the Segment Statement of financial position split between Operating Businesses and Surplus Balance Sheet.