PEREGRINE INTEGRATED REPORT€¦ · enable stakeholders to evaluate Peregrine’s ability to create and sustain value over the short, medium and long-term. This, Peregrine’s third,

PEREGRINEINTEGRATED

REPORT

www.peregrine.co.za

PEREGRINEINTEGRATED

REPORT

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A PLACE................................................................................

where we connect with our clients,engage with the market and interactwith one another.

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WELCO

ME

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8 THE GROUP

10 Group snapshot

12 2013 Performance highlights

20 Chairman’s report

21 Chief Executive Officer’s report

24 Directorate

31 Group structure

32 Business segments review

49 Material issues

50 Stakeholder engagement

51 Five-year review

51 Value added statement

74 FINANCIAL STATEMENTS

76 Directors’ responsibility statement

77 Declaration by the Company Secretary

78 Directors’ report

82 Audit Committee report

83 Independent auditor’s report

84 Income statements

85 Statements of comprehensive income

86 Statements of financial position

87 Statements of changes in equity

89 Statements of cash flow

90 Segmental information

95 Principal accounting policies

104 Notes to the financial statements

158 Details of principal subsidiary companies– annexure A

159 Details of associate companies– annexure B

160 Reconciliation of Segment ReportIncome statement to Income statement– annexure C

161 Reconciliation of Segment ReportStatement of financial position to Statement of financial position – annexure D

52 SUSTAINABILITY

54 Transformation

59 Human capital

60 Corporate citizenship

62 CORPORATE GOVERNANCE

64 Corporate governance report

72 Remuneration committee report

7 Scope and boundary

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Contents

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162 SHAREHOLDER INFORMATION

164 Shareholders’ diary

164 Dividend timetable

165 Analysis of shareholders

167 Letter from the Chairman

168 Notice of annual general meeting

172 Directors and management

175 Definitions

178 King III compliance checklist

182 Administration

183 Form of proxy

Peregrine Holdings LimitedRegistration No: 1994/006026/06

ISIN: ZAE000078127

JSE Main Board sector: Financial Services

Share code: PGR

Listing date: 10 June 1998

Shares in issue at 31 March 2013: 206 790 887

Headquarters: Johannesburg, South Africa

The consolidated and separate annual financial statements have been

prepared under the supervision of RE Katz CA (SA), the Group Chief

Financial Officer

Published on 23 August 2013

Design and production: visioneers.co.za

Shareholders & providers of capital

Group restructuring 10Five-year review 51Material issues 49Investment case 15Chairman’s report 20Chief Executive Officer’s report 21Business segments review 32Corporate citizenship 60Annual financial statements 74

Employees

Group restructuring 10Material issues 49Chief Executive Officer’s report 21Business segments review 32Corporate citizenship 60Corporate governance report 64Value added statement 51Transformation 54

Clients

Material issues 49Chairman’s report 20Chief Executive Officer’s report 21Business segments review 32Corporate citizenship 60Annual financial statements 74

Communities, Environment & Society

Material issues 49Chief Executive Officer’s report 21Business segments review 32Transformation 54Corporate citizenship 60

Regulatory authorities

Corporate governance report 64King III compliance checklist 178Chairman’s report 20Chief Executive Officer’s report 21

05 STAKEHOLDERS’ NAVIGATION GUIDE

Peregrine acknowledges that this integrated report isintended to serve all stakeholders. This guide will assistin directing each stakeholder to areas that specificallyaddresses the interests of the relevant stakeholder group

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Scope and boundary

This integrated annual report of Peregrine presents the financialresults and the environmental, social and governance performanceof the group for the year ended 31 March 2013.

The prior integrated report was dated 12 September 2012.Peregrine’s scope of reporting on its sustainability initiativesconsists of the reportable business segments in South Africanamely – Wealth Management, Asset Management, Broking &Structuring and Proprietary Investments, for the duration of theperiod 1 April 2012 to 31 March 2013.

The content included in this integrated annual report is intendedto be useful and relevant to Peregrine’s stakeholders, as it isconsidered to be of a nature which may influence their perceptionor decision-making. The content specifically aims to providestakeholders with an understanding of the economic, environmental,social and governance initiatives of the group and their impact, toenable stakeholders to evaluate Peregrine’s ability to create andsustain value over the short, medium and long-term.

This, Peregrine’s third, integrated report is prepared in accordancewith IFRS, the Listings Requirements of the JSE and the CompaniesAct. Peregrine has further applied the vast majority of the principlescontained in the King III Report, as encapsulated in the applicableregulations. Any King III principles which have not been applied areexplained, including, wherever possible, reference to the part of theyear during which the non-compliance occurred. The company hasalso considered and applied many of the recommendations releasedby the International Integrated Reporting Council.

Statement of responsibility

The Audit Committee acknowledges its responsibility on behalf ofthe board to ensure the integrity of this integrated report. Thecommittee has accordingly applied its mind to the report andbelieves that it appropriately and sufficiently addresses all materialissues, and fairly presents the integrated performance of Peregrineand its subsidiaries for the year within the scope and boundarymentioned above. The Audit Committee recommended thisintegrated report to the board for approval.

Assurance

Assurance of the Peregrine integrated report is the responsibilityof a combined financial and non-financial team from KPMG Services.

In addition to the annual financial statements being audited, andtheir unmodified opinion included on page 83, the value addedstatement (page 51) and our CSI expenditure (page 56) wasassured at a limited level using the International Standards forAssurance Engagements (ISAE) 3000; this report which includesunmodified conclusions is available online at www.peregrine.co.za

Forward-looking statements

This integrated annual report contains forward-looking statementsthat, unless otherwise indicated, reflect the company’s expectationsas at 31 March 2013. Actual results may differ materially from thecompany’s expectations if known and unknown risks or uncertaintiesaffect its business, or if estimates or assumptions prove inaccurate.The company cannot guarantee that any forward-looking statementwill materialise and accordingly readers are cautioned not to placeundue reliance on any forward-looking statements. The companydisclaims any intention and assumes no obligation to update orrevise any forward-looking statement, even if new informationbecomes available as a result of future events or for any otherreason, other than as is required by the JSE Listings Requirements.

SI Stein J Hertz RE KatzAudit Committee Chairman Chief Executive Officer Chief Financial Officer

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THE GROUP

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SECTIONNo.

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Group snapshot

Peregrine is a leading financial services group providing investmentmanagement solutions in wealth and alternative assets. Drivenby an owner-managed and entrepreneurial culture, the groupinvests its clients’ capital and facilitates investments and transactionson their behalf and invests its own capital. Peregrine comprisesa number of niche financial services businesses in which it holdseither significant management control or ownership.

The group operates in the fields of Private Client Wealthcare,South African and global funds-of-funds and single manager hedgefunds. Peregrine further houses one of South Africa’s leadingderivatives, equity and prime broking operations. It also investsits proprietary capital in hedge funds, property funds and globalequity investments.

In terms of the recent restructure (more fully detailed below), thegroup now focuses exclusively on operating financial servicesbusinesses in South Africa and internationally, with an appropriateand sustainable B-BBEE shareholding directly into its South Africanbusinesses. The group operates through three key businesssegments: Wealth Management, Asset Management and Broking& Structuring, with underlying operating businesses being supportedby making capital investments, the bulk of which constituteinvestments into hedge funds managed by the group’s fund managers.

The group is listed on the JSE in the ‘Financial Services’ sectorand at year-end had a market capitalisation of R2,3 billion.

Peregrine invests both its clients’ and proprietary capital, andmanages the related transactions. At year-end the group heldresponsibility for R79 billion in total gross assets under management.It has an international footprint spanning South Africa, the UK andthe Channel Islands and employs 524 people worldwide. For theyear under review, the group’s activities were categorised into thefollowing key reporting segments:

Peregrine’s key business strategic objective is to deliver consistentlyhigh levels of risk-adjusted returns to its clients over the mediumto long-term. This is primarily driven by Peregrine’s resources andpersonnel, which the group believes to be of unrivalled expertise.

The unswerving focus on performance is balanced by anentrepreneurial approach and steadfast commitment to governance,which have together generated a business model that is wellrespected by partners, peers and clients and recognised by thefinancial services industry at large.

When looking at making acquisitions, Peregrine considers theprofitability, cash generative nature, future growth prospects, ethicalconduct and the governance structure of the target entity as themajor areas.

Group restructuring

During the year under review and in order to re-inforce the groupscore focus on financial services, capitalise on Peregrine’s strongcash generative nature and to position the group for organic andacquisitive growth, a group restructure was implemented as aresult of which:

• Peregrine repurchased 28 584 059 shares from Nala and itswholly owned subsidiary, which shares were subsequently delistedand cancelled;

• Nala acquired a 20% shareholding in Peregrine SA Holdings,which owns the South African operating subsidiaries, includingCitadel, Peregrine Capital and Peregrine Securities, the remaining80% being held by Peregrine Holdings Limited;

• Peregrine Financial Services Holdings Limited directly holdsthe Stenham investment with the remaining internationally basedoperations, including Beauclerc being held by PeregrineInternational Holdings Limited; and

• Sandown Capital holds all of the remaining non-financialservices investments, which will be managed as a portfolio inorder to optimise value for Peregrine shareholders, the proceedsof which, over and above that which is optimally required tosupport and grow the underlying businesses, will be returned toshareholders from time to time

KEY BUSINESS SEGMENTS

Wealth Management

Local Asset Management

Broking & Structuring

Offshore Asset Management (Stenham & SA Alpha)

Proprietary Investments

EXECUTIVE DIRECTORS

Seated (left to right): Jonathan Hertz, Robert KatzStanding (left to right): Mandy Yachad, Sean Melnick

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Shareholder analysis (%)as at 28 March 2013

SHAREHOLDERANALYSIS

13,2

53,9

Other

FoundersManagement

& staff

32,9

2013 2012

WealthManagement

Local AssetManagement

Broking &Structuring

Offshore AssetManagement

ProprietaryInvestments

26,6

24,0

16,2

20,1*

BUSINESSSEGMENTS

BUSINESSSEGMENTS

Business segment splits (%)by operating profit

Total*

Major shareholders (%)

Founders, management & staff 32,9

OMIGSA 21,0

Allan Gray 11,4

Offshore Institutions 6,9

Regarding Capital Management 5,9

Investec 5,0

Sanlam 3,1

Major shareholders (%)

86,2 %

Institutions

13,1

31,3

18,9

11,3

20,0* 18,5

*Offshore Asset Management Includes: Stenham and SA Alpha

*% shareholding calculated net of treasury shares

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2013 Performance highlights

DIVIDENDS PER SHARE (CENTS)

CASH DIVIDEND28 cents per share

Cash generated fromoperating activities of

R312MILLION FINAL DIVIDEND UNCHANGED AT

CENTS PER SHARE72:

LONG-TERMoutstanding debt down from

ZERO

2009

1331

+18

2010 2011

3572

2012

72

2013

R179 Million to

HEPS down 6% to 138,9 cents

SPECIAL

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TOTAL REVENUE (Rm)

’09

1 452 1 5451 684

1 767 1 737

’10 ’11 ’12 ’1300

800

2 000

400

1 200

1 600

Including non-controlling interests

HEADLINE EARNINGS (Rm)

’09

73

266287

321

286

’10 ’11 ’12 ’1300

50

150

250

350

100

200

300

SHARE PRICE PERFORMANCE (CENTS)

01 April 2012 – 30 June 2013

GROSS AUM (Rbn)

’09

78,6

’10 ’11 ’12 ’1300

20

40

60

80

77,081,6

72,8

80,9

APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN

850

950

1 000

1 100

1 200

1 300

900

1 050

1 150

1 250

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• High dividend pay-out• Entrepreneurial and owner-managed culture• Highly skilled teams• Commitment to responsible investing• Commitment to sustainable development• Best practice governance standards• Low staff turnover at executive and operational level• Only reward excellence• Benefit the societies in which we operate and exist

Investment case

Sustainability

• Strong cash generation over past 5 years• All long-term debt repaid• Finalised and implemented restructuring of B-BBEE shareholding• Maintaining strategic restructure for optimal growth• Advanced enterprise development programme• Group Transformation Forum operating effectively• Achieved compliance with investment principles• Established mentorship program – 60 individuals trained and

40 mentee-mentor relationships formed• To avoid, “even the appearance” of improper behaviour and market abuse

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Accolades

2013Peregrine Capital High Growth FundFund of the Year & Best South African Equity FundHedgeNews Africa

Peregrine Capital Pure Hedge FundWinner of South African Market Neutral & Quantitative CategoryHedgeNews Africa

2012Stenham Gold#1 performing Fund of Hedge Fund ($10 - $250 million)Barclay Hedge

Stenham PropertySpecial Jury Award for the development of Alte PostMIPIM

2011Stenham Quadrant10 Years Performance (>US$500m)InvestHedge

Stenham Universal II & Stenham TradingGold RatingStandard & Poor’s

Peregrine Capital Pure hedge FundBest Market Neutral FundHedgeNews Africa

* As at year-end (31 March) of the relevant year

*

*

*

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01Milestones

1996• Peregrine founded

1997• Peregrine Equities founded• Initial 7% of Citadel acquired with option to increase up to 20%

1998• Peregrine lists on JSE• Peregrine Capital founded• Number of employees: 30*

2001• Stakeholding in Citadel increased to control• Number of employees: 159*

2002• Peregrine Incubator/PIM founded (subsequently renamed Peregrine Fund Platform)• Citadel becomes wholly-owned subsidiary• Assets under management: Gross R3,3 billion*

2003• Assets under management: Gross R11,2 billion*• Number of employees: 417*

2006• Caveo Fund Solutions founded with Investment Solutions• B-BBEE transaction implemented• Assets under management: Gross R23,0 billion*• Number of employees: 353*

2008• Controlling interest acquired in Stenham• Assets under management: Gross R43,4 billion*• Number of employees: 418*

2010• 50% of Green Oak Capital acquired• 35% of Peregrine Securities sold to management• Assets under management: Gross R77,0 billion*• Number of employees: 579*

2011• Nala founded (Peregrine’s B-BBEE partner)• Beauclerc Limited established• ApexHi UK Limited established• 49,9% stake acquired in SA Alpha Capital Management Limited (Bermuda based asset manager)• Assets under management: Gross R81.6 billion*• Number of employees: 565*

2012• Restructuring of B-BBEE shareholding• Refined group strategy and structure• Payment of first special dividend• Assets under management: Gross R72,8 billion*• Number of employees: 558*

2013• Peregrine reaches 15 years since listing on the JSE Limited• Payment of second special dividend• Assets under management: Gross R78,6 billion*• Number of employees: 524*

* As at year-end (31 March) of the relevant year

Executive reviews

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Chairman’s report

Despite challenging trading conditions, the group managed toremain satisfactorily profitable at a headline earnings level andachieved strong cash-flows coupled with the repayment of all long-term debt. The results once again highlight the benefit to the group,of holding a portfolio of investment-related businesses. Localoperating subsidiaries performed well with Citadel and PeregrineCapital in particular producing solid results. Proprietary investmentsagain generated strong returns for the year, despite the distributionof the Consolidated Infrastructure Group (CIL) shares, by way ofa special dividend, in line with the group’s strategy and therealisation of a portion of the investments in the hedge funds toextinguish group debt. Offshore operations continue to struggle,which resulted in a significant impairment of certain intangibleassets in Stenham.

Implementation of New Strategy and Restructuring

The group commenced the implementation of its strategy of nolonger accumulating excess capital at the centre, by returning toshareholders capital over and above that which is optimally requiredfrom an operating perspective. The restructure is in line with thegroup’s strategy of focusing on operating in financial servicesbusinesses in South Africa and internationally, with an appropriateand sustainable B-BBEE shareholding being held directly into theSouth African businesses. At the special general meeting of shareholders held on 4 September 2012, all necessary resolutionswere passed which enabled the group to implement the restructure.In terms of the restructure:

• Nala acquired a 20% shareholding in Peregrine SA Holdings.As a consequence of Peregrine Holdings Limited having a 30%shareholding in Nala, Nala’s non-controlling interest in PeregrineSA Holdings is an effective 14%; and

• Peregrine repurchased and cancelled 28 584 059 shares andaccordingly the reduced, after minorities, earnings in the SouthAfrican operating subsidiaries has been compensated for, by asubstantial reduction in the number of shares in issue.

Board Composition

During the year under review, Jan van Niekerk resigned fromoffice as Chief Executive Officer of Peregrine with effect from1 April 2013. On behalf of the Board, I thank Jan for his significantcontribution to the group over the past twelve years. JonathanHertz was appointed as an executive director and the group’sChief Executive Officer with effect from 1 April 2013. Jonathanhas been associated with Peregrine for much of the past decadeand a half, first as its Chief Operating Officer before leaving thegroup, and currently as Chairman of Citadel Life Limited. He hasa thorough and detailed understanding of the various businessesin which Peregrine is invested and is considered ideally suited totake over the reins as Chief Executive Officer. We welcomeJonathan back and look forward to Peregrine’s continued successand growth under his leadership.

The composition of the board continues to reflect an appropriatebalance between executive and non-executive directors inaccordance with the principles set out in the King III Report. Thecomposition of the various sub-committees of the Board (the AuditCommittee, the Remuneration Committee, the Risk and Compliance

Committee and the Social and Ethics Committee) also reflects theappropriate mix between executive and non-executive directorsin compliance with the Companies Act 2008 and the King III Report.In accordance with the requirements of the King III Report, thatthe chairman of the company should not also serve as the chairmanof the Remuneration Committee, I stepped down as chairman ofthe Remuneration Committee on 5 June 2013, on which date CliveBeaver was appointed to that position. I remain a member of theRemuneration Committee. The board re-iterates that it is committedto the application of sound corporate governance, transparency,accountability and integrity as set out in the King III Report andlegislation, including the Companies Act 2008.

Appreciation

In conclusion, and in line with the new strategy implemented duringthe period under review, Peregrine has built a strong base ofprofitable, cash-generative operating businesses. Special attentionis being placed on regenerating growth in the offshore business.The group will continue to focus on growing its businessesorganically, returning excess capital over and above that whichis optimally required from an operating perspective to shareholdersover time, while at the same time diversifying and expandingthrough appropriate transactions.

Finally, I extend my thanks to the board of directors for theirongoing commitment, valuable contributions and sound support.I also thank all the stakeholders of Peregrine for their continuedcontributions, support and commitment.

LN Harris SCNon-executive Chairman JHB 23 AUGUST

2013

Chief Executive Officer’s report

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After four long years of depressed economic indicators within theglobal economy, the past twelve months saw the world’s largesteconomy finally displaying real signs of recovery. This resulted inseveral global stock markets rallying and in many cases reachingall-time highs. Unlike the US, however, Europe has continued tostruggle and concerns of Chinese growth have become increasinglyapparent. From a South African perspective, for the year ended31 March 2013, the JSE All share Index generated a total returnof 22.5%, while the local currency depreciated by over 20% againstthe US Dollar.

The Peregrine group operates in the areas of wealth and assetmanagement, as well as securities broking and structuring. Ouroperations are therefore linked to the market environment in whichwe operate. Strength within the Sub-Saharan African marketshelped the South African subsidiaries generate a strongperformance, while the UK and European businesses continuedto face headwinds.

The group has had a busy year. We implemented a largeempowerment transaction within the South African operations,purchased and cancelled almost 13% of our issued shares andmanaged to pay off all of our long-term debt. At the same time weneeded to be mindful of escalating pressure from a complianceand regulatory perspective, as global legislators instigated moredemands on international financial institutions.

Financial results

The Peregrine group produced a mixed set of results undercontinued challenging trading conditions for the twelve monthsended 31 March 2013. Local operating subsidiaries performedwell, while offshore operations continue to struggle which resultedin a significant impairment of the intangible assets in certain ofthe international subsidiaries.

The group produced headline earnings of R286 million which were11% lower than the previous year, while headline earnings pershare decreased by just 6% to 138,9 cents per share, followingthe group’s acquisition and cancellation of 28.5 million sharesduring the year. While headline earnings remained positive, theStenham intangible asset impairment of R753 million (afterminorities), which is a non-cash item, resulted in a basic lossattributable to shareholders. The basic loss attributable toshareholders amounted to R467 million (2012: basic earningsR314 million). The significant impairment to the carrying value ofStenham’s intangible assets (comprising customer relationships,trade name and goodwill) resulted from the Asset Managementand Property divisions having revised downwards their long-termgrowth assumptions, due to the continued challenges faced bytheir respective industries. Notwithstanding the difficult conditions,Stenham remains comfortably profitable and cash-flow generative,with no long-term debt and cash available to augment future growth.

The results for the year include, for the first time, a 35% non-controlling interest within Peregrine Securities, resulting from thecompletion of the management buy-in into the business. Theresults for the year also include for the first time, Nala EmpowermentCompany’s (“Nala”) non-controlling interest within Peregrine SAHoldings (being the entity which is the holding company of theSouth African operating companies). Nala’s non-controlling interest(an effective 14%) follows from the restructure of the group’s BEEshareholding, which became effective at the end of September 2012.

The group continues to be highly cash-generative. Cash generatedfrom operating activities amounted to R312 million (2012: R188million). A good indication of the cash profits of the underlyingbusinesses is that total profit before tax, capital items and non-cash items, adjusted for total minorities, amounted to R325 million.This has allowed the group to continue to maintain significant cashresources and to repay all long-term debt. Aggregate cash in thegroup amounted to R585 million at year-end, of which R108 millionwas available at the centre. The majority of the remaining R477million is held offshore.

In line with the group’s new dividend policy of paying out a minimumof 50% of earnings, an ordinary dividend of 72 cents per sharefor the year was declared (2012: 72 cents per share). Consonantwith the policy of returning excess capital to shareholders overtime, a special cash dividend of 28 cents per share was declared.

The operational review on pages 32–48 contains details of theperformance of our various subsidiaries for the financial year.

Transformation

Peregrine has always been committed to meeting transformationtargets throughout our South African subsidiaries. During the 2013financial year we concluded an important transaction with ourempowerment partner, Nala, which now owns 20% of the SouthAfrican operations of the group. The shareholders of Nala includean educational trust, a social investment trust, as well as a trustof which Peregrine’s empowerment staff are beneficiaries.

Nala has already managed to accrue significant financial benefitsas a result of the strong performance of the group’s South Africansubsidiaries and Nala’s other investments. This augers well forcurrent and future Peregrine staff and allows the group to attractand retain senior skilled empowerment executives.

We have made progress in the areas of ownership, enterprisedevelopment, procurement and CSI, but we have often struggledto attain the targets that we have set for ourselves, particularlywithin skills development and employment equity. Our aim is toutilise the benefits of the new ownership structure to assist us inattaining these goals.

Governance

The group continues to remain fully committed to an open anddisciplined governance process and we have complied in allmaterial respects with the requirements as set out in the King IIIreport. In addition, our risk management processes remain robustthroughout the group and integrate the functions of risk, internalaudit, legal and compliance.

We have always been mindful of our responsibilities as custodiansof our client’s funds. In addition to compliance with regulationsand best practice, our commitment to responsible investing andsustainable development both in relation to the assets we manageand from a staff improvement perspective is crucial to our business,particularly as we seek to ultimately benefit the societies in whichwe operate.

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Chief Executive Officer’s report Continued

Prospects

Peregrine has been a public company listed on the JSE for thelast 15 years. During this time we have managed to build a portfolioof diversified financial services businesses that are poised forcontinued growth. Our owner managed culture has ensured thatwe have been intolerant of mediocrity and been diligent in rewardingonly exceptional performance. Our staff at both an executive andoperational level have been well rewarded and we have thusexperienced low staff turnover throughout the organisation.Furthermore, effective management of internal costs and risks area natural consequence of businesses with management teamsincentivised directly through business profitability.

Whilst we are confident that we will be able to deliver on ourorganic growth strategy, we remain on the lookout forentrepreneurial management teams running entities thatcomplement our existing business and which help us to augmentour goals as an internationally diversified financial services group.

Appreciation

I would like to make particular mention of and thank our employeesfor their dedication and hard work. I would also like to thank theboard of directors for their encouragement and guidance. Finallyto all the clients of our various businesses – we are aware thatyour continued support gives us the opportunity to be successfuland deliver the service and results that you require.

J HertzChief Executive Officer JHB 23 AUGUST

2013

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Establish the groupas a highly profitableand innovative nicheplayer in the wealthand assetmanagement domain.

Jonathan Hertz

Directorate

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Sean Alan Melnick (44)Deputy Chairman

BCom (Hons) (Wits) CFA

Sean is deputy Chairman of Peregrine HoldingsLimited and Chairman of Peregrine’s internationalsubsidiary, Stenham Limited. He was one of theoriginal founders of the Peregrine group in 1996.Sean began his career at Liberty AssetManagement in 1992, where he headed up thegroup’s derivatives desk and attained the positionof senior portfolio manager before joining thederivative trading and structuring desk at InvestecBank Limited in 1995. Sean left Investec Bankin 1996 to co-found Peregrine, took on the roleof group Chief Executive Officer in 1997 and ledthe group to its successful listing on the JSE inJune 1998. Sean has spent a cumulative 11years in the position of Peregrine group ChiefExecutive Officer, two years as group Chairmanand the past three years as group deputyChairman. He has been primarily responsible forand integrally involved in the Peregrine group’sexpansion strategy from inception.

Jonathan Hertz (40)Chief Executive OfficerBSc (Wits) FIA FASSA, CFA

After qualifying as an actuary, Jonathan wasappointed managing director of Safrican, a leadinglow cost insurer in South Africa before joiningPeregrine in 2000 as Chief Operating Officer. In2006, Jonathan co-founded Caveo FundSolutions, a fund of hedge fund business, as ajoint venture between Peregrine and InvestmentSolutions. In May 2008, he founded South AfricaAlpha Capital Management, a Bermuda domiciledinvestment management business housing theUS Dollar class of several of the leading hedgefunds trading in Sub-Saharan African securities.He re-joined Peregrine in April 2013 as ChiefExecutive Officer.

Directorate

Executive

Sean Alan MelnickDeputy Chairman

Jonathan HertzChief Executive Officer

Robert Eric KatzChief Financial Officer

Mandy YachadExecutive Director

Non-executive

Pauline Goetsch

Independent non-executive

Advocate Leonard Harris SCChairman

Bernard Clive Beaver

Veronica Nomfanelo Magwentshu

Lungile Myrtle Ndlovu

Steven Ivan Stein

Proposed independentnon-executive

Stefaan SitholeSubject to shareholder approval at the upcomingannual general meeting, Stefaan will beappointed as an independent non-executivedirector to the board and a member of the AuditCommittee and will be the Chairman of the Socialand Ethics Committee

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The Group

Robert Eric Katz (48)Chief Financial Officer

MCom (cum laude) (RAU) CA(SA)

Rob served articles at Ernst & Young after whichhe served as group financial director of EducorLimited. He then joined Standard Bank and wasemployed in various senior executive positionsincluding global chief financial officer for Personaland Business Banking, managing director of thewealth division and managing director of HomeLoans. Rob was appointed as Chief FinancialOfficer of Peregrine with effect from 1 March 2010.

Pauline Goetsch (44)BCom, BAcc (Wits, 1992), CA(SA),

Dip Banking Law (RAU, 1996), CFA

After qualifying as a Chartered Accountant, aswell as completing an advanced diploma inbanking, Pauline Goetsch joined the riskmanagement division of Investec Merchant BankLimited in 1995, where she was responsible forthe evaluation of operation and price risk. Shejoined Peregrine in July 1997 and served asgroup financial director from 2001 to February2010. Pauline remained as a non-executivedirector on the Peregrine board following herresignation. She is currently based in London asManaging Director of ApexHi UK Limited, theinvestment advisor to a property income fund.

Mandy Yachad (52)Executive Director

BCom LLB (Wits)

Prior to joining the Peregrine group on 1 October1999, Mandy practised at Werksmans Attorneysfor 14,5 years, the last nine years as a partnerin the commercial department. After being aninvitee to board meetings since February 2003,he was appointed as an executive director to theboard in November 2010. Mandy’s responsibilitiesinclude head of internal corporate finance andgeneral legal functions within the Peregrine groupand he is also the designated representative ofthe Company Secretary.

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The Group

Advocate Leonard Harris SC (51)Chairman

BCom LLB (Wits) MBA (Wits)

Leonard is currently in practice as an advocateat the Johannesburg Bar. Prior to commencingpractice as an advocate, from 1988 to 1991 hewas employed by Johannesburg ConsolidatedInvestment Company Limited in its PlatinumDivision (now incorporated into Anglo AmericanPlatinum Corporation Limited) where he wasinvolved in the financial and legal structuring andimplementation of international operations.Leonard was appointed to the Peregrine boardon 24 May 2001.

Veronica Nomfanelo Magwentshu (42)BSC (Walter Sisulu University)

BSC Hons (University of KwaZulu-Natal) MBA (GIBS)

Nomfanelo has extensive experience in strategydevelopment and operational management. Sheis currently an independent advisor to variouscompanies. Prior to that Nomfanelo held variousexecutive roles including that of Chief OperatingOfficer of 2010 FIFA World Cup OrganisingCommittee South Africa and executive positionsat South African Airways. She is currentlychairperson of the South African ForestryCompany Limited (Safcol), an independent, non-executive director of Nampak Limited,Chairperson of the Eastern Cape DevelopmentCorporation (ECDC), and non-executive directorof Coega Development Corporation (CDC) andAir Traffic Navigation Services (ATNS). Nomfanelowas appointed to the Peregrine board on 1 July2011. Nomfanelo, who retires by rotation at theupcoming annual general meeting, has indicatedthat she will not be making herself available forre-election.

Bernard Clive Beaver (71)CTA (Wits) CA(SA) Dip Banking Law (RAU)

After qualifying at Whiteley Bros (a predecessorfirm to Deloitte & Touche), Clive spent a briefperiod in industry, some time with the IndustrialDevelopment Corporation and then with amerchant bank, prior to becoming a partner atDeloitte & Touche in 1980. During his 25 yearsas a partner he served a wide range of clientsincluded in the financial services sector and hasbeen fully involved, since 1993, in servicing banks(merchant and retail), securities traders, short-term insurers and unit trusts. He chaired SAICA'sStockbrokers Interest Group for several years,was a member of SAICA's Short Term InsuranceInterest Group and SAICA's Banking InterestGroup. He has also undertaken specialinvestigations on behalf of the SA Reserve Bankand the JSE. Clive retired as a senior partner ofDeloitte & Touche’s Financial Services Team on31 December 2004 and remains a member ofSAICA and the Institute of Directors. Clive wasappointed to the Peregrine board on3 January 2005.

Directorate Continued

29

The Group

Lungile Myrtle Ndlovu (55)BA (University of Zululand) MA (University of Westminster)

Higher Diploma in Personnel Management (Wits)

Lungile was Chief Human Resources Officer ofthe Vodacom Group for eleven years, duringwhich time she held board positions and was amember of the respective remunerationcommittees of Vodacom Mozambique, VodacomDRC, and Gateway. Lungile was also a memberof the Senior Leadership team as well as the HRLeadership team of Vodafone, the parentcompany of Vodacom. Prior to joining Vodacom,she served as Group General Manager: HR forPrimedia and Group HR Manager for OtisElevators South Africa. Lungile serves on theBoard of Trustees of the Vodacom GroupFoundation. She is currently the Chairman of thePeregrine Social & Ethics Committee. Lungilewas appointed to the Peregrine board on 1 July2011. Lungile, who retires by rotation at theupcoming annual general meeting, has indicatedthat she will not be making herself available forre-election.

Steven Ivan Stein (56)B Compt (Hons) CA(SA) H Dip Tax Law

Steven fulfils the role of chairman of Peregrine’sAudit, Risk and Compliance and RemunerationCommittees and has been a member of thePeregrine board since 2007.Steven spent 15 years as a senior partner in afirm of South African Chartered Accountants. InMarch 2002 Steven co-foundedSwissIndependent Trustees an Offshore TrustCompany operating in Switzerland, Malta,Panama and South Africa. He maintains his roleas Chief Executive Officer of SwissIndependentTrustees and has an active role with numerousglobal clients and interfaces with global regulatorsand tax administrators. Steven has broadinvestment banking, private equity and corporategovernance experience and holds a variety ofleadership and advisory roles on boards of publicand private companies.

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In 1991 Stefaan qualified as a CharteredAccountant after serving articles with DeloitteHaskins and Sell. He then joined Anglo AmericanCorporation as an Internal Auditor for the periodof three years. Recruited by SAB Beer Divisionfor an executive financial position, Stefaan servedas a Financial Manager at the Rosslyn Breweryfrom 1992 to 1994. In 1995, he became a partnerin a multi-national auditing firm, which wasrenamed Fisher Hoffman Sithole. In 2001 hebecame a partner at Sithole AB & T Incorporatedand since 2002 he has been the managing partnerof Sithole Incorporated and Sithole SS CharteredAccountants. Stefaan has served, and continuesto serve, as chairman and member of numerousprivate and public sector audit committees aswell as trustee to various entities. His relationshipwith Peregrine commenced in November 2006when he became trustee of Peregrine’s threeempowerment trusts and was later appointed tothe board of Nala Empowerment InvestmentCompany and Peregrine SA Holdings.

Stefaan Sithole (56)BCom BAcc (Wits) CA(SA) Diploma in Business

Management (University of Natal) CIA

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Group structure – Peregrine Holdings Limited

Asset Managment

Peregrine Capital(Pty) Ltd 50 %

Caveo Fund Solutions(Pty) Ltd 49,9 %

Green Oak Capital(Pty) Ltd 50 %

SA Alpha CapitalManagement Limited 49,9 %

Beauclerc Limited 60 %

Citadel Group 100%Wealth Management

Peregrine Direct Limited 100 %Peregrine Equities

(Pty) Ltd 100 %

Peregrine Derivatives(Pty) Ltd 100 %

Peregrine Financial Products(Pty) Ltd 100 %

Peregrine Securities(Pty) Ltd 65 %

Broking & Structuring

Stenham Limited 62,7 %Stenham

Peregrine SA Holdings(Pty) Ltd 80%

Sandown Capital(Pty) Ltd 100 %

Group Investments

Citadel

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0133

34

0

10

15

25

5

20

2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13

March September

Citadel – AUM (R’bn)

2013 2012Revenue R493 million R402 millionProfit* R133 million R109 millionAssets undermanagement R23,5 billion R20,5 billion

Citadel

* Profit is represented before tax, reflecting amountsafter minorities, before intangible amortisation and share-based payment cost.

34

CITADEL CLIENTRETENTION RATE

96

20YEAR ANNIVERSARY

1993–2013

New identityCitadel rolled out abrand new look thatvisually captures thecompany’s spirit.

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Citadel is a Wealth Management business specialising in comprehensive andintegrated wealth advice incorporating financial planning, asset and investmentmanagement and estate structuring for high net worth individuals and families. Itoffers a global solution which incorporates financial and investment planning in allmajor currencies, comprehensive estate and fiduciary planning including local andoffshore trust advice, and international holding structures.

Founded in 1993, Citadel currently employs 310 people, including an advisory teamof 135. Its underlying investment philosophy is based on four key tenets:

• Asset allocation drives performance• Effective diversification reduces risk without compromising returns• Value investing makes sense• The future is uncertain and will often surprise

Citadel is deeply committed to serving its clients. The company offers objectiveadvice and customised, individualised risk management. Its reputation is evidentin its continuing strong client retention rate and increasing level of client investments.

Review of operations

Revenue increased by 23% to R493 million (2012: R402 million) driven mainly bythe addition of new businesses, increased investment returns and new servicesand products, which led to higher assets under management and higher fees earned.The profit reflected during the current year is after taking into account an effective14% Nala minority with effect from 1 October 2012. Citadel increased profit by 22%to R133 million (2012: R109 million) with assets under management increasing toR23,5 billion (2012: R20,5 billion). Gross inflows amounted to R2,1 billion.

Citadel maintained its client retention rate in excess of 96%.

The business’ performance in the face of a challenging economic landscape wassatisfactory. The wealth management space was characterised by rationalisationand consolidation during the year resulting in greater concentration on South Africanclients. Overall this is healthy for the industry and should ensure that better valueis provided to clients through a more focussed approach on core competencies.

Citadel’s local and offshore portfolios delivered positive returns in line with financialmarkets. The research and development of new, innovative solutions was successfullyexecuted during the year, which has positioned the business for further growth. Thewell diversified and broad offering available ensures that advisors can meet theirclients bespoke objectives and needs which contributes to the overall client experience.The business continues to invest in its people through dedicated training and mentoring.

Trading conditions are expected to be tough in the year ahead. The potential consequentialimpact on clients’ confidence will demand extensive focus on client relations.

Citadel Wealth Management is a pioneer and innovator in the privateclient wealth management space in South Africa and manages morethan R23 billion worth of assets on behalf of some 3 850 individuals andfamilies.

BUSINESS SEGMENTS

Citadel

Stenham

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2013 2012Revenue R76 million R61 millionProfit* R16 million R13 million

Stenham Trustees

* For all business divisions profit is represented before tax,reflecting amounts after minorities, before intangible amortisation, impairment and share-based payment cost


Stenham Asset Management

Stenham Asset Management runsa total of 13 funds (12 hedge funds and1 long only fund) across variousstrategies including: Multi Strategy,Global Macro, Equity Bias, Creditand Commodities.

Germany 70%

UK 18%

Swiss 7%

USA 3% Japan 2%

Stenham Property –AUM Geographic spread

38

GermanyEUR

UKGBP

SwissCHF

USAUSD

JapanYEN

USD LiborStenham Trading MSCI World JP Morgan Global Govt Bond

’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13

0

’97’96’95’94

50%

100%

150%

200%

250%

300%

350%

400%

450%

Stenham Universal USD cumulative performance

Stenham Trading USD cumulative performance

The firm's history of investing in hedgefunds is best represented by its flagship20+ year funds: Stenham Universal(Multi Strategy) and Stenham Trading(Global Macro) Funds, highlighted inthe two graphs above.


Stenham Property

Stenham Trustees – Profit (R’m)

0

8

12

4

16

Mar’10 Mar’11 Mar’13Mar’12

USD LiborStenham Universal MSCI World JP Morgan Global Govt Bond

’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13

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50%

100%

150%

200%

250%

300%

’97’96’95’94’93’92

350%

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Stenham is an international financial services group and has been activein investment management for over 25 years. The group provides arange of alternative asset management investment solutions with assetsunder management of R43,5 billion (2012: R42,3 billion).

BUSINESS SEGMENTS

Stenham

Stenham Limited is an international financial services group providingalternative asset management investment solutions, operatingthrough three independent divisions: Stenham Asset Management,a global hedge fund-of-funds business; Stenham Property, a globalproperty investment manager; and Stenham Trustees, which providestrust and corporate administration services.

Peregrine held a 62.7% stake in Stenham at year-end, following anumber of share-repurchase transactions during the year, with theremainder held by outside investors, together with managementand directors of group companies.


Stenham Asset Management provides market leading investmentsolutions to institutions, charities, private banks and family officesincluding both discretionary portfolios and funds. The business aimsto deliver consistent capital growth implemented through a strategyof diversification to control the level of risk in a client’s portfolio.

Stenham Property

Stenham Property offers investors access to international commercialreal estate opportunities either through discretionary closed-endedreal estate funds, or the ability to co-invest in direct syndications.

Stenham Trustees

Stenham Trustees, operating from Alderney and Guernsey, advisesinternational clients on the establishment and administration of acomprehensive range of onshore and offshore structures.


After eliminating the effect of the impairment in the carrying valuesof the goodwill and intangibles relating to the Stenham businesses,Stenham’s contribution to Peregrine’s earnings declined by 28%,to R85 million (2012: R118 million), with both Stenham AssetManagement and Stenham Property divisions experiencingchallenging trading conditions.


The Asset Management division had a particularly challenging year,on the back of declining assets under management and lowermargins as the division continued to experience the effects of theprolonged period of uncertainty evident in the financial markets andthe fund of funds industry in particular.

The launch of three new funds during the year, namely the EmergingMarkets Fund, a Credit Opportunities Fund and a specialistHealthcare Fund were favourably received by investors, withimpressive investment performance achieved to date.

Assets under management as at 31 March 2013 were 8% lowerthan at the end of the previous financial year, at R18,9 billion(2012: R20,6 billion). Performance fees were marginally up on theprior year, on the back of the successful launch of the equity andemerging markets funds. While operating costs were 5% down onthe previous year, this improvement was not enough to offset the27% decline in net revenue.

Stenham Property

Property division was impacted by fewer fee-generating transactionsduring the period and the non-recurrence of exceptional profitsearned in the prior year as the team continued to focus on therefinancing and management of existing investment portfolios.Highlights included the purchase, in joint venture, of the ParamountHotel in New York and the acquisition of Regents Arcade Housein London. There were several disposals completed during the year,the largest of which was the sale of Victoria Street, London. Inaddition to these transactions, a substantial refinance of the EuropeanShopping Centre Fund was successfully completed during theperiod under review.

The gross value of investment properties managed on behalf ofclients as at 31 March 2013 amounted to R24,6 billion(2012: R21,7 billion).

Stenham Trustees

The Trust division performed ahead of expectations over the year,increasing its contribution to group earnings as the benefits oftighter cost management and productivity improvements continuedto flow through.

Peregrine Securities

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0141

42

2013 2012Revenue R385 million R332 millionProfit* R58 million R96 million


* Profit is represented before tax, reflecting amountsafter minorities, before intangible amortisation and share-based payment cost.

Top Rated DerivativeDealing and ResearchHouse In South Africa

Financial mail 2012/2013

administration with clientassets in excess of R16 billion

Niche business focusing onElectronic trading, Derivativesand Prime services

Trading and executionproducts allowing seamlessand robust marketconnectivity

Bespoke Derivative researchand consulting services withagency best execution

HEDGE FUNDPRIME SERVICES &...........................

Top 5 JSEEquity and Derivativemember by volume andnumber of trades

Business segments

43

Peregrine Securities is a leading South African broking and derivative structuringbusiness. The client base includes local and foreign hedge funds, investment banks,institutional fund managers, life assurers and high net worth individuals.

With a niche focus on electronic execution, derivatives and prime servicesadministration, the business model is distinguished by a foundation in technologyand best execution services. This is augmented by a multi-asset electronic primeservices reporting platform, top rated derivative research and non-proprietaryconsulting and structuring solutions to clients.

With a focus on seamless trading services and products, the client is assured ofaccessing markets through robust connectivity backed up by a team focused onhigh trading volumes and support.


The overall performance for the year was satisfactory, particularly relative to theenvironment. Revenue increased 16% from R332 million to R385 million. The profitreflected during the current year is after taking into account an effective 14% Nalaminority with effect from 1 October 2012 and included for the first time a 35%management minority with effect from 1 April 2012. This generated a net operatingprofit of R58 million (2012: R96 million). Direct costs associated with trading wereup 20% to R118 million while fixed operating expenses were up 8% to R95,4 million.

In addition to an increased cost base combined with a market regulatory andcompliance focus, the human input and trading costs associated with businesscontinue to escalate. However with these further barriers to entry and complexityin the broking space, Peregrine Securities remains well positioned and entrenchedin its niche business focus.

Peregrine Securities houses the group’s derivative, equity and primeservices entities. Through its operating subsidiaries, the business is oneof the largest stock broking operations in South Africa, and is a top JSEequity and derivative member by volume and deals processed.

BUSINESS SEGMENTS


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Peregrine Capital

2013 2012Revenue R177 million R141 millionProfit* R72 million R62 millionAssets under management R2,9 billion R2,6 billionAssets under advisory mandate R485 million R312 million

* Profit is represented before tax, reflecting amounts after minorities,before intangible amortisation and share-based payment cost.

Company interaction

543Management

meetings

384Results

presentations

52Site visits 33

Conferences

’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13

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1 000

2 000

3 000

4 000

5 000

6 000

Performance Strategy Composite Market Neutral Strategy Composite ALSI TRI

StrategyCompound annual returnssince inception

PerformanceStrategy Composite 30.6 %

Market NeutralStrategy Composite 24.5 %

ALSI TRI 17.0 %

Cumulative net return of Performance Strategy Composite and Market Neutral Strategy Composite,showing CAGR and ALSI

Peregrine Capital historical performance

StrategyCompound annual returnssince inception

30.5 %

ALSI TRI 16.1 %

High GrowthStrategy Composite

Cumulative net return of High Growth Strategy, showing CAGR and ALSI

The tenure of the majorsegregated portfolios managedby Peregrine Capital

Portfolio 1 15 yearsPortfolio 2 13 yearsPortfolio 3 & 4 10 yearsPortfolio 5 10 years

’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13

0

3 500

ALSI TRIHigh Growth Strategy Composite

3 000

2 500

500

1 000

1 500

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The company strives to deliver sustained high, risk-adjusted returns over the medium-term by focusing on bottom up stock selection and implementing disciplined andconsistent research procedures.


Peregrine’s share of profit increased to R72 million (2012: R62 million) due to stronginvestment performance on both absolute and relative bases. With effect from 1October 2012, the current year’s profit is after taking into account an effective 14%Nala minority.

Peregrine Capital manages three different investment strategies namely MarketNeutral, Performance and High Growth. Investor returns (after fees) were pleasingin absolute terms and on a risk adjusted basis:

• High Growth Strategy 35.1%• Performance Strategy 21.1%• Market Neutral Strategy 17.4%

The JSE All Share Index returned 22.5% for the year on a total return basis.The equity content remained conservative with the following averages per strategyfor the period under review:

• High Growth Strategy 55.0%• Performance Strategy 41.9%• Market Neutral Strategy 18.4%

Whilst Peregrine Capital experienced net fund outflows, as a result of the superiorreturns the asset base grew 17% to R3,4 billion.

Global macro tail risks have reduced somewhat during the year with the Europeansovereign debt situation improving to some extent and the US outlook improving,these being offset by increased uncertainty related to China. South African specificrisks continue to increase due to a slowing economy, bad debts on unsecured loansincreasing and significant labour disruption related to wage negotiations expected.Accordingly, the funds remain conservatively positioned.

Peregrine Capital is the group’s flagship hedge fund manager andone of South Africa’s largest dedicated hedge fund managers, withR2,9 billion assets under management, with a further R485 millionunder advisory mandates. Since inception in July 1998, PeregrineCapital has consistently delivered exceptional results across its suiteof funds which are managed with a primary focus on investing in listedequity related instruments in South Africa, with opportunities beingsought in the large, mid and small cap stocks.

BUSINESS SEGMENTS

Peregrine Capital

Attribution of returnprofile across 21investment sectors

47

The proprietary investments on the Balance Sheet continued their strongperformance following on from last year, albeit off a lower base followingthe distribution of the CIL shares by way of a special dividend. After thedistribution of 6.984 million CIL shares to shareholders, proprietaryinvestments achieved income of R118 million (2012: R162 million).The value of the CIL shares distributed to shareholders was R84,5 millionat the time of distribution and R136,2 million at year-end.

The net investment into hedge funds amounted to R390 million(2012: R437 million) with the percentage return on average net investmentamounting to 28% (2012: 18%).

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Proprietary Investments

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Material issuesCorporate accountability for a sustainable future

Peregrine has initiated an evolving process of identifying andmanaging the material issues which the board believes are criticalto sustaining future growth. This process supports the group’scommitment to integrated reporting and application of the principlesof guiding frameworks, such as the King III Report and the GlobalReporting Initiative.

The dual processes of stakeholder identification and engagementare therefore key building blocks in determining the material issues.As a business that deals in intangibles, the respective relationshipsbetween Peregrine and its stakeholders are the threads that givethe business form, from the skills sets and expertise of its people,through invaluable collaboration with its partners, to the loyalty ofits clients. Stakeholder relationships further provide the gateway toidentifying the key influencers of their decision-making, which inturn informs strategy. The role of all different stakeholders has longbeen acknowledged by Peregrine and the group recognises theneed to take account of and respond to the legitimate interests andexpectations of stakeholders, as mandated in the Board Charter.

Peregrine has identified its stakeholders as individuals or groupswho potentially affect, or are affected by, the group and its operations.These include stakeholders with a material influence such asshareholders, providers of capital, investors, business partners,employees, regulatory authorities and, more broadly, the communityin which the group operates, the media and society at large.

Peregrine recognises theneed to take account of andrespond to the legitimateinterests and expectationsof stakeholders

External environment

• Global economic conditions• Local political and economic conditions• Market conditions• Interest rates & foreign exchange volatility• Regulatory environment

Income, growth & return

• Strategic growth drivers• New opportunities• Organic growth• Innovation• Cost management

Transformation

• Ownership• Employment equity• Skills development• Preferential procurement• Enterprise development• Social-economic development

Human capital

• Skills attraction, development & retention• Employee engagement• Safety, health and environment (SHE)

Reputation management

• Investor relations• Corporate governance• Code of conduct/ethical policy• Expectation management• Customer relations

Operational risk management

• Internal financial controls• Conduct and ethical behaviour• Risk management• IT management & protection of information• Compliance

MATERIAL ISSUES

Following stakeholder input, six material issues wereidentified as outlined below:

Shar

ehol

ders

/Pr

ovid

ers

ofC

apita

l

•Annual general meeting•Regular investor presentations/road shows

•Regular one on one meetings• Integrated Report, SENS, resultsannouncements posted on website, published in business press and posted to shareholders

•Engagement with financial media•Chief Executive Officer and ChiefFinancial Officer readily available

Provide financialcapital to drivegrowth

Sustainablereturns

Foundation of operationsand drivers of growth

A stimulating and rewarding workenvironment that encourages,trains and appropriatelyincentivises excellence

Support the longevityof the business

Exceptional, available,dedicated service that yieldsconsistently superior returns

Communities Society

EmployeesClients

Reg

ulat

ory

auth

oriti

es

• Regular review meetings•Ongoing written communication•Seminars

Provider of variouslicences to groupcompanies

To behave asan exemplarycorporate citizen

•Bi-annual feedback and reporting from Socio-economic development (SED) partners, ORT SA, Study Trust and GOLD Peer• Continuous communication with SED partners to identify further potential projects

• Woman's Day reach out to woman• Market days as fundraisers for communities• Involvement with communities on Mandela Day• Spearheading a new philanthropy initiative with clients• Participation in outreach projects by employees• Annual site visits

The communities from where ouremployees and clients originate

Support, assistance andupliftment for self-sustainability

•Ongoing education of employees in respect ofB-BBEE principles and practices

•Enterprise development initiatives•Advertising is aligned with best practice codes of conduct•Corporate social investment• Education of woman – Understanding fundamentals of investments• Student engagements and holiday programs• Learnerships

The society from which ouremployees and clients originate

To contribute positivelyand effect change in the societyin which we operate

•Regular client seminars•One on one meetings•Client newsletters•Conferences

What ourstakeholders

expect from usWhy we value our

stakeholders

How we engagewith our

stakeholders

Stakeholdergroup

While the current forms of stakeholder engagement, the rationale therefore andoutcomes thereof are tabled below, Peregrine recognises that stakeholder interestsare dynamic and require ongoing management.

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Stakeholder engagementInteraction facilitating better communication

•Open door policy•Senior executive road shows• Internal newsletter•Peregrine intranet•Annual company climate surveys in certain subsidiaries• Family days and Health days• 360 performance reviews in certain subsidiaries• Counselling• Mentoring and coaching programs• Training grants for personal development• Human Development Forum

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Steakholder engagementCorporate accountability for a sustainable future

2013 2012 2011 2010 2009

Income statementTotal revenue (R’000) 1 737 305 1 767 089 1 683 965 1 544 887 1 452 013(Loss) / Profit from operations (R’000) (473 362) 517 809 480 475 496 504 307 485Headline earnings (R’000) 286 371 321 450 287 249 266 468 73 067Attributable (loss) / earnings (R’000) (466 669) 313 860 307 952 267 298 118 041Headline earnings per share (cents) 138,9 147,7 131,9 124,4 33,9Ordinary dividend per share declared subsequent to 31 March (cents) 72,0 72,0 35,0 31,0 13,0Special dividend per share (cents) 28,0 42,4 - - -Number of shares outstanding (adjusted for treasury shares) (’000) 196 307 217 576 217 763 217 393 214 151

Statement of financial positionShareowners’ equity (R’000) 1 706 938 2 184 309 1 732 023 1 496 856 1 417 880Return on average equity (%) (24,0) 16,0 19,1 18,3 7,8Net asset value per share (cents) 869,5 1 003,9 795,4 688,5 662,1Net tangible asset per share (cents) 628,3 508,4 350,0 236,9 119,8Gross assets under management (Rm) 78 641 72 823 81 553 76 973 80 863

PersonnelNumber of employees at year-end 524 558 565 579 573

Definitions:Shareowners’ equity: Equity attributable to equity holders of the companyAverage shareowners’ equity: Average of shareowners' equity at the beginning and end of the financial yearReturn on average equity: Attributable earnings as a percentage of average shareowners' equityNet asset value per share: Shareowners' equity divided by the number of shares in issue at year-end, net of treasury sharesNet tangible asset per share: Shareowners' equity, net of intangible assets, divided by the number of shares in issue at year-end, net of treasury shares

Five-year reviewfor the year ended 31 March

2013 2012R'000 % R'000 %

Wealth created

Revenue, investment returns and interest 1 842 242 1 851 133 Cost of services and borrowings (624 172) (720 973)

1 218 070 1 130 160

Distribution of wealth

Employees 386 101 32 368 955 33

GovernmentTaxes and levies1 347 561 29 239 363 21

Shareholders 221 334 18 228 651 20Non-controlling interests2 5 157 - 152 434 13External shareholders 216 177 18 76 217 7

Reinvestment 263 074 21 293 191 26

1 218 070 100 1 130 160 100

Value added distribution over five years (%) 2013 2012 2011 2010 2009

Employees 32 33 31 30 40Government 29 21 23 26 28Shareholders 18 20 21 15 25Reinvestment 21 26 25 29 7

100 100 100 100 100

1 Deferred taxation is classified as a distribution to government as part of taxes and levies. 2 Non-controlling interests are classified under shareholders.

Value added statementfor the year ended 31 March

SUSTAINABILITY

52

SECTIONNo.

02

53

54

Transformation

Peregrine is committed to transformation as a critical businesspractice, not only for the group’s sustainability, but also for that ofthe South African society in which a large part of its businessoperates. Peregrine further acknowledges the reputational andoperational risk inherent in failing to meet its B-BBEE objectives.To this end Peregrine has an established Group TransformationForum (“GTF”), which meets at least three times a year.

The GTF comprises member representation of all groupings withinPeregrine and functions as a discussion group and an advisorybody to the board. Members include Chief Executive Officer JonathanHertz, Chief Financial Officer Robert Katz, Executive Director MandyYachad, Citadel HR Director Marina Knox, Director of Nala RupeshGovan and representatives from the various companies in the group.The key objective is to drive Peregrine’s address of all elements ofthe B-BBEE scorecard in the spirit of authentic transformation. Theboard assumes responsibility for the dialogue on transformationand diversity between employees and management.

The full scope of the GTF’s responsibilities includes:

• Employment Equity• Skills Development• Preferential Procurement• Enterprise Development• Socio-economic Development

To support the GTF and ensure alignment of B-BBEE objectivesthroughout the group’s South African subsidiaries, Peregrine hasalso set up a Transformation Work Group and a SustainabilityForum, both comprising representatives from senior to juniormanagement. The Transformation Work Group meets every threemonths to practically monitor progress against targets in all aspectsof the scorecard. Going forward, Transformation Work Groups willbe established in all subsidiaries and it will be their responsibilityfor setting specific focus areas and targets for their companies. Theaim of the Transformation Work Groups is to have an in-depthunderstanding of the scorecard and the related strategic imperatives.As a result, these Work Groups will receive in-depth training inrelation to all elements of the scorecard.

The Work Group is very hands-on and comprises individuals whoare exposed to procurement, training and employment on a dailybasis, while the Sustainability Forum focuses specifically on socio-economic development projects and Peregrine’s broader sustainabilitystrategy. The GTF provides a platform for sharing lessons learntfrom both the Work Groups and Forum.

Peregrine is in the process of aligning its transformation reportingwith the Financial Services Charter. During 2013, the Work Groupswill be attending specific training in this regard.

Peregrine’s overriding B-BBEE objective set in 2012, to attain aLevel 4 rating by 2014, is still a crucial focus point. For the yearunder review, the group has changed ownership significantly inorder to address long-term sustainability and ownership for allgroups concerned. As a result of the restructure, we are still in theprocess of finalising our B-BBEE rating.

South African subsidiaries, including Citadel and Peregrine Securities,elected to have their individual scorecards verified. In the mediumto long-term all other subsidiaries will have measured and externallyvalidated scorecards to help determine strategic drivers for2013–2017.

Specific focus groups such as the Sustainability Forum, GTF andTransformation Work Groups are tasked with implementing groupstrategy to improve the group scorecard. This is further fostered bycollaboration between subsidiaries in this regard. Focus areasinclude skills development, procurement and enterprise development.

Ownership

In line with the Peregrine group’s sincere attempt to progresstransformation, Nala was established to be a sustainable Broad-Based Black Investment company.

70% of Nala is owned cumulatively by the Peregrine EducationalTrust (35%), the Peregrine Community Development Trust (15%)and the Employee Portfolio Investment Trust (20%). These trustshave been established to benefit Peregrine’s black staff, to aid incommunity development and to promote the advancement ofdisadvantaged individuals through education. The remaining 30%of Nala is owned by Peregrine Holdings Limited.

In terms of the group restructure, Nala converted its 12,5%aggregate stake in Peregrine Holdings Limited (the listed company)for a 20% stake in Peregrine SA Holdings, the entity which ownsthe South African operating subsidiaries including Citadel, PeregrineCapital and Peregrine Securities. This direct holding into theunlisted holding company of the South African operations will, overtime, enable Nala to participate in the cash flow of the business.

In addition, Peregrine Equities holds a significant minority stakein Legae Securities, the oldest empowerment stock broker inSouth Africa.

Board representation

At year-end the board included two female black independent non-executive directors, equating to a 20% black representation. Bothretire by rotation at the upcoming annual general meeting andhave indicated that they will not be making themselves availablefor re-election.

Employment equity

A formal Employment Equity Policy is in place for all employeesand potential candidates. Of the group’s 409 (2012: 423) SouthAfrican employees, 33% (2012: 33%) are black. The EmploymentEquity Policy stipulates a specific focus on recruiting blackcandidates, and to this end the first two-month period in therecruitment process is dedicated to the exclusive fulfilment ofemployment equity positions. This principle remains our core focusyear on year. The table below highlights the percentage ofemployees that are black by employment category:

2013 2012Number of %* Number of %*

Category/ level employees employees

Top management 14 0 13 0Senior management 12 17 20 10Professionally qualified 137 9 130 11Skilled 162 36 182 38Semi-skilled 64 80 64 66Unskilled 10 100 11 100Disabled 10 90 3 33Total 409 33 423 33

*Percentage of workforce which is black.

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The decrease in staff members did not affect the percentage ofthe workforce which is black, supporting our drive towardsemployment equity and transformation.

Most significant changes occurred in disabled staff due to thespecific learnership program aimed at providing disabled individualsthe opportunity to gain work experience.

The reduction in the senior management category was as a resultof structural changes in subsidiaries within the group.

Discrimination on any level is not tolerated. Should any suchdiscrimination occur it is immediately and appropriately dealt within terms of the group’s Code of Conduct and attendant disciplinaryprocedures. Sensitisation amongst African cultural groups withinthe organisation was raised in response to specific needs wherecultural values of different African cultures and people wereexperienced. This was dealt with by the facilitation of culturaldiversity and tolerance for all cultural traditions and principles.

While Peregrine encourages freedom of association to its employees,at this point no employees have undertaken to join a union.

Skills development and training

The group’s skills development programme is aimed at empoweringemployees to reach their full potential. During the year R2,7 million(2012: R3 million) was committed to training, encompassing formalprogrammes, internal work sessions, regulatory education andformal and informal mentoring. Of the participants 30% were black.

All employees have the opportunity to be exposed to trainingand development.

The table below illustrates the external and internal training coursesattended in 2013 and 2012 respectively:

Number of2013: External Training attendees

Brain Profile 99Customer Services 13B Com. Degrees and Diplomas 30Regulatory Exams 35Financial Planning Certificate 19Business Writing 10Investment Conference 18Leadership Stamina 16Rape and Hijack 49Teamwork 31Mentoring 61VAT Seminars 3Risk Management 2Leadership Development 8Individual Coaching 8IFRS Update 6Ethics 2Regulation and Ethics of SA Financial Markets 2Introduction to Financial Markets 2Equity Markets 1Settlement Course and Exams 2MBA for Office Professionals 1BCA New York Conference 1Registration Financial Planning Institute 90Tradetech Conference 1

Number of2013: Internal Training attendees

Asset Management Training 150IFRS Update - KPMG 13Induction 44Partner Training 105Partner Operations 105FICA and FAIS 98Systems Training 91Strategic Financial Investment 107Learnerships 10Tax Workshop – Deloitte 14

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The group’s skills developmentprogramme is aimed atempowering employees to reachtheir full potential.

Number of2012: External Training attendees

B.Com Degrees and Diplomas 31Technical Certificates and CPD 49Personal Development and Leadership 224IT 18Health and Safety 16Language Skills 14Regulatory Training and Conventions 110Client Services 22Brain Profile 320Effective Meetings 10

Number of2012: Internal Training attendees

Mentoring 19Asset Management Training 110Induction 36Partner Training 110FICA and FAIS 68Operations Meetings 80

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During the year, as part of a one year program, 10 learnershippositions were established as a specific focus to provide opportunityfor disabled individuals. Within the year, two learners were ableto secure permanent employment. Learners receive the opportunityto gain life skills, on the job training and work place etiquette toname a few.

In addition, Legae Securities is hosting a graduate program whichis designed to improving the quality and quantity of BEE skills inthe South African stockbroking industry. Two individuals arecurrently exposed to the extensive graduate program whereknowledge transfer, talent development and technical skills withinthe stockbroking arena are transferred.

A mentorship program was implemented during the year where60 employees received training and 40 mentor-mentee relationshipswere formed with specific emphasis on skills transfer, personaldevelopment and internal coaching.

Coaching provided by external coaches has been offered as aspecific development plan for individuals to achieve a higher levelof work-life balance or personal meaning.

The aim for the year ahead is to establish a registered TrainingAcademy with registered training programs to support businessimperatives of continuous further education.

Preferential procurement

The group is committed to developing committed and supportiverelationships with B-BBEE service providers and is targeting a70% Black allocation of procurement spend to suppliers as perthe Codes.

Enterprise development

Peregrine has in place Enterprise Development Agreements withblack-owned companies including Cut 2 Black, Masake Sportsand Logistics, Energy, Travel Motives, and GOLD Consulting.Enterprise development partners were exclusively used in arranginginternal client events as well as employee incentive trips. Peregrinecontinues to focus on developing procurement partners throughsuch agreements and enterprise development is a specificdevelopment and scorecard focus for the year ahead, with particularemphasis on building businesses through direct enterprisedevelopment, as well as supporting businesses throughprocurement initiatives.

Specifically, Peregrine has entered into an enterprise developmentagreement with its long standing SED partner, GOLD PeerEducation Development Agency. The process and trainingmethodology of developing peers to educate communities, andprogrammes such as HIV/Aids awareness, has been exceptionallysuccessful and led to the development of GOLD Consulting. GOLDConsulting has established accredited training programmes applyingthe GOLD Peer Education methodology and principles, to providetraining for organisations and thereby ultimately becoming aprofitable business. All profits from GOLD Consulting will go directlytowards GOLD Peer Education Development Agency, allowingthem to become less dependent on sponsorships. Peregrineprovided strategic business development assistance and granted

a loan to GOLD Consulting. This partnership has resulted in GOLDPeer Education Development Agency being able to register anddevelop all its training material for accreditation and is consistentlyachieving its business objectives. GOLD Peer EducationDevelopment Agency has provided training for the Department ofBasic Education, Standard Bank and many government projectsto name a few. They also have a healthy pipeline of companiesinterested in their training programs

In addition, the investment in stockbroker Legae sees Peregrineproviding infrastructure, technology, capital and skills transfer.

Socio-economic development

Peregrine is committed to advancing local communities throughsocio-economic development and empowerment programmes.The group allocates approximately 1% of the prior year’s NPAT(attributable to equity holders) to various initiatives, which duringthe year totalled R3,7 million (2012: R3,1 million). To date thegroup’s initiatives have focussed on South Africa and in particularon education. Beneficiaries are guided and decided by the GTF.

CSI expenditure is provided in the table below:

Transformation Continued

Focus area Rand

Education 1,5 millionHealth – HIV 1,0 millionBasic needs and social development 1,0 millionEnterprise development 0,2 million

Total 3,7 million

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Study Trust

Study Trust supports learners in furthering their education infinancial services at top South African universities. Through financialassistance, Peregrine is helping to support the current 6 blackstudents studying for BCom degrees.

ORT SA

Peregrine provides over 80 teachers in 18 schools with practicaltools to enhance their teaching skills in the areas of mathematics,science and technology.

Reach Out

Reach Out is a programme for Peregrine staff to “reach out” tocauses of their choice. Beneficiaries such as crèches, old agehomes and other projects are chosen by champions in the variousoffices. One of the beneficiaries includes Orphanage 5C, a carecentre close to the Sandton offices. Projects require not only financialcontribution but also the active participation of employees. Theseprojects create the opportunity for Peregrine employees to give ofthemselves to others – a truly humbling and enriching experience.

GOLD (Generations of Leaders Discovered)

GOLD was founded in September 2004 to respond pro-actively tothe increasing incidence of HIV infections and risk behaviour amongstyouth and its negative impact on education and communities atlarge. Volunteers receive HIV/AIDS education and training and inturn go into the community and train other youngsters and thecommunity at large. This initiative reaches up to 61 000 people.

GOLD Peer Education Development Agency

The GOLD Peer Education model has been pioneered over thelast six years, and drew on best practice global research togetherwith the accumulated knowledge of pioneering NGO's implementingpeer education in Southern Africa. In Mpumalanga, Peregrine haspartnered with GOLD Peer Education Development Agency, inmentoring 1 020 school going leaders to become positive rolemodels and agents of change in their schools and communities.GOLD carefully assesses, selects and collaborates with community-

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Below is a listing of the major beneficiaries for the period ending 31 March 2013. The grouphas supported Study Trust for 5 years, OTR SA for 6 years, Reach Out for 9 years and theGOLD initiative for 5 years. Going forward, the group will continue supporting GOLD PeerEducation for a further year and will be investing in the Citadel Philanthropy Foundation.

based organisations to implement GOLD aligned peer educationprogrammes in their individual communities, in collaboration withschools and community sites. GOLD trains and mentors theseorganisations over eight years to work intensively over a 3–5 yearperiod with the same youth.

Citadel Philanthropy

Citadel philanthropy creates a vehicle where individuals can makea positive contribution to the development and upliftment of SouthAfrica. Together, we can do more!

South Africa faces an enormous number of social challenges,including having one of the highest measures of wealth inequalityand wealth disparity in the world. We believe that as citizens ofthis vibrant country, we cannot rely on government alone to solveour problems. It's our responsibility to ensure a positive andsustainable future for all.

Citadel Philanthropy Advisors is dedicated to actively promotingphilanthropy in South Africa. This is done by providing advice andspecialised services to individuals, corporates and non-profitorganisations who are looking for strategic guidance and planningin the giving of their wealth.

While donor-advisor funds are offered by leading financial servicesproviders around the world, Citadel Philanthropy is proud tointroduce the Citadel Philanthropy Foundation (CPF): the firstdonor-advised fund of its kind in South Africa. The CPF is a uniqueservice offering that will enable many of our country’s mostsuccessful individuals to become great philanthropists. The fundalso ensures that corporate Social Economic Development spendachieves maximum impact.

To give is good, but togive strategically is great

Philip FaureHead of Citadel Philanthropy

Major Beneficiaries 2013

SOCIO–ECONOMIC DEVELOPMENT

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Transformation Continued

Impact on community

• Giving dignity and care to orphaned children

• Dignity and care to community

• Dignity to orphans• Maintenance of orphanage

• Provided children with playground equipment• Running water• Dignity by providing basic need – clean, running water

• Feeding of many children• Giving time to disabled youngsters

• Environmental contribution

• Providing dignity and respect to woman

Socio-economic development projects 2013

Project

SOS Village

Mamelodi community

Christ Church ChristianCare Centre, Sandton

Moraledi Primary School

Nomaxabiso Day Care centre

Arbour Day

Woman’s Day

Peregrine / Citadel contribution

Food parcels, clothes

Reaching out to a community close to the Pretoriaoffice, supplying food on Mandela Day

Maintenance, painting and tiling of the orphanageand various items sponsored

In conjunction with Roundabout Water erected aborehole

Food, toys and basic supplies

Planting trees in communities and at schools

Provided basic sanitary needs to woman

Peregrine is committed toadvancing local communitiesthrough socio-economicdevelopment andempowerment programmes.

Employee headcount by race and gender (%)(South African operations):

2013 2012

Black 33% 33%White 67% 67%

Male 41% 40%Female 59% 60%

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The exceptional calibre of Peregrine’s people underpins the group’sreputational success. Peregrine recognises its people as pivotalto realising growth opportunities and meeting future challenges,which is particularly pertinent in the current economically-pressuredlandscape. As such, creating an optimal environment to attract,retain, motivate and develop top talent is a key business objectivefor the group.

Individual coaching and mentoring is offered to ensure on-goingdevelopment, even in the absence of formal training. Peregrinecontinues cultivating a relationship of trust with staff, encouragingindependence and entrepreneurialism. Management continue toengage with all employees on a continuous basis to stay abreastof any specific needs, internal climate elements, development ortraining needs and to create a sense of inter-relatedness.

The group further strives to offer employees flexibility in workinghours and the opportunity to work remotely. Extended maternityleave and the flexibility to work half-day is possible, should theoperational requirements of the business in question not becompromised. Peregrine makes use of temporary staff whenrequired and does not employ contractors or labour brokers.The well-being of Peregrine’s staff is paramount and to this endprogrammes are offered such as Living in Mastery, which developsself-insight and awareness of well-being. The Human Developmentforum specifically focuses on employee well-being and employeesare encouraged to address any issues to the forum, while formalpolicies outline grievance and discrimination procedures.

The group remains steadfast in its compliance with a broad baseof labour legislation.

Employee headcount by race, percentage wise, has remainedunchanged relative to prior year and by gender marginally different.Although the staff number has decreased from 423 in 2012 to 409in 2013, the racial and gender representation has remained constantreflecting the group’s respect for diversity in race and gender.

Safety

The group is committed to a safe, healthy and hygienic workingenvironment in compliance with the Occupational Health andSafety Act, 1993 (No. 85 of 1993). Peregrine has a formal SHEPolicy, which was reviewed and, although no material changeswere made, amended during the year to ensure all legislativechanges are taken into consideration. The policy outlines the SHEresponsibilities of the group and employees and requires theappointment of business specific representatives, as well as aGroup Health and Safety Committee. Accordingly each buildinghas an appointed SHE officer. Officers regularly inspect the building,first aid kits, emergency exits, fire extinguishers etc. to ensure asafe working environment.

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It further spells out procedures for first aid, emergency evacuationand exposure to environmental health risks. In addition the Policycovers drug and alcohol dependency and outlines the policy ongroup support in these instances. Further, it sets guidelines forincident reports.

All new employees are mandated to participate in a generalinduction which covers SHE policies. During the year the followingformal SHE training took place:

• First Aid• Fire• General awareness• Emergency evacuations

SHE audits are conducted annually utilising checklists to identifyhazards and non-compliance. An outcome during the year indicatedthe pressing need to improve signage, which has been effected.

Health

Peregrine holds an annual Health Day focusing on primaryscreening for diabetes, hypertension, cholesterol and HIV/AIDS.Employees identified as requiring treatment receive on-goingsupport. The blood pressure monitors in each office, that werepurchased last year, have made a significant impact on a numberof people’s lives, since it allows immediate insight into a person’scurrent blood pressure and on-going monitoring, specifically inindividuals who suffer from hypertension. In addition, the groupconducts regular awareness sessions relating to overall healthand wellbeing and has an intranet section dedicated to this topic.During the period there were no major injuries resulting in time offfrom work or any fatalities at the workplace.

Peregrine acknowledges the seriousness of the HIV/AIDS epidemicand is committed to creating a supportive and non-discriminatoryworking environment. A formal HIV/AIDS policy is in place, whichis reviewed annually. Annual awareness sessions are conductedto coincide with World AIDS Day, which include corporate theatreand information dissemination sessions. The group’s annual HealthDay includes voluntary testing and free counselling and employeesare encouraged to take part in know your status testing.

Environment

Making strides in its commitment to the environment, Peregrinehas established green committees and each subsidiary is taskedwith reducing the environmental impact of the group’s office-basedbusiness units. Each such committee has a committed budget toadvance environmental initiatives. The long-term goal is to becarbon positive, although the immediate focus is on appropriatelyreducing the carbon footprint.

Within the group, Citadel has the only significant carbon footprintdue to its multiple national offices and the largest workforce inthe group, with approximately 80% of the total South Africanemployee headcount.

An energy management system is also in place at all offices whichincludes automated lighting and controlled air-conditioning.

Human capital

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Reputation management

A formal Code of Conduct (“the Code”) was proposed during the2011 year, and approved by the board, setting out standards ofintegrity and ethics in dealings with all stakeholder groups. Everyemployee of Peregrine is expected to subscribe to the Code. TheCode has been communicated to all employees within eachbusiness and is available on the intranet. It further forms part ofthe Peregrine Human Resources Manual and informs work placepolicies and procedures. This has been reviewed as part of theannual review process and no significant changes were made.

The code of conduct aims to encourage the following behaviour:

• Employees to act with honesty and integrity in all dealingswith stakeholders.

• To interact with fairness, dignity and respect within and outside of the group in all business dealings.

• To create and protect a credible and well-reputed businessand working environment free from harassment and discrimination.

• Obeying the law, both in letter and in spirit, is the foundationon which this group’s ethical standards are built.

• A conflict situation must be avoided or properly mitigated where our personal interest could conflict with our duties tothe organisation and to our clients.

• Employees who have access to confidential information about the Company or any other entity are not permitted touse or share that information for trading purposes in the Company or the other entity’s securities or for any other purpose, except in the conduct of the Company’s business.

• The diversity of the group’s employees is a tremendous asset. The group is firmly committed to providing equal opportunity in all aspects of employment and will not tolerateany illegal discrimination or harassment based on race, colour,religion, sex, national origin or any other protected class.

• Employees are required to follow all applicable environmentallaws and regulations.

To give practical effect to the Code, an anonymous whistle-blowingprocess has been put in place, which enhances the culture ofresponsible information disclosure, relating to criminal and otherirregular conduct in the workplace and/or any other contraventionof the Code. Any reported instances of non-adherence will beimmediately investigated. Where necessary, Human Resourcesis mandated to escalate serious contraventions to the Chief

Executive Officer. To date no such incidences have been reported.Peregrine provides employees with extensive infrastructure, trainingand support to ensure they are able to perform their dutiesprofessionally and effectively.

Peregrine’s long-standing position as a reputed market-leader inthe wealth and asset management arena supports its sustainability.Wealth created by Peregrine group amounted to R1,22 billion(2012: R1,13 billion) for the year to March 2013. Distributions tostakeholders are set out in the value added statement.

Responsible investing

Peregrine acknowledges that its stewardship of its clientsinvestments, places on the group’s shoulders an onus ofresponsibility and accountability. Its key role is to protect, manageand grow client assets and to deliver sustainable value. In additionto assessing economic return, Peregrine takes into accountenvironmental, social and governance concerns when assessingpotential investments. To this end the group formally ascribes tothe Code for Responsible Investing in South Africa (CRISA), whichencourages domestic institutional investors to integrate into theirinvestment decisions sustainability considerations in line with theKing III Report.

Corporate citizenship

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Peregrine’s key roleis to protect, manageand grow clientassets to deliversustainable value.

CORPORATEGOVERNANCE

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Corporate governance report

Governance structure

Peregrine’s board is committed to transparency, accountability andintegrity, complying with the recommendations as set out in the KingIII Report and applicable laws. The board aims to integrate responsiblecorporate citizenship into the group’s growth strategy and to embedsound corporate governance values and principles into daily operationsand processes in order to build a culture of sustainability. It furtherendeavours to ensure that these sustainability components formpart of all strategic decisions, audits and assessments.

The companies falling under the Group’s offshore subsidiaries,Stenham Group and Peregrine International Holdings, are governedby the laws of foreign jurisdictions.

In line with the King III Report’s ‘apply or explain’ approach, thedirectors will continue to state the extent to which the companyapplies good corporate governance principles to create and sustainvalue for stakeholders over the short, medium and long-term andto explain any instances of non-compliance. The board recognisesthis as a dynamic responsibility requiring continuous monitoring of

• Participation of entities in Treating Customers Fairly (TCF) self-assessment to actively strive to deliver on the TCF outcomes

• Social and Ethics Committee established

• Annual review of the Board, Audit Committee and Risk and ComplianceCommittee Charters, resulting in no material amendments

• Material compliance with the principles and requirements of theKing III Report (except where stated with appropriate reasons)

• Proactive participation in the Association for Savings andInvestment South Africa (ASISA)

HIGHLIGHTS

AuditCommittee

RemunerationCommittee

Risk &Compliance

Social & EthicsCommitee

P E R E G R I N E B O A R D

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processes to ensure improved compliance in line with developmentsin corporate governance in South Africa and internationally.A detailed register of Peregrine’s application of the King III principlescan be found on the company’s website (www.peregrine.co.za).

Peregrine’s board actively reviews and enhances the company’ssystems of control and governance on a continual basis to ensurethat the business is managed ethically and within prudentlydetermined risk parameters in conformity with South African acceptedstandards of best practice.

The board

The board remains responsible and accountable for the performanceand affairs of the group and has full control over all the subsidiariesof the group. The directors acknowledge that responsibility forsafeguarding Peregrine’s sustainability rests with them. Duringthe 2011 year the board codified the values on which Peregrine’sgood corporate citizenship is based in a new, formal Code of Conduct,which Code is reviewed and, if necessary, amended from timeto time.

Peregrine’s unitary board is chaired by an independent non-executivedirector, LN Harris and, as at the date of this report, comprises afurther nine directors, four of whom are executive. In line with theKing III Report the majority (six) are non-executive directors, fiveof whom are classified as independent. As at the date of the report,three of the directors are female, of which two are black.

Jan van Niekerk resigned with effect from 1 April 2013 and JonathanHertz was appointed as Chief Executive Officer with effect from 1April 2013.

The capacity of the directors at the date of this report can besummarised as follows:

Executive directors: SA Melnick (Deputy Chairman), J Hertz(Chief Executive Officer), RE Katz (Chief Financial Officer), MYachad (Head of Legal and Company Secretary Representative)

Non-executive director: P Goetsch

Independent non-executive directors: LN Harris (Chairman),BC Beaver, VN Magwentshu, LM Ndlovu, SI Stein

The name and a brief curriculum vitae of each director are set outon pages 26 to 29.

The responsibilities of the Chairman, Deputy Chairman, ChiefExecutive Officer and the other executive and non-executive directorsare clearly separated to ensure a balance of power and preventany one director from exercising unfettered powers of decision-making. The Chairman provides leadership to the board in alldeliberations ensuring independent input, and oversees its efficientoperation. The Deputy Chairman and Chief Executive Officerare responsible for proposing, updating, implementing andmaintaining the strategic direction of Peregrine, as well as ensuringcontrolled operations. In this regard, they are assisted by the otherexecutive directors.

The independent non-executive directors and non-executive directorare individuals who objectively contribute a wide range of industryskills, knowledge and experience to the board’s decision-makingprocess. These directors are not involved in the daily operations of

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the group.

A formal self-assessment by the board was conducted during May2012 and the board was satisfied that it operates effectively accordingto an approved Board Charter, which sets out its duties andresponsibilities. In accordance with the King III principles, the boardis currently in the process of undergoing (and will, from time to time,undergo) a comprehensive and rigorous review and evaluation ofthe independence of those non-executive directors (including theChairman) classified as ‘independent’.

Access to the advice and services of the Company Secretary andto company records, information, documents and property isunrestricted. Non-executive directors also have unfettered accessto the external auditors and to management at any time. All directorsare entitled, at Peregrine’s expense, to seek independent professionaladvice on any matters concerning the affairs of the group.

The Memorandum of Incorporation (adopted at the annual generalmeeting held on 26 October 2012) provides –

• for one-third of the non-executive directors to retire by rotationeach year. Accordingly VN Magwentshu and LM Ndlovu will retire at the upcoming annual general meeting. Both have advised that they will not be standing for re-election;

• that the board may appoint a person who satisfies the requirements for election as a director to fill any vacancy andserve as a director on a temporary basis until the vacancy hasbeen filled by election at the next meeting of shareholders. Accordingly at the upcoming annual general meeting, shareholders will be requested to ratify the appointment ofJ Hertz who was appointed to the board as Chief Executive Officer with effect from 1 April 2013;

• for the company, at the general meeting at which a director retires, to fill the vacancy by electing a person thereto or to specifically resolve not to fill any such vacancy. Accordingly at the upcoming annual general meeting, shareholders will berequested to (i) elect Stefaan Sithole as an independent, non-executive director (and a member of the Audit Committee) tofill the vacancy created by the retirement of VN Magwentshu;and (ii) not fill the vacancy created by the retirement of LM Ndlovu.

In terms of the Memorandum of Incorporation, the board recommendsto shareholders that:

• all retiring directors who are eligible and available for re-electionbe re-elected; and

• Stefaan Sithole be elected as an independent, non-executivedirector (and a member of the Audit Committee).

The board meets at least four times a year with ad-hoc meetingswhen necessary to review strategy, planning, financial performance,resources, operations, risk and compliance, capital expenditure,standards of conduct, corporate governance, transformation, diversity,employment equity, human resources, community upliftment andenvironmental management, and the manner in which all of thesecontribute to and maintain sustainability.

Details of directors’ attendance at board and sub-committee meetingsare set out below (the number in brackets indicates the total numberof meetings held):

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The formal Board Charter mandates compliance with the principlesof the King III Report and current relevant legislation, as well aswith South African accepted standards of best practice. It regulatesthe parameters within which the board operates and demands thatthe board represents and promotes the legitimate interests of thegroup and its stakeholders, in a manner that is both ethical andsustainable and in so doing, adopts an approach in terms of whichstrategy, risk, performance and sustainability are intertwined.

The Charter specifically outlines the board’s primary function, whichis to determine the group’s strategy, purpose, values and stakeholdersrelevant to its business.

Board processes

The Company Secretary, Peregrine Management Services (Pty)Ltd, is responsible for ensuring that board procedures are incompliance with relevant regulation and legislation and that fullcompliance is adhered to. Wherever necessary, Peregrine’s Sponsorand other relevant advisors/experts will be invited to become involvedto ensure that the directors have adequate information to sufficientlydischarge their responsibilities.

M Yachad oversees the duties of the Company Secretary. He is anon-practicing attorney who has extensive experience in the companysecretarial and corporate governance arenas and who has beenintimately involved with the group since 1999 (attending boardmeetings since 2003 initially by invitation and from November 2010,as an executive director). A committee, specifically appointed forsuch purpose, has considered and satisfied itself with the competence,qualifications and experience of the Company Secretary and MrYachad as the representative thereof, basing such findings onongoing relationships, past practice and performance as well as MrYachad’s qualifications and experience.

He keeps record of, inter alia, meeting attendance registers, meetingminutes, resolutions, directors’ declarations of personal interest/sand all notices and circulars issued by the company. AlthoughMandy Yachad is an executive director of Peregrine and accordinglyan arms-length relationship between the company secretary andthe board of directors is not present, given Mr Yachad’s extensive

experience in the company secretarial and corporate governancearenas, his role as head of legal for the group and based on hispast performance, the board is of the opinion that Mr Yachad remainsbest placed to ensure that good governance is maintained throughoutthe group and that Mr Yachad continues to ensure that the boardmaintains a high level of integrity and ensures that the board ofdirectors acts as a custodian of corporate governance.

Directors, as well as executive directors of subsidiary companies,are required to disclose their shareholdings, additional directorshipsand any potential conflicts of interest as well as any proposed sharedealings in the company’s securities to the Chairman, DeputyChairman or Chief Executive Officer for approval. The CompanySecretary, together with the Sponsor, ensures publication of allapproved share dealings on SENS. Where applicable appropriatepersonal account trading rules are in place within the subsidiarybusinesses. All directors and senior executives with access tofinancial and any other price sensitive information as well as allemployees are prohibited from dealing in Peregrine’s shares during

“closed periods”, as defined by the JSE, or while the company istrading under cautionary. The Chief Executive Officer informs allemployees when the company enters a “closed period” by email.

The board undertakes the role of a nominations committee and theselection, appointment and approval of new directors is thereforeundertaken by the board as a whole in a formal and transparentprocess. Any new appointees are required to possess the necessaryskills to contribute meaningfully to board deliberations and to enhanceboard composition in accordance with recommendations, legislation,regulations and best practice.

The Company Secretary has implemented a comprehensive inductionprogramme for new directors, which was approved by the boardand includes introductions to key senior management such as theChairman, Chief Executive Officer, Chief Financial Officer, AuditCommittee chairman, Risk and Compliance Committee chairmanand Head of Group Legal. The programme sets out the new directors’responsibilities and fiduciary duties, as well as advice on the relevantstatutory and regulatory framework and the JSE ListingsRequirements. The induction programme is designed to ensure thatnew directors attain a sound understanding of the business operations,the group’s performance and the industry in which it operates.

Each new director is provided with a formal induction pack, whichincludes relevant charters, policies and guidelines necessary tocomply with corporate governance requirements. In additioninformation on the board sub-committees, the delegation of authorityframework and board procedures are outlined and documentsrelating to any general meetings over the past three years (e.g.minutes, resolutions etc.) are provided for the director’s perusal.

Board committees

Peregrine has an established Group Audit Committee, GroupRemuneration Committee, Group Risk and Compliance Committeeand a Social and Ethics Committee to assist the board in dischargingits collective responsibility of sound corporate governance. Allcommittees were found to have satisfied their responsibilities incompliance with their formal charters and/or written terms of reference.Having regard to the provisions of King III and the JSE ListingsRequirements, the board, from time to time, assesses the functionscarried out by the non-executive directors as members of the varioussub-committees.

There is transparency and full disclosure from board committeesto the board. The committee chairmen provide feedback to the

* Non-executive** Independent non-executive† Audit Committee Chairman‡ Remuneration Committee Chairman

§ Risk & Compliance Committee Chairman# By invitation

†† Social & Ethics Committee Chairman

Name Board Audit Remuneration Risk & Social & Ethicsmeetings Committee Committee Compliance Committee

meetings meetings Committee meetingsmeetings

BC Beaver** 5(6) 4(4) – – –P Goetsch* 5(6) – – – – LN Harris (Chairman)**‡ 6(6) – 3(3) – – RE Katz (CFO) 6(6) 4(4) # – 3(3) 1(1)VN Magwentshu** 5(6) 3(4) – – –SA Melnick (Deputy Chairman) 6(6) – 3(3)# – – LM Ndlovu**†† 4(6) – – – 1(1)SI Stein**†§ 4(6) 4(4) 3(3) 3(3) –JC van Niekerk (CEO) (resigned 1 April 2013) 6(6) – 3(3)# 1(3) # –M Yachad 6(6) – – 2(3) # 1(1)

Corporate governance report Continued

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board on recent committee activities and the minutes of committeemeetings are available to the board. In addition, the chairmen ofthe committees attend the company’s annual general meeting toanswer any questions from stakeholders pertaining to the relevantmatters handled by their respective committees.

Audit Committee

Members: SI Stein (Chairman), BC Beaver and VN Magwentshu.In addition, the group Chief Financial Officer, RE Katz attends allmeetings as an invitee. As VN Magwentshu is retiring and notmaking herself available for re-election, subject to his appointmentas a director of the company, S Sithole will be appointed as amember.

Remuneration Committee

Members: BC Beaver (Chairman) and LN Harris. In addition, SAMelnick and the Chief Executive Officer attend all meetings asinvitees. Post year-end BC Beaver replaced SI Stein as a member,and was appointed as Chairman.

Social and Ethics Committee

Members: LM Ndlovu (Chairperson), RE Katz and M Yachad. Inaddition, the head of group Human Resources, M Knox attends allmeetings as an invitee. As LM Ndlovu is retiring and not makingherself available for re-election, subject to his appointment as adirector of the company, S Sithole will be appointed as the Chairman.

Risk and Compliance Committee

Members: SI Stein (Chairman) and RE Katz.In addition, an independent external risk specialist together withthe risk champions of the major subsidiaries attends all meetingsas invitees.

The committee meets at least twice a year and more frequently ascircumstances require, and is convened and conducted on the sameprinciples as those applying to board meetings. Additional meetings,with the approval of the Chairman, may be held at the request ofthe Chief Executive Officer or other members of the board.

The Chairman of the committee may meet with the Chief ExecutiveOfficer and/or the Company Secretary prior to a meeting to discussimportant issues and agree on the agenda.

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The Risk and Compliance Committee is governed by a formal charterwhich sets out its composition, role and responsibilities. The role isprimarily to assist the board in executing its responsibilities relatingto risk management.

To this end its objectives are to ensure that:

• Key risks are identified, analysed and assessed• Appropriate risk management recommendations are made

for board approval• Adequate progress is made against the risk management plan• Management’s risk responses are appropriate and adequate• The risk management process is effective.

In achieving these objectives the committee reviews and assessesthe company’s risk control systems and ensures that risk policiesand strategies are effectively managed, which includes monitoringrisk tolerance levels.

The Chief Risk Officer is the Chief Financial Officer RE Katz. Eachoperating subsidiary has an established risk and compliancecommittee which is responsible for reporting directly to the GroupRisk and Compliance Committee and the Chief Risk Officer. Furtherthe group and each operating subsidiary also has a dedicated RiskChampion, whose duties are to develop, maintain, manage andexecute a comprehensive process for identifying, assessing,mitigating, monitoring and reporting on risks that may impact onorganisational performance.

Peregrine acknowledges that risk management is a corporatediscipline demanding the highest quality processes, training andinfrastructure so that corporate executives at all levels can understandand control risks in their business units and across the entirebusiness. To this end Peregrine’s risk methodology integrates riskand legal compliance and internal audit in a single database.

Risks, as set out in a formal risk matrix in the database, are monitoredon a daily to a monthly basis depending on their respective natureand severity. During the current year, risk ratings have been re-assessed as part of an annual exercise as documented in the riskcharter and discussed at the Risk and Compliance Committee meeting.

Risk management process

Identify preventative& corrective controls

Determine improvement action Assess residual risk

Identify consequences

Report

I D E N T I F Y R I S K

Assess control effectiveness

Assess inherent risk

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Risk

Financial risk

Liquidity risk

Credit risk

Market risk

Employee risk

Technology risk

Compliance & legal risk

Operational risk

Investment risk

Market conduct risk

Reputational risk

Country risk

Mitigation/risk response

• Inclusive management style• Maintaining a balance between an entrepreneurial and a corporate environment• Focus on growth and return objectives

• Stringent cash flow reporting• Monitoring of the group’s working capital requirements with a focus on liquidity• General banking facility in place to meet liquidity requirement in excess of normal operational requirements

• Diversified investment of cash in top rated financial institutions• Prudential credit limits set by the Risk and Compliance Committee• Regular review of credit exposure• Established credit policies

• All investments made within an approved investment mandate with set allocation parameters• Investments are measured continually via mark-to-market valuations, sensitivity, concentration and scenario

analyses where applicable

• Employees are involved in the decisions affecting their business and are incentivised by reward• Interests are aligned through performance bonuses linked directly to the profit performance of each business

and through a deferred share purchase scheme• Employees are provided with applicable and relevant training and mentoring

• Continuous improvement of staff skills, technology and strategy• Experienced and skilled staff with deep understanding of business• IT management and staff form an integral part of the risk management team

• Skilled staff dedicated to specific compliance functions as part of the group risk management frameworkand the group Compliance Forum

• Comprehensive system of internal controls as well as sound practices in the areas of human resources and IT• Efficient and enhanced internal audit function• Effective functioning of the risk management system• Subsidiary and Group Risk Committee/s• Appointment of risk and governance champions at group and in each subsidiary• Comprehensive risk matrix and continually addressing processes and procedures

• Appropriate asset allocation• Effective diversification• Value investing• Scenario planning

• The Company has a policy in terms of which all employees and their associates are prohibited from transactingin Peregrine shares during any closed period and/or during any period when the company is trading undera cautionary announcement

• Compliance with the ASISA guideline on personal account trading• Approval and monitoring of personal trades of employees• Conflicts of interest must be avoided or mitigated and disclosed to clients• Annual declaration signed by employees regarding conflicts of interest, personal account trading and other matters

• Code of Conduct introduced in 2011• A comprehensive process is followed prior to entering into any new arrangement with an outside party for

the purpose of managing third party assets

• The board continually monitors political and economic environments


The most significant risks faced by Peregrine are detailed in the risk matrix below:

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Accounting and auditing

The Audit Committee reviews and monitors the scope of workplanned by both internal and external audit and ensures that bothassurance providers adopt a risk-based approach. KPMG Inc. wasappointed as the independent external auditors during 2011 andare responsible for reporting on whether the annual financialstatements are fairly presented in compliance with IFRS and theCompanies Act of South Africa. The preparation of the annualfinancial statements remains the responsibility of the directors.

The Audit Committee regularly meets with the external auditors andevaluates their independence. As a rule the board does not engagethe external auditors for any non-audit services, or for assisting withcompany secretarial duties. Where the external auditors, as anexception, are appointed for non-audit services, the committeeensures that the nature of the work and the size of the fee do notimpair their independence. There is a non-audit fee policy whichhas been approved by the Audit Committee in order to ensure thisprocess is monitored in line with these policies and this is tabledand assessed at each Audit Committee meeting.

Internal control

The board is responsible for the group’s systems of internal control,such as the directors determine it necessary, to enable the preparationof financial statements that are free from material misstatement,whether due to fraud or error, and for maintaining adequateaccounting records and an effective system of risk management.The Audit Committee assists in this regard, supported by the internalaudit function. Together they annually evaluate the adequacy andeffectiveness of internal control systems and processes, and monitorwhether internal control recommendations have been implemented.This is formally documented. Internal audit reports directly to thechairman of the Audit Committee and has full and unrestrictedaccess to the Chief Executive Officer and Group Chairman.

The systems of internal control are designed to manage rather thaneliminate risk. The systems are also designed to safeguard andmaintain accountability of the group’s assets. Further, these systemsshould identify and curtail significant fraud, potential liability, lossand material misstatement, while complying with applicable statutorylaws and regulations.

The internal control systems are designed, for instance, to providereasonable assurance as to the integrity and reliability of the annualfinancial statements. Inherent limitations in the system’s effectivenessexist due to the possibility of human error and the circumvention oroverriding of controls. The importance of internal control systemsand management of risk is clearly communicated to all employees,so that they have a clear understanding of their roles and obligationsin this regard.

The internal auditors, based on the field work undertaken during theyear, provided reasonable assurance on the adequacy of the internalcontrols tested and the associated risk management process. Nothinghas come to the attention of the board that would indicate a materialbreakdown in the systems of internal control during the year.

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Deloitte & Touche (SA) are responsible for the internal audit functionfor the group, with the exception of Citadel and Stenham. Citadeloperates its own internal audit function and Deloitte LLP (UK) will,in addition to their external audit of Stenham, also provide certainextended assurance services under the direction of Stenham’sgovernance function. Citadel’s internal audit function liaises regularlywith the group internal audit function.

Management maintains a formal risk matrix for each business andoperating unit, based on inherent risk, the perceived effectivenessof existing control structures and management's assessment ofresidual risk. Internal audit conducts a separate risk assessmenton each of these businesses and operating units and comparesthat to the matrix maintained by management to try and ensure thatall material risks are identified and their impact is properly evaluated.Findings are reported to, and discussed with, operationalmanagement by the Audit Committee, with significant findings beinghighlighted for specific attention.

A formal Internal Audit Charter is in place. The key responsibilitiesof the internal audit function, as encapsulated in the Charter, include:

• Developing and maintaining an internal audit coverage planaligned with the risk management processes and based onsignificant exposures to loss or failure, and submitting such planto the Audit Committee for approval

• Developing annual internal audit plans based on significantexposures identified in the internal audit coverage plan andsubmitting such annual plans, and any significant amendmentsto these plans, to the Audit Committee for approval

• Reviewing the enterprise risk management system so as toalign this system with the internal audit risk assessment

• Evaluating business risk in order to focus the internal audit effort• Reviewing systems and operations to assess the extent to which

objectives are being achieved, and the adequacy of controlsover activities leading to such achievement

• Evaluating the relevance, reliability and integrity of managementand financial information

• Ensuring compliance with established policies, procedures,instructions and contracts

• Recommending improvements in procedures and systems toprevent waste and fraud

• Advising on appropriate systems of controls and other accountingand operational matters in a consulting capacity.

Internal audit conducted a risk-based internal audit during the year,with no significant findings identified.

1st Line of Defence – management acts as the first line of defence, with responsibility for following the strategy, policies andmaintaining internal control and risk management in the business together with detailed performance measurement.

2nd Line of Defence – the Risk and Compliance functions, along with the various Committees and Forums, with responsibilityfor the oversight of the management of risk and the maintenance of an effective risk management and compliance framework.

3rd Line of Defence – the Internal Audit Function and External Audit Function, with responsibility for providing assuranceas to the effectiveness of the control environment.

Assurance

Assurance is multi-faceted. The Audit Committee ensures that a system of internal controls is implemented and operational throughout theyear and the Risk and Compliance Committee oversees an effective risk management process. These are supported by the internal auditfunction and the independent external audit process.

Peregrine is committed to applying a combined assurance model and intends to continuously advance this in the years ahead. Management,the internal audit function and the external auditors have taken this into account in their consideration of risks and in the planning of theinternal and external audits during the year.

The graph below illustrates how the “three lines of defence” model works within Peregrine.

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IT governance

IT related risks continue to be a focus area across all operatingentities within the group. Maintaining adequate controls requirescontinuing attention at all levels in the organisation due to thehostile operating environment and the on-going legislative changes.

IT governance is therefore an integral objective in the group’sholistic approach to governance. An IT Management Forum,headed by the Chief Information Officer, is tasked with reviewingon-going business requirements within the areas of IT, softwareand technological and physical infrastructure, as well as disasterrecovery plans. An IT governance charter and IT internal controlframework are in place. The latter is independently audited byboth internal and external audit.

Fault-tolerant robust infrastructure, together with geographicdispersion is used to the group’s advantage. This ensures thatPeregrine continues to be a going concern in the event of an ITdisaster. The plans are regularly updated, and on-going attentionis being given to refinements. Regular business resilience/continuitytesting is a key part of the planning process.

In terms of the Board Charter, the board assumes responsibility forthe overall supervision of IT risk. IT management reports to theboard on the progress of the IT functional objectives, and to theGroup Risk and Compliance Committee regarding their role in therisk management process. The Chief Information Officer is invitedto attend all Group Risk and Compliance Committee meetings.


B O A R D

Internal Audit

3rd line of defence

External Audit

3rd line of defence

Group / Subsidiary Co’sRisk and Compliance

Committees

2nd line of defence

Legal and Compliance Forum

2nd line of defence

IT Management Forum

2nd line of defence

Management

1st line of defence

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Legal compliance

Peregrine has an effective compliance framework approved bymanagement and the board, which includes suitably skilled andexperienced compliance officers in each of the operatingsubsidiaries. A Group Legal and Compliance Forum overseeslegal compliance in the subsidiaries on behalf of the board, themembers of which are the designated compliance person(s) fromeach subsidiary, the group Chief Financial Officer RE Katz andexecutive director M Yachad.

The Group Legal and Compliance Forum is a sub-committee ofthe Group Risk and Compliance Committee and meets at leastquarterly.

Specifically it is required to:

• Review compliance matters and deal with compliance breacheswithin the group

• Report instances of material non-compliance, that have notbeen remedied, to the Group Risk and Compliance Committee

• Facilitate legal and regulatory compliance and act as a centralrepository for group policies have been established

• Review the regulatory reporting universe of each subsidiary tomonitor that instances of failure to report or late reporting areexplained and addressed, and report such instances to the GroupRisk and Compliance Committee

• Identify areas that pose significant compliance risks and monitorthat adequate processes are in place to address these

• Monitor that training on legal and compliance matters istaking place

• Monitor that all key individuals and representatives pass theRegulatory Examinations as required by the Financial Advisoryand Intermediary Services Act, 2002

• Monitor compliance activities that affect the Peregrine group’sprofessional indemnity and fraud insurance cover

• Monitor client complaints and litigation and inform the GroupRisk and Compliance Committee in this regard

Social and Ethics Committee

In compliance with the requirements of the Companies Act,the Social and Ethics Committee was formed by the board duringJuly 2012.

The committee is chaired by an independent non-executive directorand includes two executive directors.

The objective of the committee is to review and approve the policy,strategy and structure to manage transformation and social andethics issues in the company. In line with corporate governancerequirements, it oversees the monitoring, assessment andmeasurement of the company’s activities relating to transformation,good corporate citizenship, corporate social investment, theenvironment, health and public safety, consumer relationshipsand engagement with stakeholders. It also plays a monitoringrole for the company’s labour and employment practices anddetermines clearly articulated ethical standards (code of ethics)to achieve a sustainable ethical corporate culture. In dischargingthese responsibilities it considers the legal and regulatoryframeworks, industry scorecards and the vision of the company.

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The committee relies on management for the implementation ofstrategies and initiatives, of which the primary contributors are theexecutive committee, Group Transformation Forum and theSustainability Forum.

The committee met on one occasion during the year, with the nextmeeting due to be held later this year.

Peregrine is represented at the following industry associationsor organisations and regulated by the following financialservices regulators:

Certain Peregrine group entities:

• are members of the Association for Savings and InvestmentSouth Africa (www.asisa.co.za)

• are licensed authorised/registered and regulated by the FSB(www.fsb.co.za)

• are regulated and authorised by the FSA (www.fsa.org.uk)• are regulated by the GFSC (www.gfsc.gg)

Peregrine Securities and certain of its subsidiaries are membersof the JSE Limited (www.jse.co.za) and regulated by theJSE Limited.

Certain Peregrine group professionals are:

• members of the Actuarial Society of South Africa(www.acturarialsociety.org.za)

• members of the South African Institute of Chartered Accountants (www.saica.co.za)

• Chartered Financial Analyst charter holders (www.cfasa.ac.za)• members of the Financial Planning Institute of Southern

Africa (www.fpi.co.za)• members of the Institute of Directors Southern Africa

(www.iodsa.co.za)

Compliance Officers are members of the Compliance Instituteof South Africa (www.compliancesa.com)

INDUSTRY ASSOCIATIONS

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Remuneration is a key sustainability issue as incentivising andretaining personnel is considered crucial for the group’s long-termviability. Further, the personnel are not only the bedrock of Peregrine’ssuccess, but also take stewardship of clients wealth. Peregrine’sremuneration policy sets out the group’s intention to attract andretain critical talent as well as to motivate employees to perform inthe best interests of the company and its stakeholders.

The Remuneration Committee assists the board in ensuring thatgroup remuneration and recruitment is aligned with overall businessstrategy, with the aim of enabling Peregrine to attract and retainpersonnel who will create long-term value for all stakeholders.

It is an independent and objective body which is responsible forassessing non-executive and executive remuneration and fordetermining short and long-term incentive pay structures for groupexecutives and the award of share options to executives and staff.Each subsidiary has its own remuneration committee which comprisessenior management and includes executive directors from thePeregrine board. The sub-committees report directly to the GroupRemuneration Committee.

At year-end, the committee comprised independent non-executivedirectors SI Stein (Chairman) and LN Harris. Post year-end BCBeaver replaced SI Stein as a member of this committee and, inorder to ensure compliance with King III, was appointed as chairmanas LN Harris is the chairman of the board and the specificrequirement states that the chairman of the board should not bethe chairman of the Remuneration Committee but can be a memberof it. The Deputy Chairman and the Chief Executive Officer attendedas invitees, but were excluded from deliberations relating to theirown remuneration.

Meetings are held annually prior to release of the group's annualresults or more frequently if required. Details of directors attendanceat the Remuneration Committee meetings are set out on page 66.

The Remuneration Committee makes appropriate recommendationsregarding fees for non-executive directors and shareholders arerequired, at the annual general meeting, to approve such fees.

Remuneration policy

Underpinned by the belief that employees remuneration packagesremain an effective tool to incentivise and retain key personnel,the group benchmarks executive remuneration against industrynorms, while individual and group performance targets are alsotaken into account.

The Remuneration Committee ensures an appropriate level oftransparency as well as a level of equity and consistency acrossthe group.

Executive directors and senior members receive a fixed annualsalary with a performance-linked component. However the paymentof bonuses to executive directors is discretionary and determined

Remuneration committee report

JHB 23 AUGUST2013

LN Harris SCRemuneration Committee Chairman

annually by the Remuneration Committee. In addition equityownership with its commensurate risks and rewards serves to alignthe long-term interest of executive directors with that of shareholders.Executive directors have the opportunity to participate in a deferredshare purchase scheme.

Non-executive directors receive fixed fees for their services asdirectors of the board and as members of board committees.The Remuneration Committee proposes fees for non-executivedirectors, which are agreed by the board and approved byshareholders. The fees are benchmarked annually.

Non-executive remuneration for the 2014 financial year (1 April 2013to 31 March 2014) and the maximum proposed remuneration forthe 2015 financial year (which is subject to approval by shareholdersat the annual general meeting) are set out in the table below:

Executive directors’ remuneration is set out in note 4.1 to theannual financial statements.

Should the committee require information from any employee orfurther need to obtain external legal or other independentprofessional advice deemed necessary, it is authorised by theboard to do so at the expense of the group.

Type of fee Existing Proposed(per annum) annual fee annual fee

2013/14 2014/15

BoardChairman R414 750 R435 625Board member R152 250 R160 000Audit CommitteeChairman R262 500 R275 625Member R200 000 R210 000Remuneration CommitteeChairman R131 250 R138 000Member R131 250 R138 000Risk & Compliance CommitteeChairman R131 250 R138 000Member R131 250 R138 000Social & Ethics CommitteeChairman Nil NilMember Nil Nil

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*We are proud to have been listed on the JSE for the past 15 years.We remain committed to delivering sound business growth for

our shareholders as well as enhancing and safeguarding our people,the communities in which we operate and the environment.

JSE:PGR

15YEARS

*

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FINANCIALSTATEMENTS

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SECTIONNo.

04

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Directors’ responsibility statement

LN Harris SC (Chairman) J Hertz (CEO) RE Katz (CFO)Authorised Director Authorised Director Authorised Director

The directors are responsible for the preparation, integrity and fairpresentation of the consolidated and separate financial statementsof Peregrine Holdings Limited, comprising the statements offinancial position at 31 March 2013, and the statements of incomeand comprehensive income, changes in equity and cash flows forthe year then ended, and the notes to the financial statementswhich include a summary of significant accounting policies andother explanatory notes, in accordance with International FinancialReporting Standards and comply with the Listings requirementsof the JSE Limited and the requirements of the Companies Act ofSouth Africa and include amounts based on judgements andestimates made by management.

In addition, the directors are responsible for preparing the directors’report. The directors consider that in preparing the financialstatements they have used the most appropriate accountingpolicies, consistently applied and supported by reasonable andprudent judgements and estimates, and that all statements ofIFRS that they consider to be applicable have been followed.

The directors are also responsible for such internal control as thedirectors determine is necessary to enable the preparation offinancial statements that are free from material misstatement,

whether due to fraud or error, and for maintaining adequateaccounting records and an effective system of risk management.The company and its subsidiaries operated in a well-establishedcontrol environment, which is well documented and regularlyreviewed. This incorporates risk management and internal controlprocedures, which are designed to provide reasonable, but notabsolute, assurance that assets are safeguarded and the risksfacing the business are being controlled.

The directors have made an assessment of the ability of thecompany and its subsidiaries to continue as going concerns andhave no reason to believe that the businesses will not be goingconcerns in the year ahead.

The auditor is responsible for reporting on whether the consolidatedand separate financial statements are fairly presented in accordancewith the applicable financial reporting framework.

Approval of consolidated and separate financial statements

The consolidated and separate financial statements of PeregrineHoldings Limited, as identified in the first paragraph, were approvedby the board of directors on 23 August 2013 and signed by:

JHB 23 AUGUST2013

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Declaration by the Company Secretary

I declare that to the best of my knowledge, for the year ended31 March 2013, the company has lodged with the Companies andIntellectual Property Commission all such returns as are requiredof a public company in terms of section 88(2)(e) of the CompaniesAct (No. 71 of 2008, as amended) and that all such returns aretrue, accurate and up to date.

M Yachad For and behalf of Peregrine Management Services Proprietary Limited

JHB 23 AUGUST2013

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Directors’ reportFor the year ended 31 March 2013

The directors present their report which forms part of the financialstatements for the year ended 31 March 2013. The financialstatements on pages 84 to 161 set out fully the financial position,results of operations and cash flow for the company and the groupfor the financial year ended 31 March 2013.

Financial highlights of the Peregrine group

The Peregrine group produced a mixed set of results undercontinued challenging trading conditions for the twelve monthsended 31 March 2013. Local operating subsidiaries performedwell with Citadel and Peregrine Capital, in particular, producingsolid results. Proprietary Investments generated strong returnsagain for the year, notwithstanding the distribution of theConsolidated Infrastructure Group Limited shares by way of specialdividend and the use of a portion of the investments in the hedgefunds to extinguish group debt during the year. Offshore operationscontinue to struggle which resulted in a significant impairment ofthe intangible assets in Stenham. While headline earnings remainedpositive, the Stenham intangible asset impairment of R753 million(after minorities), which is a non cash item, resulted in a basicloss attributable to shareholders.

The results for the year include, for the first time, a 35% non-controlling interest within Peregrine Securities and NalaEmpowerment Company’s (Nala) 20% non-controlling interest inPeregrine SA Holdings (being the entity which is the holdingcompany of the South African operating companies).The non-controlling interest within Peregrine Securities results from thecompletion of the management buy-in into this business. The Nalanon-controlling interest follows from the restructure of the group’sBEE shareholding which became effective at the end of September2012 (details of which are mentioned below under the headingGroup reorganisation and restructure of BEE shareholding).

Operating revenue increased by 10% to R1.7 billion(2012: R1.5 billion).

Investment and other income of R47 million (2012: R233 million)decreased by 80%. Income from associate companies increasedby 43% to R57 million (2012: R40 million).

Total operating expenses of R1.3 billion (2012: R1.2 billion) were6% higher than the previous year. Net interest received amountedto R47 million which exceeded the prior year by 117%. Interestpaid was 98% lower at R492 826 (2012: R29 million) with interestreceived being 7% lower at R48 million (2012: R51 million). Theeffective tax rate was 22% (2012: 20%).

Loss attributable to equity holders in the company amounted toR467 million (2012: earnings R314 million), after deducting thegross impairment of intangible assets of R893 million, amortisationof intangible assets of R41 million (2012: R36 million), share-based payment charge of R19 million (2012: R22 million), taxationof R93 million (2012: R106 million) and non-controlling interestsof R5 million (2012: R152 million).

Headline earnings decreased by 11% to R286 million(2012: R321 million) after adjusting for the Stenham intangibleasset impairment of R753 million.

Share capital

Authorised shares

As at 31 March 2013 the authorised share capital of the companycomprised 500 000 000 (2012: 500 000 000) ordinary shares of0.1 cent each.

The 10 000 000 preference shares of 0.1 cent each which previouslyformed part of the authorised (but unissued) share capital werecancelled following a special resolution passed on 26 October 2012.

Issued shares

As at 31 March 2013 the issued share capital of the companycomprised 206 790 887 (2012: 228 128 764) ordinary shares of0.1 cent each.

At the special general meeting of shareholders held on4 September 2012, all necessary resolutions were passed whichenabled the group to implement the restructuring, in terms of whichNala effectively switched its 12.5% shareholding in PeregrineHoldings Limited for a 20% shareholding in Peregrine SA HoldingsProprietary Limited with effect from 12 October 2012. As a result,28 584 059 shares were repurchased, cancelled and delisted.

As a result of the vesting of the first tranche of shares relating tothe share scheme which was implemented during 2010 (comprisingan executive incentive scheme and a junior share option schemewith shares vesting in three equal tranches in November 2012,2013 and 2014), 7 246 182 new Peregrine shares were allottedand issued on 16 January 2013 at a price of R7.64675 per share.The group held 10 484 314 treasury shares (2012: 10 552 646)at year-end with a book value of R26.7 million (2012: R27.3 million).Of these, 2 039 325 (2012: 2 039 325) are held by the group’sstaff share trusts and 8 444 989 (2012: 8 513 321) by four of thegroup’s subsidiaries.

Unissued shares

The authorised, but unissued, shares were placed under the controlof the directors at the last annual general meeting. In terms of thisauthority and subject to the provisions of the Companies Act andthe rules and regulations of the JSE Limited, the directors maynot issue in any one financial year, more than 10% of the company’sissued ordinary share capital less the aggregate number of shares,if any, held by the company and its subsidiaries (but specificallyexcluding any share trusts) from time to time, as treasury shares.

Shareholders will be requested to renew this authority at theforthcoming annual general meeting.

Authority for the repurchase of shares

The conditions relating to the repurchase by the company of itsown shares are governed by the company’s memorandum ofincorporation which provides, inter alia, that any decision by thecompany to acquire its own shares must satisfy the JSE ListingsRequirements and the requirements of the Companies Act and,accordingly, for as long as it is required in terms of the JSE Listings

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Requirements, the acquisition shall be approved by a specialresolution of the shareholders, whether in respect of a particularrepurchase or generally approved by shareholders.

Shareholders will be requested to renew the authority to repurchaseshares at the forthcoming annual general meeting, which authorityshall not extend beyond the date of the next annual general meetingor 15 months from the date on which the special resolution authorisingsuch repurchase was passed, whichever is the earlier date. Theapproval limits the repurchase, in any one financial year, to 20% ofthe issued share capital of the company on the date on which thespecial resolution authorising such repurchase was passed.

Dividend

A cash dividend of 72 cents per share (2012: 72 cents per share)declared by the directors for the year ended 31 March 2013, waspaid on 29 July 2013.

A special cash dividend of 28 cents per share (2012: specialdistribution of 3,5 Consolidated Infrastructure Group Limited sharesfor every 100 Peregrine shares held) declared by the directorswas paid on 29 July 2013.

Consolidation of hedge funds

In terms of current International Financial Reporting Standardscertain of the group’s proprietary hedge fund investments arerequired to be consolidated due to the fact that the group haseffective control both in terms of kick-out rights and with directand indirect holdings being close to 100%. This has resulted inan increase in current assets and current liabilities of R1.2 billion(2012: R887 million). There has been no impact on equity or profitor loss.

Acquisitions

1. Peregrine Securities Proprietary Limited (“Peregrine Securities”),through one of its subsidiaries, acquired a 40% interest inSouthchester Holdings Proprietary Limited effective 1 April 2012for a cash consideration of R120. Notwithstanding PeregrineSecurities having a 40% shareholding, the entity is required tobe consolidated in terms of current International FinancialReporting Standards due to the fact that Peregrine Securitieshas effective control in terms of kick-out rights. This has resultedin an increase in current assets and current liabilities of R1.5 billion.

2. Following on further tranches of share buy-backs in Stenhamduring the course of the year, Peregrine Financial Services’effective shareholding in Stenham increased from 57.62%to 62.71%.

Disposals

There were no disposals during the year under review.

Directorate and secretary

The name and address of the company secretary are set out on theindex page.

At the annual general meeting held on 26 October 2012, in terms ofarticle 52.1 of the company’s articles of association LN Harris, RE Katz,SA Melnick and JC van Niekerk retired. All of them, being eligible,offered themselves for re-election and were re-elected.

JC van Niekerk resigned with effect from 1 April 2013 and J Hertzwas appointed as Chief Executive Officer with effect from 1 April 2013.

In terms of the company’s memorandum of incorporation, VNMagwentshu, LM Ndlovu and J Hertz (the latter having been appointedin a temporary capacity following the resignation of JC van Niekerk)will retire at the forthcoming annual general meeting. Whilst LM Ndlovuand J Hertz, being eligible, have indicated that they will offer themselvesfor re-election, VN Magwentshu has indicated that she will not beoffering herself for re-election.

At the forthcoming annual general meeting, shareholders will alsobe asked to approve the appointment of S Sithole as an independent,non-executive director and a member of the Audit Committee.

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Directors’ shareholding

On 31 March 2013, excluding their participation in the group’s deferred purchase scheme, the directors held in aggregate 42 384 275Peregrine shares (2012: 38 476 629), representing 20.5% (2012: 16.8%) of the issued share capital of the company. The following directand indirect beneficial interests of the directors in the company are set out below.

2013 2012Name Direct Indirect Total % of Deferred Total Direct Indirect Total % of Deferred Total

beneficial beneficial issued purchase 3 including beneficial beneficial issued purchase 2 including share deferred share deferred

capital purchase capital purchase

SA Melnick 881 34 526 015 34 526 896 16.7 3 333 334 37 860 230 881 32 669 734 32 670 615 14.3 5 000 000 37 670 615JC van Niekerk 1 - 1 667 101 1 667 101 0.8 - 1 667 101 - 1 000 000 1 000 000 0.4 2 500 000 3 500 000P Goetsch 684 585 2 775 911 3 460 496 1.7 1 333 334 4 793 830 17 919 2 775 911 2 793 830 1.2 2 000 000 4 793 830RE Katz 151 659 333 333 484 992 0.2 866 667 1 351 659 151 659 - 151 659 0.1 1 000 000 1 151 659M Yachad 336 264 1 336 818 1 673 082 0.8 600 000 2 273 082 336 264 1 036 385 1 372 649 0.6 900 000 2 272 649LN Harris 503 042 - 503 042 0.2 233 334 736 376 436 376 - 436 376 0.2 350 000 786 376BC Beaver - 32 000 32 000 0.0 16 000 48 000 - 24 000 24 000 0.0 24 000 48 000S Stein 36 666 - 36 666 0.0 18 334 55 000 27 500 - - 0.0 27 500 55 000VN Magwentshu 2 - - - - - - - - - - - -LM Ndlovu - - - - - - - - - - - -

Total 1 713 097 40 671 178 42 384 275 20.5 6 401 004 48 785 279 970 599 37 506 030 38 476 629 16.8 11 801 500 50 278 129

1 Resigned with effect from 31 March 2013; 2 Retires at the forthcoming annual general meeting and will not be making herself available for re-election; 3 Details of the group's share scheme is set out in note 30.2. 4 J Hertz was appointed as a director and group CEO effective 1 April 2013. At that date he held 1,500,000 Peregrine Holdings Limited shares indirectly beneficially and a further 1,000,000 shares in the deferred purchase scheme, in a direct beneficial capacity.

As at year-end, the directors had no non-beneficial shareholdings, direct or indirect, in the company other than:

• Sean Melnick in his capacity as trustee of The Citadel Staff Share Trust, which trust indirectly held 2 012 792 shares(2012: 2 012 792) shares, and

• Mandy Yachad in his capacity as trustee of The Citadel Staff Share Trust, which held 2 012 792 (2012: 2 012 792) shares.

Other than the purchase of 27 351 shares by an associate of M Yachad on 28 June 2013, no changes have occurred in any of the directors’shareholdings between the end of the financial year and the date of this report.

Directors’ remuneration is detailed in note 4 to the financial statements.

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Directors’ report Continued

With effect from 28 September 2012, the group reorganisationwas implemented. Part of the rationale of the group reorganisationwas to facilitate the restructuring of the group's BEE shareholdingthrough Nala so as to increase the percentage of its equity interestin Peregrine's South African operations.

To achieve this Nala swapped its 12.5% shareholding in PeregrineHoldings Limited for a 20% shareholding in SA Holdings, beingthe holding company of Peregrine's South African operations.

In terms of the reorganisation:

• the South African operating subsidiaries, namely Citadel,Peregrine Capital, Peregrine Securities and other smaller South

African subsidiaries were transferred to and held, directly orindirectly, by SA Holdings, a wholly owned subsidiary;

• the internationally based operations, predominantly Stenham,are held by Peregrine Financial Services Holdings Limited, awholly owned subsidiary. The intention is, subject to the obtainingof the necessary approvals, to ultimately hold such intereststhrough Peregrine International Holdings Limited, a companyincorporated in Guernsey;

• all remaining non-financial services investments are held bySandown Capital Proprietary Limited, a wholly owned subsidiary,and its associates.

Group reorganisation and restructure of BEE shareholding

81

In terms of the restructuring of the BEE shareholding:

• Peregrine repurchased from Nala and its subsidiary 28 584 059Peregrine shares for an aggregate purchase price ofR294 701 648, following which such shares were cancelled anddelisted. These 28 584 059 Peregrine shares were purchasedcum the ordinary and special dividends declared on 6 June 2012;

• Nala acquired, by way of subscription, a 20% shareholding inSA Holdings for a subscription price of R380 million, whichimplied a value of R1.9 billion for SA Holdings. Nala obtainedthe funding required, inter alia, to fund the difference betweenthe subscription price and the repurchase price from StandardBank of South Africa. In order to facilitate such funding,SA Holdings furnished the funders with appropriate guarantees.(note 44.2)

Subsidiaries

Details of the company’s principal subsidiaries are set out onpage 158. The aggregate profit after taxation of subsidiariesattributable to the company amounted to R259 353 552 (2012:R330 002 664). The aggregate losses after taxation attributableto subsidiaries amounted to R725 713 574 (2012: R15 771 283).The profits and losses include the company’s attributable shareof income of associates, which are accounted for in the results ofthe company’s underlying subsidiaries.

All companies within the Peregrine group are incorporated withinthe Republic of South Africa, with the exception of PeregrineInternational Holdings Limited, Beauclerc Limited, Citadel OffshoreHoldings Limited, Citadel Guernsey Limited and PeregrineInternational Wealthcare Limited which are incorporated in Guernsey,Peregrine Advisory Services Limited which is incorporated in theUK, Peregrine Direct Limited which is incorporated in the BritishVirgin Isles, and Stenham Limited and its subsidiaries which areincorporated in the British Virgin Isles, the UK and in Guernsey.

Special resolutions

At its annual general meeting on 26 October 2012, the companypassed the following special resolutions:

• authorising the payment to the non-executive directors ofannual fees for services as directors with effect from the dateof the annual general meeting;

• authorising the company to provide financial assistance ascontemplated in sections 44 and 45 of the Companies Act;

• authorising the company to acquire shares issued by it andto enable its subsidiary companies to acquire shares in itsshare capital;

• authorising the cancellation of the 10 000 000 authorisedbut unissued compulsorily convertible redeemable preferenceshares, and

• authorising the substitution of the company’s existing articlesand memorandum of association with the memorandum ofincorporation tabled at the meeting.

The only other special resolutions passed by the company and/orits subsidiaries were those relating to:

• the restructure of the BEE shareholding and the groupre-organisation;

• the adoption of a new memoranda of incorporation for the South African subsidiaries;

• the provision of financial assistance, and• where applicable, the conversion of shares to no par value

shares.

Auditors

KPMG Inc. will continue in office in accordance with the CompaniesAct, 71 of 2008, subject to the approval of the shareholders at theupcoming annual general meeting.

Share incentive scheme

Prior to the end of the 2010 financial year, an executive incentivescheme was implemented, which resulted in senior staff memberspurchasing 19,788 million shares at R8.10 per share on a deferredbasis. The price per share has been and will be reduced by theamount of any special dividends declared and paid to shareholdersbetween the implementation date and the relevant vesting date.The first tranche vested on 15 November 2012 and the remainingtwo tranches will vest, in equal tranches, in November 2013and 2014. Each participant was obliged to pledge an equal numberof Peregrine shares as security for payment of the deferredpurchase consideration. In addition, a share option scheme forother members of staff was implemented. The total expense ofR77.6 million will be recognised in the consolidated results overa five year period. The expense of R19 million (2012: R22 million)was recognised during the current financial year.

Prior to year-end, an extension to the executive incentive schemewas implemented, which resulted in senior staff memberspurchasing 2.561 million shares at R11.30 per share on a deferredbasis, which price per share will be reduced by the amount of anyspecial dividends declared and paid to shareholders between theimplementation date and 15 November 2015 on which date theseshares will vest. Each participant was obliged to pledge a numberof Peregrine shares as security for payment of the deferredpurchase consideration equal to 50% of the shares purchased.

Borrowing limitations

In terms of the memorandum of incorporation, the borrowingpowers of the directors are unlimited and the directors mayexercise all powers of the company to borrow money, as theyconsider appropriate.

Events subsequent to reporting date

Subsequent to year-end, Peregrine increased its holdingfrom 62.71% to 63.94% in Stenham following another share-repurchase transaction.

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Audit Committee reportThe information below constitutes the report of the Audit Committee

At present, the Audit Committee comprises three independent non-executive directors, namely SI Stein (Chairman), BC Beaver andVN Magwentshu. In accordance with the committee charter, at theupcoming annual general meeting (i) SI Stein and, BC Beaver willbe offered for approval as members of the Audit Committee (ii) asVN Magwentshu is retiring and not making herself available for re-election, S Sithole will be offered for approval as a member.

A short curriculum vitae for each of these directors has been setout on pages 28 to 29 of this integrated report, demonstrating theirsuitable and relevant skills and experience.

The committee meets at least four times a year. Special meetingsare convened as required. Attendance for the year under reviewis set out on page 66.

An effectiveness evaluation was performed during May 2012, interms of which the board satisfied itself that each committeemember has the suitable skill and experience to serve on the AuditCommittee.

The Audit Committee fulfils the function as an Audit Committeefor all subsidiaries in the group, with the exception of Citadel Lifeand the Stenham group of companies. A separate Citadel LifeAudit Committee is a requirement of the Long Term Insurance Act.The Stenham group of companies, as an offshore subsidiary, hasa separate Stenham Audit Committee (SAC) in view of the sizeof the Stenham business and the complexities of the offshoreenvironment. The group Chief Financial Officer is a member ofthe SAC and the minutes and documents of the SAC are madeavailable to the group Audit Committee. In addition, the chairmanof the SAC presents regular feedback on the functioning anddeliberations at the Group Audit Committee as and when required.The group external auditors attend the year-end SAC meeting viavideo conference.

The responsibilities of the committee are formally encapsulatedin the Audit Committee Charter which include:

• Reviewing the internal and external audit reports• Reviewing the minutes of the Group Risk & Compliance

Committee and discussing significant items raised• Reviewing legal matters that could have a significant impact

on the financial statements• Confirming and monitoring the internal audit process and

assessing the effectiveness of the internal audit function• Monitoring internal control frameworks and procedures including

accounting policies, legislative compliance, regulatory mattersand governance

• Reviewing the effectiveness of the systems of internal control,including IT internal controls and risk management, based onwritten reports from the Chief Audit Executive

• Recommending the appointment of external auditors, who inthe opinion of the committee are independent of the company,for approval by shareholders at the annual general meeting

• Approving the remuneration of the external auditors andassessment of their performance

• Performing an annual assessment of the independence of theexternal auditors

• Setting the principles for recommending the use of externalauditors for non-audit services

• Advising and updating the board on issues ranging fromaccounting standards to published financial information

• Reviewing the group’s financial statements• Monitoring compliance with laws and regulations

The Audit Committee is satisfied with the efficacy and independenceof the external auditor, KPMG Inc., who performed the audit forthe year.

The Audit Committee oversaw the compilation of the integratedreport, including appointing individuals with the appropriate skilland experience to assist with its preparation. The committeereviewed the Directors Responsibility Statement in the financialstatements on page 76 and concur therewith. A member of theAudit Committee and an independent non-executive director thenreviewed the final report prior to publication.

Following our review of the financial statements, the AuditCommittee is of the opinion that, in all material respects theycomply with the relevant provisions of the Companies Act andIFRS and the interpretations issued by the International FinancialReporting Interpretations Committee (IFRIC), and that they fairlypresent in all material respects, the results of operations, cashflows and financial position of the company and the group for theyear then ended.

The committee has recommended to the board the entire integratedreport for approval.

The Audit Committee is of the opinion that it has discharged itsfunctions in terms of its proposed Charter and as ascribed to it bythe Companies Act.

The committee has further considered and is satisfied with theexpertise and experience of the company’s Chief Financial Officer,RE Katz.

SI SteinAudit Committee Chairman

JHB 23 AUGUST2013

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Independent auditor’s reportTo the shareholders of Peregrine Holdings Limited

Report on the financial statements

We have audited the consolidated and separate financial statementsof Peregrine Holdings Limited, which comprise the statements offinancial position at 31 March 2013 and the statements of incomeand comprehensive income, changes in equity and cash flows forthe year then ended, and the notes to the financial statementswhich include a summary of significant accounting policies andother explanatory notes, as set out on pages 84 to 161.

Directors’ responsibility for the financial statements

The company’s directors are responsible for the preparation andfair presentation of these financial statements in accordance withInternational Financial Reporting Standards and the requirementsof the Companies Act of South Africa, and for such internal controlas the directors determine is necessary to enable the preparationof financial statements that are free from material misstatement,whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these financialstatements based on our audit. We conducted our audit inaccordance with International Standards on Auditing. Thosestandards require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidenceabout the amounts and disclosures in the financial statements.The procedures selected depend on the auditor’s judgement,including the assessment of the risks of material misstatement ofthe financial statements, whether due to fraud or error. In makingthose risk assessments, the auditor considers internal controlrelevant to the entity’s preparation and fair presentation of thefinancial statements in order to design audit procedures that areappropriate in the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of the entity’s internalcontrol. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accountingestimates made by management, as well as evaluating the overallpresentation of the financial statements.

We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, these financial statements present fairly, in allmaterial respects, the consolidated and separate financial positionof Peregrine Holdings Limited at 31 March 2013 and its consolidatedand separate financial performance and consolidated and separatecash flows for the year then ended in accordance with InternationalFinancial Reporting Standards and the requirements of theCompanies Act of South Africa.

Other reports required by the Companies Act

As part of our audit of the financial statements and group financialstatements for the year ended 31 March 2013, we have read theDirectors’ report, the Audit Committee’s Report and the CompanySecretary’s Certificate for the purpose of identifying whetherthere are material inconsistencies between these reports and theaudited financial statements. These reports are the responsibilityof the respective preparers. Based on reading these reportswe have not identified material inconsistencies between thesereports and the audited financial statements. However, we havenot audited these reports and accordingly do not express anopinion on these reports.

KPMG Inc.Registered Auditor

Per Heather BerrangeChartered Accountant (SA)Registered AuditorDirector

KPMG Crescent,85 Empire RoadParktown2193

23 AUGUST2013

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Income statementsFor the year ended 31 March

2013 2012 2013 2012Notes R’000 R’000 R’000 R’000

Operating revenue 1 1 690 333 1 533 597 - -Investment and other income 2 46 972 233 492 1 022 342 80 300

Total revenue 1 737 305 1 767 089 1 022 342 80 300Fair value gains on linked financial investments 3.1 580 690 244 985 - -Fair value loss on policyholder contract liabilities 3.2 (580 690) (244 985) - -Operating expenses 4 (1 317 847) (1 246 334) (1 165) (379)

Profit from operations 419 458 520 755 1 021 177 79 921Net interest received 5 47 050 21 719 856 8 Interest received 47 543 50 899 4 774 8 Interest paid (493) (29 180) (3 918) -Income from associate companies 16 57 395 40 081 - -

Profit before intangibles impairment 523 903 582 555 1 022 033 79 929Intangibles impairment 14 (892 820) (2 946) - -

(Loss)/profit before taxation and capital items (368 917) 579 609 1 022 033 79 929Capital items 6 - (6 936) - -

(Loss)/profit before taxation (368 917) 572 673 1 022 033 79 929Taxation 7 (92 595) (106 379) - -

(Loss)/profit for the year (461 512) 466 294 1 022 033 79 929

Attributable to:Equity holders of the company (466 669) 313 860 Non-controlling interests 5 157 152 434

(461 512) 466 294

Basic (loss)/earnings per share (cents) 8 (226,4) 144,2 Diluted basic (loss)/earnings per share (cents) 8 (222,7) 142,9

Group Company

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Statements of comprehensive incomeFor the year ended 31 March

2013 2012 2013 2012R’000 R’000 R’000 R’000

(Loss)/profit for the year (461 512) 466 294 1 022 033 79 929Other comprehensive income for the year net of tax:Currency translation differences1 286 102 195 702 - -

Total comprehensive (loss)/income for the year (175 410) 661 996 1 022 033 79 929

Attributable to:Equity holders of the company (232 880) 441 158 1 022 033 79 929Non-controlling interests 57 470 220 838 - -

(175 410) 661 996 1 022 033 79 929

1 No tax effect

Group Company

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Statements of financial positionFor the year ended 31 March

Group Company

2013 2012 2013 2012Notes R’000 R’000 R’000 R’000

ASSETS

Non-current assets 5 790 092 6 493 000 668 642 122 487

Property, plant & equipment 11 35 750 19 077 - -Intangible assets 14 545 796 1 293 027 - -Interest in subsidiaries 15 - - 668 642 51 333Investment in associate companies 16 101 945 55 440 - -Investments linked to policyholder investment contracts 17.1 4 728 289 4 432 561 - -Financial investments 18.1 306 889 527 111 - -Loans and receivables 19 1 987 100 550 - -Loans to related parties 41.1 - - - 71 154Deferred taxation 20 69 436 65 234 - -

Current assets 12 867 002 7 862 242 126 356 380Financial investments 18.2 2 588 026 1 093 587 - -Loans and receivables 19 310 897 29 911 - -Loans to related parties 41.1 - - 125 895 -Trade and other receivables 21 697 215 529 361 - -Amounts receivable in respect of stockbroking activities 22.1 8 291 269 5 391 069 - -Taxation 4 111 19 269 - -Cash and cash equivalents 23 975 484 799 045 461 380

Total assets 18 657 094 14 355 242 794 998 122 867

EQUITY AND LIABILITIES

Equity 2 229 742 2 778 728 696 216 122 655

Share capital 24 207 228 207 228Share premium 88 662 38 024 88 662 38 024Treasury shares (26 664) (27 277) - -Accumulated profits 1 730 718 2 161 555 794 171 329Share-based payment reserve 63 149 44 138 63 149 44 138Put option reserve (8 271) (8 271) - -Non-distributable reserves 25 (140 863) (24 088) (249 973) 39 936Total equity attributable to equity holders of the company 1 706 938 2 184 309 696 216 122 655Non-controlling interests 522 804 594 419 - -

Non-current liabilities 4 752 244 4 680 592 - -

Interest-bearing borrowings 26 - 157 548 - -Policyholder investment contract liabilities 17.4 4 728 289 4 432 561 - -Loans and other payables 27 19 014 60 543 - -Financial instrument liability 28 - 3 653 - -Deferred taxation 20 4 941 26 287 - -

Current liabilities 11 675 108 6 895 922 98 782 212

Interest-bearing borrowings 26 - 21 688 - -Loans and other payables 27 1 593 899 21 670 - -Loans from related parties 41.1 - - 98 491 -Financial instrument liabilities 28 919 662 583 415 - -Trade and other payables 29 946 330 798 031 291 212Amounts payable in respect of stockbroking activities 22.2 7 861 260 5 430 803 - -Taxation 37 604 40 315 - -Bank overdraft 23 316 353 - - -

Total equity and liabilities 18 657 094 14 355 242 794 998 122 867

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Statements of changes in equityFor the year ended 31 March

Group

Share capital Share Treasury Accumulated Share-based Share Put option Non- Attributable to Non- Total equity premium shares profits payment buy-back reserve distributable equity holders controlling

reserve1 reserve2 reserves3 reserves4 interests

R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’0002013

Balance at 31 March 2012 228 38 024 (27 277) 2 161 555 44 138 - (8 271) (24 088) 2 184 309 594 419 2 778 728Total comprehensive (loss)/income for the year - - - (466 669) - - - 233 789 (232 880) 57 470 (175 410)Dividends paid - - - (216 177) - - - - (216 177) (232 116) (448 293)Share-based payment cost - - - - 19 011 - - - 19 011 - 19 011Subscription of shares in new subsidiaries - - - - - - - - - 595 595Contingent consideration received asa result of the disposal of interest in subsidiary - - - 9 489 - - - (60 655) (51 166) 60 655 9 489Purchase of shares in subsidiary fromthe non-controlling shareholder (note 34) - - - 9 559 - - - - 9 559 (20 346) (10 787)Repurchase of treasury shares - - (242) - - - - - (242) - (242)Disposal of treasury shares - - 855 94 - - - - 949 - 949Repurchase and cancellation of sharesof holding company (28) (4 764) - - - (289 909) - - (294 701) - (294 701)Issue of additional shares of holding company 7 55 402 - - - - - - 55 409 - 55 409Disposal of 20% of Peregrine SA Holdings to Nala - - - 236 600 - - - - 236 600 143 400 380 000Repurchase and cancellation of shares ofa subsidiary (note 37) - - - - - - - - - (85 006) (85 006)Non-controlling interest share ofcapital contribution made to subsidiary - - - (3 733) - - - - (3 733) 3 733 -

Balance at 31 March 2013 207 88 662 (26 664) 1 730 718 63 149 (289 909) (8 271) 149 046 1 706 938 522 804 2 229 742

2012

Balance at 31 March 2011 228 38 024 (25 500) 1 917 514 22 069 - (8 271) (212 041) 1 732 023 513 699 2 245 722Total comprehensive income for the year - - - 313 860 - - - 127 298 441 158 220 838 661 996Dividends paid - - - (76 217) - - - - (76 217) (50 644) (126 861)Share-based payment cost - - - - 22 069 - - - 22 069 - 22 069Repurchase of treasury shares - - (1 777) - - - - - (1 777) - (1 777)Contingent consideration received as a result ofan agreement to dispose of an interest in a subsidiary - - - 10 441 - - - 60 655 71 096 - 71 096Subscription of shares in a new subsidiary - - - - - - - - - 51 51Repurchase and cancellation of shares ofa subsidiary (note 37) - - - (4 043) - - - - (4 043) (89 525) (93 568)

Balance at 31 March 2012 228 38 024 (27 277) 2 161 555 44 138 - (8 271) (24 088) 2 184 309 594 419 2 778 728

1 This represents the fair value of equity settled options granted in terms of the group’s share-based compensation schemes (note 30.2)2 Refer to note 13 for detailed explanation3 Refer to note 27 for detailed explanation4 Refer to note 25 for a breakdown of the categories of non-distributable reserves

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Statements of changes in equityFor the year ended 31 March

Company

Share capital Share Accumulated Share-based Share Non- Total equitypremium profits payment buy-back distributable

reserve 1 reserve 2 reserve 3

R’000 R’000 R’000 R’000 R’000 R’000 R’000

2013

Balance at 31 March 2012 228 38 024 329 44 138 - 39 936 122 655Total comprehensive income for the year - - 1 022 033 - - - 1 022 033Dividends paid - - (228 191) - - - (228 191)Share-based payment cost - - - 19 011 - - 19 011Repurchase and cancellation ofshares of holding company (28) (4 764) - - (289 909) - (294 701)Issue of additional shares of holding company 7 55 402 - - - - 55 409

Balance at 31 March 2013 207 88 662 794 171 63 149 (289 909) 39 936 696 216

2012

Balance at 31 March 2011 228 38 024 245 22 069 - 39 936 100 502Total comprehensive income for the year - - 79 929 - - - 79 929Dividends paid - - (79 845) - - - (79 845)Share-based payment cost - - - 22 069 - - 22 069

Balance at 31 March 2012 228 38 024 329 44 138 - 39 936 122 655

1 This represents the fair value of equity settled options granted in terms of the group’s share-based compensation schemes (note 30.2)2 Refer to note 13 for detailed explanation3 Refer to note 25 for a breakdown of the categories of non-distributable reserves

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Statements of cash flowFor the year ended 31 March

Group Company

2013 2012 2013 2012Notes R’000 R’000 R’000 R’000

Cash flow from operating activities (158 134) (27 710) 237 503 80Cash generated from/(utilised by) operating activities 31 161 257 126 132 (1 086) (383)Interest received 47 084 44 338 4 774 8Interest paid (16 230) (38 455) (3 918) -Dividends received – financial investments 9 255 15 240 - -Dividends received – associate companies 30 041 35 195 - -Dividends received – subsidiaries - - 381 577 80 300Dividends paid (283 229) (126 861) (143 844) (79 845)Taxation paid 32 (106 312) (83 299) - -

Cash flow from investing activities (378 460) (84 605) (7 072) -Acquisition of property, plant and equipment (28 457) (10 442) - -Acquisition of subsidiary companies 33 - (4 241) - -Acquisition of additional interest in subsidiary company 34/15 (10 783) - (7 072) - Acquisition of associate companies 35 - (25 558) - -Acquisition of financial investments (1 253 270) (258 500) - -Disposal of subsidiary companies 36 9 807 11 555 - -Cash de-recognised as a result of loss of control of hedge funds - (89 035) - -Increase in loans to associate companies (397) (5 726) - -Decrease in loans to associate companies - 158 - -Proceeds on sale of property, plant and equipment 98 90 - -Proceeds on subscription by Nala Empowerment Investment Companyin Peregrine SA Holdings 380 000 - - -Proceeds on sale of financial investments 524 542 297 094 - -

Cash flow from financing activities 336 877 (486 446) (230 350) (142)Shares repurchased and cancelled 13 (294 701) - (294 701) -Proceeds on issue of shares 30.2 55 409 - 55 409 -Decrease in non-controlling interest arising on share buy-back 37 (85 006) (93 568) - -Increase in loans and receivables (260) (103 222) (5 202) -Decrease in loans and receivables 471 899 8 250 - -Increase in loan to subsidiary company - - - (142)Decrease in interest-bearing borrowings (179 236) (241 977) - -Increase in loans and other payables 17 316 075 5 500 14 144 -Decrease in loans and other payables (16 954 913) (57 716) - -Increase in financial instrument liability 9 750 - - -Decrease in financial instrument liability (2 140) (3 713) - -

Net (decrease) / increase in cash and cash equivalents (199 717) (598 761) 81 (62)Cash and cash equivalents at the beginning of the year 799 045 1 325 300 380 442Effects of exchange rate changes on cash and cash equivalents 59 803 72 506 - -

Cash and cash equivalents at end of the year 23 659 131 799 045 461 380

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Segmental information

Group

International Financial Reporting Standards, IFRS 8, requires operating segments to be identified on the basis of internal reports about components of the groupthat are regularly reviewed by management in order to allocate resources to the segments and to assess their performance.

Management of the Peregrine group (refer Group snapshot on page 10) reviews the group results monthly under the segments of Wealth and Asset management,Broking and Structuring, Stenham and Group, comprising operations, investment returns and borrowing costs.

In terms of current International Financial Reporting Standards certain of the group's proprietary hedge fund investments are required to be consolidated dueto the fact that the group has effective control both in terms of kick-out rights and with direct and indirect holdings being close to 100%. The consolidatedproprietary hedge fund investments do not meet the quantitative thresholds for determining reportable segments in 2013 and 2012. These have been groupedtogether as non-reportable segments and are presented in the reconciliation of the segment reports to the financial statements in Annexure C and D.A reconciliation between the segment reports and the statutory income statements and statements of financial position can be found on page 160-161, AnnexureC and D.

Operating segments*

Wealth and Asset managementRevenue is derived from fees earned on assets under management. Major operating subsidiaries within this segment are Citadel Holdings Limited and itssubsidiaries, Peregrine Capital Proprietary Limited, Peregrine Fund Platform Proprietary Limited and Beauclerc Advisory Services Limited.

The Wealth and Asset Management segment has been separated into local and offshore segments whereas this segment was disclosed in aggregate in theprior year.

Broking and StructuringRevenue comprises brokerage, scrip lending income, interest and dividend income earned on trading, equities and futures transactions and fees charged forconsulting and executing derivative strategies on behalf of clients. The major operating subsidiary within this segment is Peregrine Securities Proprietary Limitedand its subsidiaries.

StenhamRevenue represents amounts receivable for services provided in the normal course of business, including management fees, asset performance fees, capitalraising fees, company formation and annual company fees, net of trade discounts. The major operating subsidiary within this segment is Stenham Limited andits subsiairies.

GroupThis segment incorporates the returns on proprietary investments, the employment of capital outside of that employed within the group’s operating segmentsand corporate costs. Major operating subsidiaries within this segment are Peregrine Financial Services Holdings Limited, Peregrine SA Holdings ProprietaryLimited, Firefly Investments 61 Partnerships and its subsidiaries, Sandown Capital Proprietary Limited and its subsidiaries and Citadel Guernsey Limited.

Other disclosure categories

The accounting policies of the reportable segments are the same as the group’s accounting policies. Segment profit represents the profit earned by eachsegment without allocation of certain corporate costs, which are central to the group and not allocated. Other than for Stenham, borrowing costs are disclosedas part of Group and have not been allocated to the appropriate operating segments. This is the measure reported to management for the assessment ofsegment performance.

Assets are allocated to reportable segments. The same applies to the depreciation/amortisation of these assets. Refer to Segment report – Statement of financialposition on pages 92 and 94.

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

Geographical information is disclosed in Annexure A.

* Refer to Business segments on pages 32 to 48.

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Segment report – Income StatementFor the year ended 31 March

Group

Wealth Wealth Asset Stenham Broking and Group Total Management Management Management Structuring (operations,

- local - offshore investmentreturns and

borrowingcosts)

R’000 R’000 R’000 R’000 R’000 R’000 R’000

2013

Revenue, investment and other income1 493 446 1 933 182 748 538 580 385 303 121 048 1 723 058Fair value gains on linked financial investments 580 690 - - - - - 580 690Fair value loss on policyholder contract liabilities (580 690) - - - - - (580 690)Operating expenses1 (381 184) (17 391) (72 193) (452 768) (311 408) (68 656) (1 303 600)

Profit from operations 112 262 (15 458) 110 555 85 812 73 895 52 392 419 458Net interest received 1 413 3 744 21 502 21 086 2 302 47 050 Interest received 1 745 3 1 397 2 173 23 666 18 559 47 543 Interest paid (332) - (653) 19 329 (2 580) (16 257) (493)Income from associate companies 22 364 - 12 038 9 315 56 13 622 57 395

Profit before intangibles impairment 136 039 (15 455) 123 337 116 629 95 037 68 316 523 903Intangibles impairment - - - (305 194) - (587 626) (892 820)

Profit before taxation and capital items 136 039 (15 455) 123 337 (188 565) 95 037 (519 310) (368 917)Capital items - - - - - - -

Profit before taxation 136 039 (15 455) 123 337 (188 565) 95 037 (519 310) (368 917)Taxation (17 910) - (32 748) (5 884) (20 539) (15 514) (92 595)

Profit for the year 118 129 (15 455) 90 589 (194 449) 74 498 (534 824) (461 512)

Attributable to: Equity holders of the company 117 556 (26 733) 61 922 (104 890) 47 071 (561 595) (466 669)Non-controlling interests 573 11 278 28 667 (89 559) 27 427 26 771 5 157

118 129 (15 455) 90 589 (194 449) 74 498 (534 824) (461 512)

Headline earnings 117 556 (26 733) 61 922 60 524 47 071 26 031 286 371% change in profit attributable to equity holders of the company (2012 to 2013) 41% (155)% 63% (229)% (41)% >(100)% (249)%

1 Refer to annexure C for reconciliation between Segment report and Income Statement.

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Segment report – Statement of financial positionFor the year ended 31 March

Group

Wealth Wealth Asset Stenham1 Broking and Group Total Management Management Management Structuring (operations,


borrowingcosts)

R’000 R’000 R’000 R’000 R’000 R’000 R’000

2013

Segment assets Property, plant and equipment 16 795 - 1 980 1 464 6 623 8 888 35 750Goodwill 221 526 - - 115 918 25 460 - 362 904Intangible assets 18 806 - - 164 086 - - 182 892Investment in associate companies 24 029 - 23 574 22 142 5 633 26 567 101 945Investments linked to policyholderinvestment contracts 4 728 289 - - - - - 4 728 289Non-current financial investments 3 260 - - 127 713 - 175 916 306 889Non-current loans and receivables - - - - - 1 987 1 987Deferred taxation 16 565 - 7 090 5 697 14 461 25 623 69 436Current financial investments2 18 975 - 6 923 102 295 1 285 776 390 564 1 804 533Current loans and receivables2 - - - - 301 627 - 301 627Trade and other receivables2 70 661 1 531 44 367 122 514 101 961 27 240 368 274Amounts receivable in respect ofstockbroking activities2 - - - - 8 296 022 - 8 296 022Taxation 2 392 - 302 - 1 366 51 4 111Cash and cash equivalents2 118 055 10 694 11 571 320 293 291 308 124 345 876 266

5 239 353 12 225 95 807 982 122 10 330 237 781 181 17 440 925

Segment liabilities Policyholder investment contract liabilities 4 728 289 - - - - - 4 728 289Non-current loans and payables 2 586 - - 14 490 254 1 684 19 014Deferred taxation 476 - - - 104 4 361 4 941Current loans and payables - - - 24 979 1 568 920 - 1 593 899Financial instrument liability - - - - - 5 291 5 291Trade and other payables2 114 914 3 216 29 406 147 489 206 638 56 461 558 124Amounts payable in respect ofstockbroking activities2 - - - - 7 947 668 - 7 947 668Taxation 1 145 - 2 031 6 999 2 404 25 025 37 604Bank overdraft - - - - 316 353 - 316 353

4 847 410 3 216 31 437 193 957 10 042 341 92 822 15 211 183

Capital expenditure (note 11) 13 837 - 2 038 - 4 843 7 739 28 457Depreciation 4 601 - 328 2 745 2 071 2 381 12 126Amortisation of intangibles 2 984 - - 37 989 - - 40 973Impairment of intangibles - - - 892 820 - - 892 820

1 Refer to note 42.1.1 for the allocation of intangible assets to the CGU's within Stenham.2 Refer to annexure D for reconciliation between Segmental report and Statement of financial position.

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Segment report – Income StatementFor the year ended 31 March

Group

Wealth Wealth Asset Stenham Broking and Group Total Management Management Management Structuring (operations,


borrowingcosts)

R’000 R’000 R’000 R’000 R’000 R’000 R’000

2012

Revenue, investment and other income1 401 513 235 150 696 664 391 332 424 205 318 1 754 577Fair value gains on linked financial investments 244 985 - - - - - 244 985Fair value loss on policyholder contract liabilities (244 985) - - - - - (244 985)Operating expenses1 (323 937) (17 526) (61 232) (495 949) (258 550) (79 574) (1 236 768)

Profit from operations 77 576 (17 291) 89 464 168 442 73 874 125 744 517 809Net interest received/(paid) 1 583 4 1 782 14 452 22 418 (18 520) 21 719 Interest received 1 828 4 2 361 1 214 23 070 22 422 50 899 Interest paid (245) - (579) 13 238 (652) (40 942) (29 180)Income/(loss) from associate companies 19 377 - 5 087 4 029 (546) 12 134 40 081

Profit before taxation and capital items 98 536 (17 287) 96 333 186 923 95 746 119 358 579 609Capital items - - - - - (6 936) (6 936)

Profit before taxation 98 536 (17 287) 96 333 186 923 95 746 112 422 572 673Taxation (14 663) - (31 805) (12 433) (16 167) (31 311) (106 379)

Profit for the year 83 873 (17 287) 64 528 174 490 79 579 81 111 466 294

Attributable to: Equity holders of the company 83 518 (10 495) 38 084 81 556 79 579 41 618 313 860Non-controlling interests 355 (6 792) 26 444 92 934 - 39 493 152 434

83 873 (17 287) 64 528 174 490 79 579 81 111 466 294

Headline earnings 83 518 (10 495) 38 084 81 556 79 579 49 208 321 450% change in profit attributable to equity holders of the company (2011 to 2012) 6% - 58% (6)% (11)% 41% 2%

1 Refer to annexure C for reconciliation between Segment report and Income Statement.

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Segment report – Statement of financial positionFor the year ended 31 March

Group

Wealth Wealth Asset Stenham1 Broking and Group Total Management Management Management Structuring (operations,


borrowingcosts)

R’000 R’000 R’000 R’000 R’000 R’000 R’000

2012

Segment assets Property, plant and equipment 7 588 - 265 3 770 3 863 3 591 19 077Goodwill 221 526 - - 608 579 25 460 - 855 565Intangible assets 21 789 - - 415 673 - - 437 462Investment in associate companies 20 562 - 15 779 975 5 180 12 944 55 440Investments linked to policyholderinvestment contracts 4 432 561 - - - - - 4 432 561Non-current financial investments 5 718 - - 105 180 - 416 213 527 111Non-current loans and receivables - - - 12 207 - 88 343 100 550Deferred taxation 13 550 - 2 407 4 573 3 105 41 599 65 234Current financial investments2 15 624 - 2 160 - 15 404 478 623 511 811Current loans and receivables2 - - - 8 471 - 12 615 21 086Trade and other receivables2 47 994 393 59 344 132 497 41 996 13 821 296 045Amounts receivable in respect ofstockbroking activities2 - - - - 5 398 402 - 5 398 402Taxation 3 225 - 271 - 851 14 922 19 269Cash and cash equivalents2 68 067 18 605 30 818 378 251 209 201 23 343 728 285

4 858 204 18 998 111 044 1 670 176 5 703 462 1 106 014 13 467 898

Segment liabilities Interest-bearing borrowings - - - - - 179 236 179 236Policyholder investment contract liabilities 4 432 561 - - - - - 4 432 561Non-current loans and payables 3 564 - - 56 805 174 - 60 543Non-current financial instrument liability - - - - - 3 653 3 653Deferred taxation 162 - - - 17 26 108 26 287Current loans and payables - - - 797 - 20 873 21 670Trade and other payables2 120 847 1 685 31 284 140 684 82 752 73 131 450 383Amounts payable in respect ofstockbroking activities2 - - - - 5 474 522 - 5 474 522Taxation 1 869 - 5 058 6 738 2 388 24 262 40 315

4 559 003 1 685 36 342 205 024 5 559 853 327 263 10 689 170

Capital expenditure (note 11) 4 998 - 130 1 038 1 861 2 417 10 444Depreciation 4 203 - 199 9 711 1 269 1 685 17 067Amortisation of intangibles 1 984 - - 33 551 - - 35 535

1 Refer to note 42.1.1 for the allocation of intangible assets to the CGU's within Stenham. 2 Refer to annexure D for reconciliation between Segmental report and Statement of financial position.

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Principal accounting policiesThe financial statements incorporate the following principal accounting policies for the Peregrine Holdings’consolidated financial statements and the Peregrine Holdings’ company financial statements which are consistentwith those applied in the previous year.

Basis of preparation

These consolidated and separate financial statements are preparedin accordance with, and comply with International FinancialReporting Standards (“IFRS”) as issued by the InternationalAccounting Standards Board, the Financial Reporting Guides asissued by the Accounting Practices Committee, the requirementsof the Companies Act, 71 of 2008 (as amended) (“the CompaniesAct”) and the JSE Listings Requirements. The consolidated andseparate financial statements are prepared in accordance withthe going concern principle under the historical cost basis otherthan financial assets designated as at fair value through profit orloss, and held-for-trading instruments, which are measured at fairvalue.

The preparation of financial statements in accordance with IFRSrequires the use of certain critical accounting estimates. It also

requires management to exercise judgement in the process ofapplying the group’s accounting policies. The areas involving ahigh degree of judgement or areas where assumptions andestimates are significant to the financial statements are disclosedin note 42.

Standards in issue, not yet effective

At the date of authorisation of these financial statements, thefollowing relevant Standards and Interpretations were in issue butnot yet effective. The statements will be effective for the group’sannual financial periods beginning on or after 1 April 2013 andare considered relevant to the group’s and company’s operations.The directors are currently performing an assessment of the impactof these standards and interpretations in future periods - theoutcome of the impact has not yet been quantified.

IFRS 7: Financial Instruments: Disclosures

IFRS 9: Financial Instruments

IFRS 10: Consolidated Financial Statements

IFRS 11: Joint Arrangements

IFRS 12: Disclosure of Interests in Other Entities

• Amendments require entities to disclose gross amounts subject to rights ofset-off, amounts set off in accordance with the accounting standards followed,and the related net credit exposure.

• New standard that forms the first part of a three part project to replaceIAS 39 Financial Instruments: Recognition and Measurement.

• New standard that replaces the consolidation requirements inSIC-12 Consolidation - Special Purpose Entities and IAS 27 Consolidatedand Separate Financial Statements. The standard builds on existing principlesby identifying the concept of control as the determining factor in whether anentity should be included within the consolidated financial statements of theparent company and provides additional guidance to assist in the determinationof control where this is difficult to assess.

• Amendments to the transition guidance of IFRS 10 ConsolidatedFinancial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosureof Interests in Other Entities, thus limiting the requirements to provide adjustedcomparative information.

• IFRS 10 exception to the principle that all subsidiaries must be consolidated.Entities meeting the definition of ‘Investment Entities’ must be accounted forat fair value under IFRS 9, Financial Instruments, or IAS 39, FinancialInstruments; Recognition and Measurement.

• New standard that deals with the accounting for joint arrangements andfocuses on the rights and obligations of the arrangement, rather than its legalform. The standard requires a single method for accounting for interests injointly controlled entities.


• New and comprehensive standard on disclosure requirements for all formsof interests in other entities, including joint arrangements, associates, specialpurpose vehicles and other off balance sheet vehicles.


• New disclosures required for Investment Entities (as defined in IFRS 10).

01 January 2013

01 January 2015

01 January 2013

01 January 2013

01 January 2013

01 January 2013

01 January 2013

01 January 2013

01 January 2013

01 January 2013

Standard Details of amendment

Annual periodsbeginning onor after

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IFRS 13: Fair Value Measurement

IAS 1: Presentation of Financial Statements

IAS 27: Consolidated & Separate Financial Statements

IAS 28: Investments in Associates

IAS 34: Interim Financial Reporting

IAS 32 Financial Instruments: Presentation

• New guidance on fair value measurement and disclosure requirements.

• New requirements to group together items within Other ComprehensiveIncome that may be reclassified to the profit or loss section of theincome statement.

• Annual Improvements 2009–2011 Cycle: Amendments clarifying therequirements for comparative information including minimum and additionalcomparative information required.

• Consequential amendments resulting from the issue of IFRS 10,11 and 12• Requirement to account for interests in ‘Investment Entities’ at fair value

under IFRS 9, Financial Instruments, or IAS 39, Financial Instruments:Recognition and Measurement, in the separate financial statements ofa parent.

• Consequential amendments resulting from the issue of IFRS 10,11 and 12

• Annual Improvements 2009–2011 Cycle: Amendments to improve thedisclosures for interim financial reporting and segment information for totalassets and liabilities.

• Amendments require entities to disclose gross amounts subject to rights ofset-off, amounts set off in accordance with the accounting standards followed,and the related net credit exposure. This information will help investorsunderstand the extent to which an entity has set off in its balance sheet andthe effects of rights of set-off on the entity’s rights and obligations.

• Annual Improvements 2009–2011 Cycle: Amendments to clarify the tax effectof distribution to holders of equity instruments.

01 January 2013

01 July 2012

01 January 2013

01 January 201301 January 2014

01 January 2013

01 January 2013

01 January 2013

01 January 2013



Principal accounting policies Continued

None of the IFRICs effective during the year or not effective at year end are relevant to the group.

Standards in issue and relevant to the group’s operations at present

The following standards are in issue and became effective during the current financial period, and are considered to be relevant to thegroup’s operations:

IFRS 3: Business Combinations

IFRS 7: Financial Instruments: Disclosures

IAS 1: Presentation of Financial Statements

IAS 24: Related Party Disclosure

IAS 34: Interim Financial Reporting

• Transition requirements for contingent consideration from a businesscombination that occurred before the effective date of the revised IFRS.

• Measurement of non-controlling interests.• Un-replaced and voluntarily replaced share-based payment awards.

• Clarification of disclosures.• Additional disclosure relating to transferred financial assets.

• Clarification of statement of changes in equity.

• Clarification of the definition of related party.

• Clarification of disclosure requirements around significant eventsand transactions.

01 January 2011

01 January 201101 January 2011

01 January 201101 July 2011

01 January 2011

01 January 2011

01 January 2011



The adoption of the amendments to the standards listed above did not have a significant impact on the measurement or presentation of group’s financial informationdisclosed in these financial statements.

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1. Principles of consolidation

Subsidiaries are entities, including unincorporated entities,controlled by the group. Control exists when the group has thepower, directly or indirectly, to govern the financial and operatingpolicies of an entity so as to obtain benefits from its activities.The existence and effect of potential voting rights that arecurrently exercisable or convertible are considered whenassessing whether the group controls another entity. The financialstatements of subsidiaries are consolidated from the date onwhich the group acquires effective control up to the date thateffective control ceases.

Special purpose entities established to facilitate client investmentsinto hedge funds managed by the group are consolidated whenthe substance of the relationship between the group and thespecial purpose entity indicates that the group effectively controlsthe entity. The acquisition method of accounting is used toaccount for the acquisition of subsidiaries. The cost of anacquisition is measured as the fair value of assets given, equityinstruments issued and liabilities incurred or assumed at thedate of exchange, plus the value of any non-controlling interestmeasured in accordance with IFRS 3 plus the acquisition-datefair value of the group’s previously held equity interest in theacquiree. Costs attributable to such acquisitions are expensedwhen incurred. Identifiable assets acquired (including intangibleassets) and liabilities and contingent liabilities assumed in abusiness combination are measured initially at their fair values,with the exception of those assets classified as held-for-sale interms of IFRS 5, which are recognised at their fair value lesscosts to sell, at the acquisition date, irrespective of the extentof any non-controlling interest.

The excess of the cost of an acquisition over the fair value ofidentifiable net assets acquired is recorded as goodwill andaccounted for in terms of accounting policy note 5.The accountingpolicies of subsidiaries are consistent with the policies adoptedby the group. If the cost of the acquisition is less than the fairvalue of the net assets of the subsidiary acquired, the difference,referred to as a gain from bargain purchase, is recogniseddirectly in profit or loss. On an acquisition-by-acquisition basis,the group recognises any non-controlling interest in the acquireeeither at fair value or at the non-controlling interest’s proportionateshare of the acquiree’s net assets.

Intercompany transactions, balances and unrealised gains andlosses on transactions between group companies are eliminatedon consolidation. Investments in subsidiaries are accounted forat cost less impairment by the company in its standalone financialstatements. The carrying amount of these investments arereviewed annually and written down for impairment whereconsidered necessary. Cost is adjusted to reflect changes inconsideration arising from contingent consideration amendmentsarising from additional information about facts and circumstancesthat existed at acquisition date. However, if the change is dueto any other reason, the change is recognised consistent withthe classification of the contingent consideration.

The group’s share incentive trusts are included in the consolidatedfinancial statements as subsidiaries.

Transactions with non-controlling interest holders are accountedfor as transactions with external third parties. Disposals to non-controlling interest holders result in gains and losses for thegroup and are recorded in equity when the group retains control.

Purchases from non-controlling interest holders resulting ingoodwill, being the difference between any consideration paidand the relevant share acquired of the carrying value of netassets of the subsidiary, is recorded in the statement of changesin equity as an increase in equity.

Common control transactions

Business combinations whereby all of the combining entities orbusinesses are ultimately controlled by the same party or partiesboth before and after the business combination, and wherebycontrol is not transitory are referred to as common controltransactions. Business combinations involving entities undercommon control are excluded from the scope of IFRS 3, andthere is currently no guidance in IFRS on the accounting treatmentfor such combinations. Hence, the group has applied IAS 8, andhas selected an appropriate accounting policy for suchcombinations and applies this policy consistenty. The group hasselected to use the predecessor accounting method to accountfor such combinations. The principles of this method require theassets and liabilities of the acquiree be recognised in the financialstatements of the acquirer at their predecessor carrying valuesrecognised in the consolidated financial statements of the highestentity that has common control for which consolidated financialstatements are prepared. No new goodwill arises under thismethod and any difference arising between the considerationpaid and the aggregate carrying value of the assets and liabilitiesacquired are included in equity within accumulated profit. Inaddition, the group has selected to incorporate the acquiree’sresults and statement of financial position information as if bothentities had always been combined or incorporate the acquireesresults from the date either the entity joined the group wheresuch date is later/ incorporate the acquiree’s results and statementof financial position information prospectively from the date onwhich the business combination involving entities under commoncontrol occurred.

2. Associates

Associates are those entities over which the group has theability to exercise significant influence, but not control, over thefinancial and operating policies.

Interests in associates are accounted for using the equity methodand are carried in the statement of financial position at anamount that reflects the group’s share of the net assets of theassociate. Equity accounting involves recognising the investmentinitially at cost, including goodwill, and subsequently adjustingthe carrying value for the group’s share of associate profit orloss recognised in the statement of comprehensive income andother direct reserve movements. When the group’s share oflosses exceeds its interest in an associate, the group’s carryingamount, including any long term investments, are reduced tonil and recognition of further losses is discontinued except tothe extent that the group has incurred legal or constructiveobligations or made payments on behalf of an associate.

Unrealised gains and losses arising from intercompanytransactions are eliminated in determining the group’s share ofequity accounted profits. Unrealised losses are eliminated tothe extent that there is no evidence of impairment.

Where an investment which meets the definition of an associateis acquired and held for purposes of the group’s investment

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activities, it is not accounted for under the equity method but isclassified as held at fair value through profit or loss and accountedfor on the basis set out in accounting policy note 7.

Investments in associates are accounted for at cost lessimpairment by the company in its stand alone financial statementsand are reviewed for impairment annually.

3. Foreign currencies

Functional and presentation currency

Items included in the financial statements of each of the group’sentities are measured using the currency of the primary economicenvironment in which the entity operates (functional currency).The consolidated financial statements are presented in randswhich is the company’s functional currency and the group’spresentation currency and are rounded off to the nearest rand.

Transactions and balances

Transactions in foreign currencies are translated into the functionalcurrency at the exchange rate ruling at the date of the transaction.Foreign exchange gains and losses resulting from the settlementof such transactions and from the translation, at year-endexchange rates, of monetary assets and liabilities denominatedin foreign currencies are recognised in profit or loss, except forqualifying cash flow hedges to the extent the hedge is effectiveand equity instruments that are classified as available-for-salewhich are recognised in other comprehensive income.

Non-monetary assets and liabilities, measured at historical costin a foreign currency are translated using the exchange rate atthe date of the transaction. Non-monetary items that aremeasured at fair value in a foreign currency are translated usingthe foreign exchange rates at the dates the fair value wasdetermined.

Foreign operations

The results and financial position of foreign operations (noneof which has the currency of a hyperinflationary economy) thathave a functional currency different from the group’s presentationcurrency are translated into rand thousands as follows:

• Assets and liabilities are translated at the foreign exchangerate ruling at the financial year-end date; and

• Income and expenses are translated at average exchangerates for the year, to the extent that such average ratesapproximate rates ruling at the dates of the transactions.Exchange differences arising on the translation are recogniseddirectly in a separate component of other comprehensiveincome and presented in equity (foreign currency translationreserve). The relevant proportionate share of the translationdifference is allocated to non-controlling interest. When aforeign operation is sold, such exchange differences arerecognised in profit or loss as part of the gain or loss on sale.

4. Property, plant and equipment

Owned assets

Property and equipment are stated at historic cost lessaccumulated depreciation and accumulated impairment losses.

Property and equipment are depreciated on the straight-linebasis to write off the cost of the asset to its expected residualvalue over its estimated useful life. The residual value, if notinsignificant, and useful lives are reassessed at each financialyear-end. Where the residual value equals or exceeds thecarrying amount of an asset no depreciation is recognised.Where a component of an asset has a cost that is significant inrelation to the cost of the asset as a whole, that component isdepreciated separately.

Estimated useful lives are as follows:

• Computer hardware 3 years• Computer software 2 years• Furniture, fittings and office equipment 4–5 years• Motor vehicles 4 years• Leasehold improvements 3 years

Subsequent costs are included in the asset’s carrying value orrecognised as a separate asset as appropriate, only when it isprobable that future economic benefits associated with thespecific asset will flow to the group and the cost can be measuredreliably. Repairs and maintenance costs are charged to profitor loss in the financial period in which they are incurred.

The carrying value of an asset is reviewed for impairmentannually or whenever events or changes in circumstancesindicate that the carrying amount of an asset may not berecoverable. Whenever the carrying amount of an asset exceedsits recoverable amount, an impairment loss is recognised inprofit or loss.

The profit or loss on disposal of an asset is the differencebetween the disposal proceeds and the assets carrying amount.

5. Intangible assets

Goodwill

Goodwill represents the difference between the cost of acquisitionof subsidiaries and associates and the fair value of the identifiablenet assets acquired.

Goodwill arising on acquisitions prior to 31 March 2004 isincluded in the statement of financial position at its deemed cost(cost less accumulated amortisation recognised up to31 March 2003) which represents the amount recorded underprevious SA GAAP.Goodwill arising on acquisitions after 1 April 2004 and the carryingvalue of goodwill that existed at this date are not amortised butcarried at cost less accumulated impairment losses.

Goodwill is tested annually for impairment and whenever thereis an indicator of impairment. Gains and losses on the disposalof an entity include the carrying amount of goodwill relating tothe cash generating unit sold.

In respect of associates, the carrying amount of goodwill isincluded in the carrying amount of the investment.

A gain on a bargain purchase is recognised in profit or loss inthe period in which it arises.


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Other intangibles

Other intangible assets are recorded at cost less accumulatedamortisation and accumulated impairment losses. Intangibleassets with a finite life are amortised on a straightline basis towrite off the cost of the asset to its expected residual value overits estimated useful life. The useful life and residual value arereassessed at each financial year-end. An intangible asset isregarded as having an indefinite useful life when, based on allrelevant factors, there is no foreseeable limit to the period overwhich the asset is expected to generate net cash inflows.Intangible assets with an indefinite life are not amortised, howeverthey are tested for impairment at least annually.

Estimated useful lives are as follows:

• Customer relationships 15-20 years• Trade name 20 years• Intellectual property 15 years• Hedge fund track record indefinite life

Subsequent costs are included in the asset’s carrying value orrecognised as a separate asset as appropriate, only when it isprobable that future economic benefits associated with the specificasset will flow to the group and the cost can be measured reliably.Costs associated with the maintenance of intangible assets arerecognised in profit or loss when incurred.

The profit or loss on disposal of an asset is the differencebetween the disposal proceeds and the assets carrying amount.

6. Impairment of non-financial assets

The carrying amount of the group’s assets, other than deferredtax assets and goodwill, are assessed at each financial year-end to determine whether there is any indication of impairment.If any such indication exists, the recoverable amount is estimatedand the carrying value is reduced to the estimated recoverableamount and the impairment loss is recognised in profit or loss.

For goodwill, intangible assets that have an indefinite useful lifeand intangible assets that are not yet available for use, therecoverable amount is estimated at least annually to determinewhether there is an indication of impairment.

For the purpose of impairment testing goodwill is allocated tothe cash generating unit expected to benefit from the businesscombination from which it arose. Where a reasonable andconsistent basis of allocation can be identified, corporate assetsare allocated to individual cash generating units, or they areallocated to the smallest group of cash generating units forwhich a reasonable and consistent basis of allocation can beidentified. In most instances, a proportionate method of allocationis applied. Impairment losses recognised in respect of cashgenerating units are allocated first to reduce the carrying amountof any goodwill allocated to cash generating units (group ofunits) and then, to reduce the carrying amount of the otherassets in the unit (group of units) on a pro-rata basis.

The recoverable amount of assets is the greater of their fairvalue less costs to sell and value in use. In assessing value inuse, the estimated future cash flows are discounted to theirpresent value using a pre–tax discount rate that reflects currentmarket assessments of the time value of money and the risks

specific to the asset. For an asset that does not generate largelyindependent cash inflows, the recoverable amount is determinedfor the cash generating unit to which the asset belongs.An impairment loss (the difference between the carrying amountand the recoverable amount) in respect of goodwill is not reversed.

In respect of other assets, an impairment loss is reversed ifthere has been a change in the estimates used to determinethe recoverable amount.

An impairment loss is reversed only to the extent that the asset’scarrying amount does not exceed the carrying amount thatwould have been determined, net of depreciation or amortisation,if no impairment loss had been recognised.

7. Financial assets

Classification

The group classifies its financial assets in the following categories:at fair value through profit or loss, and loans and receivables.The classification is dependent on the purpose for which theasset is acquired. Management determines the classification ofits investments at the time of purchase.

Financial assets at fair value through profit or loss

This category has two sub-categories: financial assets held-for-trading and those designated at fair value through profit or lossat inception and include the group’s investment into hedge andproperty funds, securities held as part of the group’s stockbrokingactivities, investments held as part of the group’s investmentbanking activities and debt and equity instruments held by thehedge funds meeting the criteria for consolidation. Derivativeinstruments are also classified as assets held-for-trading.

All financial assets that are held by the group to back lifeassurance and investment contract liabilities are designated bythe group on initial recognition as at fair value through profit andloss in order to reduce an accounting mismatch, if they do notmeet the requirements in terms of IAS 39 to be classified asheld-for-trading.

Financial assets, other than those held for trading, are classifiedin this category if they are so designated by management andmeet one or more of the following criteria:

(i) the fair value through profit or loss designation eliminatesor significantly reduces inconsistencies in measurement orrecognition that would otherwise arise from using differentbases to measure and recognise the gains and losses onfinancial assets and financial liabilities;

(ii) the asset or liability forms part of a group of financialinstruments that is managed, evaluated and reported to theappropriate level of management using a fair-value basisin accordance with a documented risk management orinvestment strategy.

Loans and receivables

Loans and receivables are non-derivative financial assets withfixed or determinable payments that are not quoted in an activemarket, other than those which the group has classified uponinitial recognition as at fair value through profit or loss.

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Measurement

Purchases and sales of ‘regular way’ financial assets arerecognised on the trade date, which is when the group commitsto purchase or sell the assets. Other financial assets arerecognised when the entity becomes party to the contractualprovisions of the agreement and derecognised when thecontractual rights to receive cash flows from the financial assetexpire, or where the financial assets have been transferred,together with substantially all of the risks and rewards ofownership, or in which the group neither transfers nor retainssubstantially all the risks and rewards of ownership and it doesnot retain control over the financial asset.

All financial assets are initially measured at fair value plus, inthe case of financial assets not carried at fair value throughprofit or loss, transaction costs that are directly attributable totheir acquisition. Transaction costs incurred in the acquisitionof financial assets carried at fair value through profit or loss areexpensed in profit or loss.

After initial recognition, the group measures financial assetsheld-for-trading, designated at fair value through profit or loss,at fair values without any deduction for transaction costs it mayincur on their disposal.

The fair value of quoted financial assets is their bid price at thefinancial year-end. If the market for a financial asset is not activeor the instrument is an unlisted instrument the fair value isestimated using valuation techniques. These include the use ofrecent arm’s length transactions, references to the current fairvalue of another instrument that is substantially the same anddiscounted cash flow analysis. Where discounted cash flowanalyses are used, estimated future cash flows are based onmanagement’s best estimates and the discount rate is a marketrelated rate at the financial year-end for a financial asset withsimilar terms and conditions. Where other pricing models areused, inputs are based on observable market indicators at thefinancial year-end. If the value of unlisted equity instrumentscannot be reliably measured, they are measured at cost.

Loans and receivables are measured at amortised cost usingthe effective interest method, less impairment losses which arerecognised in profit or loss. In the case of short term and tradereceivables, the impact of discounting is not material and costapproximates amortised cost.

Realised and unrealised gains and losses arising from changesin the fair value of financial assets at fair value through profit orloss are included in profit or loss in the period in which they arise.

Impairment

Financial assets, other than those held-for-trading and designatedas at fair value through profit or loss are reviewed at eachfinancial year-end to determine whether there is objectiveevidence of impairment. If any such indication exists, therecoverable amount is estimated and the carrying value isreduced to the estimated recoverable amount and the impairmentloss is recognised in profit or loss.

Loan and receivables

Loans and receivables carried at amortised cost are impairedif there is objective evidence that the group will not receive cashflows according to the original contractual terms. Default or

delinquency in payment and significant financial difficulties areconsidered indicators that the receivable is impaired. Theimpairment is calculated as the difference between the carryingvalue of the asset and the expected cash flows discounted atthe original effective rate. The resulting loss is accounted for asan impairment in profit or loss. With regards to trade and otherreceivables a provision for impairment is established when thereis objective evidence that the group will not be able to collectall amounts due according to the terms of the receivables. Theamount of the provision is the difference between the asset’scarrying value and the present value of the estimated futurecash flows discounted at the original effective interest rate. Thecarrying amount of the asset is reduced through the use of aprovision account, and the amount of the loss is recognised inprofit or loss. When a trade receivable is uncollectible, it iswritten off against the provision account for trade receivables.Subsequent recoveries of amounts previously written off arerecognised in the profit or loss as bad debts recovered.

Derecognition

Financial assets are derecognised if the group’s contractualrights to cash flows from the financial assets expire or if thegroup transfers the financial asset to another party withoutretaining control or substantially all of the risks and rewards ofthe asset or in which the group neither transfers nor retainssubstantially all the risks and rewards of ownership and it doesnot retain control over the financial asset.

Offsetting

Financial assets and liabilities are offset and the net amountspresented in the statement of financial position when and onlywhen, the group has a legal right to offset the amounts andintend either to settle on a net basis or to realise the asset andsettle the liability simultaneously.

8. Hedge accounting

Derivative financial instruments which form part of qualifyingdesignated hedging relationships are classified as either cashflow hedges or fair value hedges depending on the nature of therisk being hedged. At the time a financial instrument is designatedas a hedge, the group formally documents the relationship betweenthe hedging instrument and hedge items, including the riskmanagement objectives and its strategy in undertaking the hedgetransaction, together with the methods that will be used to assessthe hedge effectiveness. The group assesses on an ongoingbasis whether the hedge has been effective in offsetting fair valuechanges or cash flows of hedged items.

Fair value hedges

Gains and losses on the fair value of the hedged item and thehedging instruments are recognised in profit and loss at eachreporting date.

Cash flow hedges

Fluctuations in the fair value of hedging instruments designatedin cash flow hedges are recognised directly in othercomprehensive income to the extent that the hedge is effective.Any fair value movements resulting in ineffectiveness in thehedging relationship are recognised in profit or loss immediately.


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Where the underlying hedged transaction results in the recognitionof a non-financial asset, the gain or loss deferred in othercomprehensive income is recognised in the carrying value ofthe underlying asset at initial recognition. In all other situations,amounts accumulated in other comprehensive income arerecycled to profit or loss in the period in which the hedged itemaffects profit or loss.

When a hedging instrument expires or is sold, or when a hedgeno longer meets the criteria for hedge accounting, any cumulativegain or loss existing in other comprehensive income at the timeremains in other comprehensive income and is recognised whenthe forecast transaction is ultimately recognised in profit or loss.When a forecast transaction is no longer expected to occur, thecumulative gain or loss that was reported in other comprehensiveincome is immediately transferred to profit or loss.

9. Cash and cash equivalents

Cash and cash equivalents comprise cash balances and calldeposits. Bank overdrafts that are repayable on demand andform an integral part of the group’s cash management areincluded as a component of cash and cash equivalents. Cashand cash equivalents are initially recognised at fair value includingtransaction costs and subsequently carried at amortised costusing the effective interest rate method.

10. Financial liabilities

All financial liabilities are initially recognised at fair value plustransaction costs incurred other than financial liabilities classifiedas at fair value through profit or loss at inception.

Held-for-trading

These comprise securities held as part of the group’s stockbrokingactivities and debt and equity instruments held by the hedgefunds meeting the criteria for consolidation. These financialliabilities are subsequently measured at fair value with all fairvalue movements recognised in profit or loss.

Designated at inception

Included in this category of financial liabilities are written putoptions issued by the group to non-controlling interest holdersand net assets attributable to outside investors of the hedgefunds meeting the criteria for consolidation.

The put options are initially recognised and subsequentlymeasured at the fair value of the respective division and adjustedfor management’s estimate of an appropriate non-controllinginterest discount factor. The initial recognition of the put optionliability is either debited to the group’s equity if the risks andrewards of ownership remain with the non-controlling interestholder or against non-controlling interest if the risks and rewardsof ownership transfer to the group.

The net assets attributable to outside investors of the hedgefunds represent their share of the net asset value of the Fund.

Financial liabilities, other than those held for trading, are classifiedin this category if they are so designated by management andmeet one or more of the following criteria:

(i) the fair value through profit or loss designation eliminatesor significantly reduces inconsistencies in measurement orrecognition that would otherwise arise from using differentbases to measure and recognise the gains and losses onfinancial assets and financial liabilities;

(ii) the asset or liability forms part of a group of financialinstruments that is managed, evaluated and reported to theappropriate level of management using a fair-value basisin accordance with a documented risk management orinvestment strategy.

The business of Citadel Life Proprietary Limited (”Citadel Life”)is that of a linked business with investors. The investor holdsunits in a pooled portfolio of assets via a linked policy issuedby the company. The assets are beneficially held by Citadel Life.Due to the nature of the linked policy, Citadel Life’s liability tothe policyholder is equal to the market value of the assetsunderlying the policy.

Investment contracts are recognised as financial liabilities inthe statement of financial position when the group becomesparty to their contractual provisions. Contributions received frompolicyholders are not recognised in profit or loss but are accountedfor as deposits.

All investment contracts issued by the group are designated bythe group on initial recognition as at fair value through profit orloss. This designation eliminates or significantly reduces ameasurement inconsistency that would otherwise arise if thesefinancial liabilities were not measured at fair value since theassets held to back the investment contract liabilities are alsomeasured at fair value.

Changes in the fair value of investment contracts are includedin profit or loss in the period in which they arise.

Fair value measurement of investment contract liabilities isbased on the fair value of the financial assets held within theappropriate unit-linked funds less the tax anticipated to be paidon investment gains.

Financial liabilities measured at amortised cost

These comprise interest-bearing borrowings, loans and payables,and trade and other payables. These financial liabilities arerecognised at fair value, net of transaction costs and subsequentlymeasured at amortised cost using the effective interest method.In the case of short-term payables, the impact of discounting isnot material and cost approximates amortised cost.

Included within the loans and other payables are written putoptions over which the group does not have the unconditionalright to avoid the delivery of cash. The group has classifiedthese shares as a liability and the value has been assessedbased on the price determined in a signed agreement betweenthe parties. The value of the liability has been discounted to theexercise date based on the cost of borrowing, which discountwill be released back to the income statement over the periodto the exercise date.

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Derecognition

Financial liabilities are derecognised if the group’s obligationsspecified in the contract expire or are discharged or cancelled.

11. Provisions

A provision is recognised when the group has a present legalor constructive obligation as a result of a past event, it is probablethat an outflow of resources embodying economic benefits willbe required to settle the obligation and a reliable estimate canbe made of the amount of the obligation. If the effect is material,provisions are determined by discounting the expected futurecash flows at a pre-tax rate that reflects current marketassessments of the time value of money and, where appropriate,the risks specific to the obligation.

The present obligation under an onerous contract is recognisedand measured as a provision. An onerous contract is one inwhich the unavoidable costs of meeting the obligations underthe contract exceed the economic benefits expected to bereceived under it, and is measured at the present value of thelower of the expected cost of terminating the contract and theexpected net cost of continuing with the contract.

12. Deferred taxation

Deferred taxation is recognised in respect of temporarydifferences arising from differences between the carrying amountof assets and liabilities in the financial statements and thecorresponding tax bases used in the computation of taxableincome. Deferred tax is not accounted for if it arises from theinitial recognition of goodwill or the initial recognition of an assetor liability in a transaction other than a business combinationthat at the time of the transaction affects neither accounting nortaxable profit or loss. Nor is deferred tax accounted for in respectof temporary differences related to investments in subsidiariesto the extent that it is probable that they will not reverse in theforeseeable future. Deferred tax is determined using tax rates(and laws) enacted or substantially enacted at the financial year-end and expected to apply when the deferred tax asset isrealised and deferred tax liability settled. Deferred tax assetsare recognised to the extent that it is probable that a taxableprofit will be available in future years against which the tax assetcan be recovered.

Deferred tax is recognised in profit or loss unless it relates toan item whose movements are recognised directly in othercomprehensive income or equity, in which case the deferredtax is also recognised in other comprehensive income or equity.

Deferred tax assets and liabilities are offset if there is a legallyenforceable right to offset current tax liabilities and assets, andthey relate to income taxes levied by the same tax authority onthe same taxable entity, or on different tax entities, but theyintend to settle the current tax liabilities and assets on a netbasis or their tax assets and liabilities will be realisedsimultaneously.

13. Share capital

Ordinary shares are classified as equity. Costs directly attributableto the issue of new shares are shown in equity as a deductionfrom proceeds, net of tax.

Shares in the company held by group companies and the shareincentive trusts are classified as treasury shares. Theconsideration paid for treasury shares, including any directlyattributable costs (net of income taxes) is deducted onconsolidation from total shareholders’ equity.

Fair value changes recognised in subsidiary financial statementsin respect of treasury shares are reversed on consolidation anddividends received are offset against dividends paid. Profits/lossesrealised on the application of treasury shares are credited/debiteddirectly to equity. Where treasury shares are subsequently soldor issued, the consideration received (net of incremental costand attributable taxes) is included in equity.

14. Segment reporting

Operating segments have been identified using the managementapproach as required by IFRS 8, in terms of which segmentclassification is determined according to the basis on whichmanagement and the board review the operating results.

15. Employee benefits

Post-retirement benefits

Citadel Holdings Proprietary Limited and Peregrine ManagementServices Proprietary Limited operate a defined contribution planbased on a percentage of pensionable earnings funded byemployees. In the case of the plan operated by Citadel HoldingsProprietary Limited, plan assets are held in separate trusteeadministered funds. Contributions to the plans are charged toprofit or loss in the period in which they become payable. Adefined contribution plan is a plan under which the group paysfixed contributions. The group has no further payment obligationsonce the contributions have been paid. The contributions arerecognised as an employee benefit expense when they are due.

Leave entitlements

Employee benefits in the form of annual and sick leaveentitlements are provided for when they accrue to employeeswith respect to services rendered up to the financial year-end.

Short term employee benefits

The group recognises a liability and an expense for bonusesand profit sharing where contractually obliged or where thereis a past practice that has created a constructive obligation.

16. Share-based payments

The group operates equity-settled, share-based compensationplans, under which the entity receives services from theemployees as consideration for equity instruments (shares oroptions) of the group.


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The grant date fair value of equity-settled share-based paymentawards granted to employees is recognised as an employeeexpense, with a corresponding increase in equity (share-basedpayment reserve), over the period in which the employeesbecome entitled to the awards. The amount recognised as anexpense is adjusted to reflect the number of share awards forwhich the related service and non-market performance vestingconditions are expected to be such that the amount ultimatelyrecognised as an expense is based on the number of shareawards that do meet the related service and non-marketperformance conditions at the vesting date.

In its separate financial statements, the grant by the companyof shares and/or options over its equity instruments to theemployees of subsidiary undertakings in the group is treatedas a capital contribution if the scheme is classified as equitysettled. The fair value of employee services rendered, measuredby reference to the grant date fair value, is recognised over thevesting period as an increase to investment in subsidiaryundertakings, with a corresponding credit to equity.

17. Financial guarantee contracts

A financial guarantee contract is a contract that requires theGroup (issuer) to make specified payments to reimburse theholder for a loss it incurs because a specified debtor fails tomake payment when due in accordance with the original ormodified terms of a debt instrument. Financial guarantee liabilitiesare initially recognised at fair value, which is generally equal tothe premium received, and then amortised over the life of thefinancial guarantee. Subsequent to initial recognition, the financialguarantee liability is measured at the higher of the present valueof any expected payment, when a payment under the guaranteehas become probable, and the unamortised premium.

18. Revenue

Revenue comprises the fair value of the consideration receivedor receivable as a result of services performed in the ordinarycourse of the group’s activities.

Principal sources of revenue comprise:

• fees and profit participations charged for fundmanagement activities;

• fees on financial structuring advice and related services;• brokerage and commissions arising on the purchase and

sale of equities and other financial instruments;• net interest earned on scrip lending, contracts-for-difference

and other prime broking products and services, and• rental received from external tenants.

Other income includes:

• profit on sale of financial investments;• changes in the fair value of assets classified as at fair

value through profit or loss;• interest earned on loans made as part of the group’s

investing activities;• dividend income.

Revenue is recognised net of value added tax.

Revenue from service-based activities is recognised when theservice is provided and complete. Interest income is recognisedon a basis that reflects the effective yield on the underlyinginstruments. Dividends are brought into account as at the lastdate of registration in respect of listed shares and when declaredin respect of unlisted shares. Rental received is recognised ona straightline basis over the term of the lease.

The effective interest rate is the rate that exactly discountsestimated future cash payments or receipts through the expectedlife of the financial asset or, when appropriate, a shorter periodto the net carrying amount of the financial asset. When calculatingthe effective interest rate, the group estimates the cash flowsconsidering all contractual terms of the financial asset and doesnot consider future credit losses. The calculation includes allfees and points paid or received between parties to the contractthat are an integral part of the effective interest rate, transactioncosts, and all other premiums or discounts. When it is notpossible to estimate reliably the cash flows or the expected lifeof a financial asset, the group uses the contractual cash flowsover the full contractual term of the financial asset.

19. Operating lease payments

Leases in terms of which the group does not assume substantiallyall of the benefits and risks of ownership are classified asoperating leases.Payments made under operating leases are recognised in profitor loss on a straightline basis over the term of the lease.

20. Finance costs

Interest costs are recognised in profit or loss using the effectiveinterest rate method.

21. Taxation

The tax expense for the period comprises current and deferredtax. Tax is recognised in profit or loss except to the extent thatit relates to items recognised in other comprehensive incomeor equity, in which case it is recognised in other comprehensiveincome or equity.

Current tax expense is based on the results for the period asadjusted for items that are not taxable or deductible. The group’sliability for current taxation is calculated using tax rates and lawsthat have been enacted or substantively enacted by financialyear-end.

22. Earnings per share

Earnings per share is calculated on the weighted averagenumber of shares in issue, net of treasury shares in respect ofthe current year, and is based on the profit attributable to theordinary shareholders. Headline earnings per share is calculatedin terms of the requirements set out in Circular 03/2012 issuedby SAICA.

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Notes to the financial statementsFor the year ended 31 March

2013 2012 2013 2012R’000 R’000 R’000 R’000

1 Operating revenue

Fees and performance participations 1 211 172 1 205 289 - -Brokerage and trading income 309 230 179 054 - -Net interest received in respect of stockbroking activities (note 1.1) 166 561 142 786 - -Rentals received 3 370 6 468 - -

1 690 333 1 533 597 - -

1.1 Net interest received in respect of stockbroking activities Interest received (note 1.1.1) 318 737 289 514 - -Interest paid (note 1.1.2) (152 176) (146 728) - -

166 561 142 786 - -

1.1.1 Interest receivedScrip lending 7 398 35 512 - -Client accounts 5 851 3 289 - -Margin, collateral and equity swaps 305 488 250 713 - -

318 737 289 514 - - - -

Arising on:Financial assets at amortised cost 318 737 289 514 - -Financial assets at fair value through profit or loss - - - -

318 737 289 514 - -

1.1.2 Interest paidScrip lending 9 922 12 641 - -Margin, collateral and equity swaps 142 254 134 087 - -

152 176 146 728 - -

Arising on:Financial liabilities measured at amortised cost 152 176 52 069 - -Financial liabilities at fair value through profit or loss - 94 659 - -

152 176 146 728 - -

2 Investment and other income

Dividend income: 9 489 15 240 1 022 342 80 300 Financial instruments at fair value through profit or loss 4 497 9 295 - - Private equity investments 4 078 3 389 - - Property fund investments - 704 - - Share portfolio investments 4 668 - - Unit trusts – unlisted 230 187 - - Other 680 997 - - Investment in subsidiaries - - 1 022 342 80 300Realised profit: 327 55 914 - - Hedge fund investments (329) 27 940 - - Financial instruments at fair value through profit or loss 8 207 16 971 - - Property fund investments (5 664) - - - Private equity investments (1 911) 9 934 - - Share portfolio investments - 914 - - Unit trusts – unlisted 24 155 - -

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2013 2012 2013 2012R’000 R’000 R’000 R’000

2 Investment income and other income (continued)

Fair value adjustments: 24 358 138 824 - - Private equity investments 6 383 76 121 - - Financial instruments at fair value through profit or loss (31 345) 49 771 - - Property fund investments 1 005 11 640 - - Unit trusts - unlisted (1 698) 2 639 - - Share portfolio investments - - - - Hedge fund investments 50 013 (1 347) - -Interest income: 12 798 23 514 - - Financial instruments at fair value through profit or loss 92 471 10 810 - - Financial instruments at amortised cost (99 149) - - - Loans and receivables 20 187 - - - Private equity investments 4 558 8 556 - - Property fund investments - 4 148 - - Hedge fund investments (5 269) - - -

46 972 233 492 1 022 342 80 300

Arising on:Financial assets at fair value through profit or loss 138 208 234 401 - -Financial liabilities at fair value through profit or loss (7 005) (909) - -Financial liabilities measured at amortised cost (104 418) - - -Loans and receivables 20 187 - - -Non-financial instruments - - 1 022 342 80 300

46 972 233 492 1 022 342 80 300

3 Investments linked to policyholder investment contracts andpolicyholder investment contract liabilities

3.1 Fair value gains on linked financial investments

Citadel Life investment contractsRealised and unrealised gains on policyholder investments 429 708 126 743 Investment income 48 780 35 458 Interest received 36 340 30 082 Dividends received - local 12 141 5 374 Dividends received - foreign 299 2

478 488 162 201

Non-Citadel Life investment contractsRealised and unrealised investment gains 55 723 56 686 Investment income 46 479 26 098 Interest received 24 777 10 484 Dividends received 21 702 15 614

102 202 82 784

Total linked investments gains 580 690 244 985

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3.2 Fair value loss on policyholder contract liabilities

Citadel Life investment contractsExpenses borne by policyholders (43 068) (35 081)Fair value adjustment on policyholder liabilities (394 802) (101 582)Policyholder tax withheld (note 3.3) (40 618) (25 538)

(478 488) (162 201)

Non-Citadel Life investment contractsInterest Paid - - Administration expenses (12 172) (12 929)Distribution to debenture holders (90 030) (69 855)

(102 202) (82 784)

Total policyholder contract expenses incurred (580 690) (244 985)

3.3 Taxation on policyholder investments

Taxation on policyholder investments comprises tax due on investment gains in policyholder funds. Taxes that become due and payable are recoveredfrom policyholder assets.

4 Operating Expenses

Include:Directors’ emoluments (note 4.1) Executive directors 27 525 42 491 For managerial services paid for by subsidiaries 19 486 33 159 Share-based payment charge 8 039 9 332 Non-executive directors 4 179 4 484 Fees paid for by subsidiaries 2 125 2 100 Share-based payment charge 2 054 2 384

Key management remuneration 212 251 177 365 Salaries and contributions 76 479 70 743 Pension benefits 4 804 3 419 Bonus and performance participations 130 968 103 203

Staff-related costs 409 230 385 127 Salaries and contributions 288 394 263 856 Pension benefits 20 420 18 251 Bonus and performance participations 100 416 103 020

Other administration costs 664 662 636 867

Group

Notes to the financial statements Continued

Fees Basic Pension fund Performance Profit Emoluments Share-based Totalsalary benefits bonus participation for services payment emoluments

charge3

R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’0004.1 Directors emoluments –

paid for by subsidiaries

For the year ended 31 March 2013Executive directors - 9 222 564 9 700 - 19 486 8 039 27 525 SA Melnick1 - 2 982 - 3 800 - 6 782 4 276 11 058 JC van Niekerk (resigned 1 April 2013) - 2 218 302 - - 2 520 2 138 4 658 RE Katz - 1 922 262 3 400 - 5 584 855 6 439 M Yachad - 2 100 - 2 500 - 4 600 770 5 370

Non-executive directors 2 125 - - - - 2 125 2 054 4 179 LN Harris 520 - - - - 520 299 819 P Goetsch 145 - - - - 145 1 710 1 855

S Stein 645 - - - - 645 24 669 BC Beaver 335 - - - - 335 21 356 L Ndlovu 145 - - - - 145 - 145 N Magwentshu 335 - - - - 335 - 335

2 125 9 222 564 9 700 - 21 611 10 093 31 704

For the year ended 31 March 2012Executive directors - 8 494 536 16 000 8 129 33 159 9 332 42 491

SA Melnick1 - 2 550 - 4 750 - 7 300 4 964 12 264 JC van Niekerk - 2 112 288 5 000 - 7 400 2 482 9 882 RE Katz - 1 832 248 4 000 - 6 080 993 7 073 M Yachad2 - 2 000 - 2 250 8 129 12 379 893 13 272

Non-executive directors 2 100 - - - - 2 100 2 384 4 484 LN Harris 500 - - - - 500 348 848 P Goetsch 140 - - - - 140 1 985 2 125 S Stein 620 - - - - 620 27 647 BC Beaver 320 - - - - 320 24 344 L Ndlovu (appointed 1 July 2011) 140 - - - - 140 - 140 N Magwentshu (appointed 1 July 2011) 35 - - - - 35 - 35 EG Dube (resigned 18 October 2011) 105 - - - - 105 - 105 MY Sibisi (resigned 31 May 2011) 240 - - - - 240 - 240

2 100 8 494 536 16 000 8 129 35 259 11 716 46 975

1 The basic salary paid to SA Melnick comprises emoluments paid by local subsidiaries in the amount of R75 099 (2012: R71 097) and emoluments paid by the Stenham groupin the amount of £216 320 (2012: £208 871).

2 The profit participation due to M Yachad was linked to the profits generated within the Firefly 61 Investments private equity fund (in which Peregrine Structuring had a 50% partnership interest at 31 March 2012) since inception of the fund, on 1 June 2005, and which profit participation was finally calculated and only vested during the year ended31 March 2012. This was the total amount payable and there was no future profit participation.

3 Refer to the directors report page 80 for details relating to directors' interests in the five-year deferred purchase scheme (note 30.2).

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5 Net interest received

Interest received (note 5.1) 47 543 50 899 4 774 8Interest paid (note 5.2) (493) (29 180) (3 918) -

47 050 21 719 856 8

5.1 Interest received Bank balances 41 667 41 694 6 8JSE Trustees 830 1 004 - -Loans and receivables 3 921 6 502 4 768 -Other 1 125 1 699 - -

47 543 50 899 4 774 8

Arising on:Financial assets at amortised cost 47 042 49 893 4 774 8Financial assets at fair value through profit or loss 459 421 - -Non-financial instruments 42 585 - -

47 543 50 899 4 774 8

5.2 Interest paid Bank overdraft 723 481 - -Loans and other payables (19 135) (12 927) 3 918 -Funding facilities 11 259 37 654 - -Financial instrument liability at fair value through profit or loss 3 595 3 653 - -Other 4 051 319 - -

493 29 180 3 918 -

Arising on:Financial liabilities at amortised cost 15 544 39 799 3 918 -Financial liabilities at fair value through profit or loss (15 737) (10 938) - -Non-financial instruments 686 319 - -

493 29 180 3 918 -

6 Capital Items

Loss on disposal of interest in associates - (6 936) - -

- (6 936) - -

7 Taxation

South African normal taxation 108 788 63 748 - - Current year 109 464 65 756 - - Prior year overprovision (676) (2 008) - -Deferred taxation (24 907) 23 366 - - Current year (20 868) 24 364 - - Prior year overprovision (4 039) (1 978) - - Rate change1 - 980 - -Foreign taxation 8 714 13 723 - - Current year 8 492 15 716 - - Prior year under / (over) provision 222 (1 993) - -Secondary tax on companies - 5 542 - -

92 595 106 379 - -

1 Increase in the effective capital gains tax rate with effect from 1 March 2012

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2013 2012 2013 2012R’000 R’000 R’000 R’000

7 Taxation (continued)

(Loss)/profit before taxation (368 917) 572 673 1 022 033 79 929Income from associate companies (57 395) (40 081) - -

(Loss)/profit before taxation and income from associate companies (426 312) 532 592 1 022 033 79 929

Tax rate reconciliation % % % %Standard rate of taxation 28,0 28,0 28,0 28,0Adjusted for: Disallowable expenditure (77,5) 3,2 - -Capital losses (0,1) 1,1 - -Secondary tax on companies - 1,0 - -Income attributable to partners in private equity fund - (1,0) - -Capital profits and exempt income 16,8 (5,7) (28,0) (28,0)Rate change - 0,2 - -Income earned in non taxed jurisdictions and in jurisdictions with differing tax rates 10,1 (8,9) - -Prior year assessed losses utilised for which no deferred tax asset raised (0,1) 3,2 - -Prior year overprovision 1,1 (1,1) - -

Effective rate of taxation (21,7) 20,0 - -

Estimated assessable losses available for set-off against future taxable income 201 664 257 534 - -Applied to reduce deferred tax (145 186) (194 436) - -

56 478 63 098 - -

8 Earnings and headline per share

Basic (loss)/earnings per share (cents) (226,4) 144,2 Basic earnings per share excluding intangible amortisation and impairment (cents) 150,2 152,8 Headline earnings per share (cents) 138,9 147,7 Headline earnings per share excluding intangible amortisation and impairment (cents) 150,2 156,3 Diluted basic (loss)/earnings per share (cents) (222,7) 142,9 Diluted headline earnings per share (cents) 136,6 146,3

The calculation of basic, diluted and headline earnings per share is based on the following data:

Earnings R’000 R’000 (Loss)/profit attributable to equity holders (466 669) 313 860 Headline earnings 286 371 321 450 Headline earnings excluding intangible amortisation and impairment 309 518 340 180

Number of shares ’000 ’000 Weighted average number of ordinary shares in issue during the year 206 099 217 655 Diluted weighted average number of ordinary shares in issue during the year 209 588 219 659

Basic earnings per share is calculated by dividing profit attributable to equity holders by the weighted average number of shares in issueduring the year.

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding assuming conversion of all dilutivepotential ordinary shares. At reporting date there were 3 488 739 (2012: 2 004 085) potentially dilutive ordinary shares still to be issued (note 30.2).

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8 Earnings and headline per share (continued) 2013 2012R’000 R’000 R’000 R’000

Gross Net Gross NetReconciliation between earnings and headline earnings:

(Loss)/profit attributable to equity holders (466 669) 313 860 Adjustments:Intangibles written off 892 820 753 040 2 946 2 946 Loss on disposal of interest in associates (note 6) - - 6 936 6 936 Bargain purchase on acquisition of interest in subsidiary - - (2 292) (2 292)

Headline earnings 286 371 321 450 Amortisation of intangibles 40 972 23 147 35 535 18 730

Headline earnings excluding intangibleamortisation and impairment 309 518 340 180

Headline earnings has not been adjusted for the profit on disposal of property, plant and equipment of R24 361 (2012: R23 621) as the amounts werenot considered to be material.

2013 2012 ’000 ’000

Reconciliation of ordinary shares in issueand weighted average issued ordinary shares:

Ordinary shares in issue 228 129 228 129 Adjusted by the weighted average number of: New shares allotted and issued 2 700 - Shares repurchased and cancelled (14 253) - Treasury shares in issue (10 477) (10 474)

206 099 217 655

Reconciliation of weighted average issued ordinary sharesand diluted weighted average issued ordinary shares:

Weighted average number of issued ordinary shares 206 099 217 655 Deferred purchase scheme 3 489 2 004

209 588 219 659

9 Dividend 2013 2012 2013 2012R’000 R’000 R’000 R’000

Dividends are accounted for when declared.

Dividend paid 216 177 76 217 228 191 79 845

Ordinary cash dividend declared on 6 June 2012 paidon 30 July 2012 (cents per share) 72 72

Special distribution of 3.5 Consolidated Infrastructure Group Limited sharesfor every 100 Peregrine shares declared on 6 June 2012 distributed on 30 July 2012

Ordinary cash dividend declared on 1 June 2011 paidon 25 July 2011 (cents per share) 35 35

An ordinary cash dividend in respect of the year ended 31 March 2013 of 72 cents per share and a special cash dividend of 28 cents per share heldwill be paid to shareholders on 29 July 2013 (Directors’ report page 79).

The financial statements do not reflect this dividend.

The group has no STC credits available to be utilised for the ordinary and special cash dividends.

Group Company


111

Group

At fair value throughprofit or loss

Loans and Available- Financial Non-financial Total Fair valueNotes receivables for-sale liabilities at instruments of financial

amortised and financial instrument cost instruments

Held-for- Designated beyond thetrading at inception scope of

IFRS 7

R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’00010 Analysis of assets and liabilities by

financial instrument classification

2013Non-current assets - 5 035 178 1 987 - - 752 927 5 790 092 5 037 165

Property, plant & equipment 11 - - - - - 35 750 35 750 -Intangible assets 14 - - - - - 545 796 545 796 -Investment in associatecompanies 16 - - - - - 101 945 101 945 -Investments linkedto policyholderinvestment contracts 17.1 - 4 728 289 - - - - 4 728 289 4 728 289Financial investments 18.1 - 306 889 - - - - 306 889 306 889Loans and receivables 19 - - 1 987 - - - 1 987 1 987Deferred taxation 20 - - - - - 69 436 69 436 -

Current assets 8 802 308 152 117 3 890 867 - - 21 710 12 867 002 12 845 292

Financial investments 18.2 2 384 811 152 117 51 098 - - - 2 588 026 2 588 026Loans and receivables 19 - - 310 897 - - - 310 897 310 897Trade and other receivables 21 - - 679 616 - - 17 599 697 215 679 616Amounts receivablein respect ofstockbroking activities 22.1 6 417 497 - 1 873 772 - - - 8 291 269 8 291 269Taxation - - - - - 4 111 4 111 -Cash and cash equivalents 23 - - 975 484 - - - 975 484 975 484

Total assets 8 802 308 5 187 295 3 892 854 - - 774 637 18 657 094 17 882 457

Non-current liabilities - 4 679 113 - - 14 490 58 641 4 752 244 4 693 603

Policyholder investmentcontract liabilities 17.4 - 4 679 113 - - - 49 176 4 728 289 4 679 113Loans and payables 27 - - - - 14 490 4 524 19 014 14 490Deferred taxation 20 - - - - - 4 941 4 941 -

Current liabilities 7 023 778 39 020 - - 4 342 880 269 430 11 675 108 11 405 678

Loans and payables 27 - 16 716 - - 1 577 183 - 1 593 899 1 593 899Financial instrument liabilities 28 897 358 22 304 - - - - 919 662 919 662Trade and other payables 29 - - - - 714 504 231 826 946 330 714 504Amounts payable in respectof stockbroking activities 22.2 6 126 420 - - - 1 734 840 - 7 861 260 7 861 260Taxation - - - - - 37 604 37 604 -Bank Overdraft 23 - - - - 316 353 - 316 353 316 353

Total liabilities 7 023 778 4 718 133 - - 4 357 370 328 071 16 427 352 16 099 281

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At fair value through profitor loss

Notes Loans and Available- Financial Non-financial Total Fair valuereceivables for-sale liabilities at instruments of financial

amortised and financial instrument cost instruments

Held-for- Designated beyond thetrading at inception scope of

IFRS 7

R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’00010 Analysis of assets and liabilities by

financial instrument classification

2012Non-current assets - 4 959 672 100 550 - - 1 432 778 6 493 000 5 060 222Property, plant & equipment 11 - - - - - 19 077 19 077 -Intangible assets 14 - - - - - 1 293 027 1 293 027 -Investment in associatecompanies 16 - - - - - 55 440 55 440 -Investments linkedto policyholderinvestment contracts 17.1 - 4 432 561 - - - - 4 432 561 4 432 561Financial investments 18.1 - 527 111 - - - - 527 111 527 111Loans and receivables 19 - - 100 550 - - - 100 550 100 550Deferred taxation 20 - - - - - 65 234 65 234 -

Current assets 4 992 150 177 372 2 655 071 - - 37 649 7 862 242 7 824 593Financial investments 18.2 916 215 177 372 - - - - 1 093 587 1 093 587Loans and receivables 19 - - 29 911 - - - 29 911 29 911Trade and other receivables 21 - - 510 981 - - 18 380 529 361 510 981Amounts receivablein respect ofstockbroking activities 22.1 4 075 935 - 1 315 134 - - - 5 391 069 5 391 069Taxation - - - - - 19 269 19 269 -Cash and cash equivalents 23 - - 799 045 - - - 799 045 799 045

Total assets 4 992 150 5 137 044 2 755 621 - - 1 470 427 14 355 242 12 884 815

Non-current liabilities 3 653 4 447 781 - - 177 573 51 585 4 680 592 4 629 007Interest-bearing borrowings 26 - - - - 157 548 - 157 548 157 548Policyholder investmentcontract liabilities 17.4 - 4 411 001 - - - 21 560 4 432 561 4 411 001Loans and payables 27 - 36 780 - - 20 025 3 738 60 543 56 805Financial instrument liabilities 28 3 653 - - - - - 3 653 3 653Deferred taxation 20 - - - - - 26 287 26 287 -

Current liabilities 4 362 755 11 145 - - 2 210 233 311 789 6 895 922 6 584 133Interest-bearing borrowings 26 - - - - 21 688 - 21 688 21 688Loans and payables 27 - - - - 6 572 15 098 21 670 6 572Financial instrument liabilities 28 572 270 11 145 - - - - 583 415 583 415Trade and other payables 29 - - - - 541 655 256 376 798 031 541 655Amounts payable in respectof stockbroking activities 22.2 3 790 485 - - - 1 640 318 - 5 430 803 5 430 803Taxation - - - - - 40 315 40 315 -

Total liabilities 4 366 408 4 458 926 - - 2 387 806 363 374 11 576 514 11 213 140

112

Group


113

Company

Notes Loans and Available- Financial Non-financial Total Fair valuereceivables for-sale liabilities at instruments of financial

amortised and financial instrumentcost instruments

beyond thescope of

Held-for- Designated IFRS 7trading at inception

R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

10 Analysis of assetsand liabilities by financialinstrument classification

2013Non-current assetsInterest in subsidiaries 15 - - - - - 668 642 668 642 -

Current assetsLoans to related parties 41.1 - - 125 895 - - - 125 895 125 895Cash and cash equivalents 23 - - 461 - - - 461 461

Total assets - - 126 356 - - 668 642 794 998 126 356

Current liabilities Loans from related parties 41.1 - - - - 98 491 - 98 491 98 491Trade and other payables 29 - - - - 291 - 291 291

Total liabilities - - - - 98 782 - 98 782 98 782

2012Non-current assetsInterest in subsidiaries 15 - - - - - 51 333 51 333 -Loans to related parties 41.1 - - 71 154 - - - 71 154 71 154

Current assetsCash and cash equivalents 23 - - 380 - - - 380 380

Total assets - - 71 534 - - 51 333 122 867 71 534

Current liabilities Trade and other payables 29 - - - - 212 - 212 212

Total liabilities - - - - 212 - 212 212

At fair value throughprofit or loss

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Computer Furniture, Motor Leasehold Totalhardware fittings & vehicles improve-

and software office equipment ments

R’000 R’000 R’000 R’000 R’00011. Property, plant and equipment

2013

Carrying value at beginning of the year 11 048 5 849 453 1 727 19 077 Cost 61 972 31 482 679 13 328 107 461 Accumulated depreciation (50 924) (25 633) (226) (11 601) (88 384)

Additions 5 102 8 601 - 14 754 28 457

Disposals (73) - - - (73) Cost (603) (114) - - (717) Accumulated depreciation 530 114 - - 644

Depreciation (7 227) (3 497) (170) (1 232) (12 126)

Translation difference 370 45 - - 415 Cost 2 321 520 - 1 399 4 240 Accumulated depreciation (1 951) (475) - (1 399) (3 825)

Carrying value at end of the year 9 220 10 998 283 15 249 35 750 Cost 68 792 40 489 679 29 481 139 441 Accumulated depreciation (59 572) (29 491) (396) (14 232) (103 691)

2012

Carrying value at beginning of the year 13 016 6 208 386 4 965 24 575 Cost 53 218 27 901 644 12 025 93 788 Accumulated depreciation (40 202) (21 693) (258) (7 060) (69 213)

Additions 6 909 3 179 240 114 10 442

Disposals (51) - (15) - (66) Cost (98) - (205) - (303) Accumulated depreciation 47 - 190 - 237

Depreciation (9 651) (3 635) (158) (3 623) (17 067)

Translation difference 825 97 - 271 1 193 Cost 1 943 402 - 1 189 3 534 Accumulated depreciation (1 118) (305) - (918) (2 341)

Carrying value at end of the year 11 048 5 849 453 1 727 19 077 Cost 61 972 31 482 679 13 328 107 461 Accumulated depreciation (50 924) (25 633) (226) (11 601) (88 384)

There are no restrictions on title and none of the assets have been pledged as security.

115

Group

12 Business acquisitions and disposals

12.1 Acquisition during the current year

12.1.1 Southchester Holdings Proprietary Limited

Peregrine Securities Proprietary Limited ("Peregrine Securities"), through one of it's subsidiaries, acquired a 40% interest in Southchester HoldingsProprietary Limited effective 1 April 2012 for a cash consideration of R120. Although Peregrine Securities only has a 40% shareholding, the entity isrequired to be consolidated in terms of current International Financial Reporting Standards due to the fact that Peregrine Securities has effective controlin terms of kick-out rights.

The acquisition had the following effect on the group’s assets and liabilities. The fair values reflected below represent their carrying values at the dateof acquisition and therefore no fair value adjustments were recognised on acquisition.

R'000

Identifiable assets 1 106 443 Financial assets at fair value through profit or loss 453 509 Loans and receivables 652 924 Trade and other receivables 6 Cash and cash equivalents 4

Identifiable liabilities (1 106 443)Loans and other payables (1 106 195)Trade and other payables (248)

Cash consideration -

12.2 Acquisitions and disposals relating to the prior year

12.2.1 Global Treasury Solutions Proprietary Limited

With effect from 1 December 2011, Citadel Holdings Proprietary Limited acquired a 100% interest in Global Treasury Solutions Proprietary Limited,which was subsequently renamed Peregrine FX Proprietary Limited, for a cash consideration of R10 million.


R’000

Identifiable assets 9 225 Intangible asset 3 000 Trade and other receivables 723 Taxation receivable 583 Cash and cash equivalents 4 919

Identifiable liabilitiesTrade and other payables (6 225)

Fair value of identifiable net assets assumed 3 000 Goodwill 7 000

Cash consideration 10 000

12.2.2 Citadel Asset Management Proprietary Limited (formerly Orthogonal Investments Proprietary Limited)

With effect from 1 September 2011, the group acquired, through Citadel Holdings Proprietary Limited, an additional 50% interest in Orthogonal InvestmentsProprietary Limited (“Orthogonal”) (note 15), which was subsequently renamed to Citadel Asset Management Proprietary Limited, from the managementconsortium of Orthogonal for a cash consideration of R84.

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12.2 Acquisitions and disposals relating to the prior year (continued)

12.2.2 Citadel Asset Management Proprietary Limited (formerly Orthogonal Investments Proprietary Limited) (continued)


R’000

Identifiable assets 4 921 Deferred taxation 3 795 Trade and other receivables 286 Cash and cash equivalents 840

Identifiable liabilitiesTrade and other payables (61)

Fair value of identifiable net assets assumed 4 860 Less: Fair value of 50% interest retained (2 568)

2 292 Bargain purchase (2 292)

Cash consideration -

13 Restructuring of the group

With effect from 28 September 2012, the group reorganisation was implemented. Part of the rationale of the group reorganisation was to facilitate therestructuring of the group's BEE shareholding in Nala Empowerment Investment Company Proprietary Limited (“Nala”) so as to increase the percentageof its equity interest in Peregrine's South African operations.

To achieve this Nala swapped its 12.5% shareholding in Peregrine Holdings Limited, being the listed holding company of the Peregrine group (which houses both the South African and non-South African operations), for a 20% shareholding in Peregrine SA Holdings Proprietary Limited (“SA Holdings”),being the holding company of Peregrine's South African operations.

In terms of the group reorganisation:

• the South African operating subsidiaries, namely Citadel group, Peregrine Capital, Peregrine Securities group and other smaller South Africansubsidiaries were transferred to and held, directly or indirectly, by SA Holdings, a wholly owned subsidiary;

• the internationally based operations, predominantly Stenham, are held by a wholly owned subsidiary, Peregrine Financial Services Holdings Limited.The intention is, subject to the obtaining of the necessary approvals, to ultimately hold such interests directly through Peregrine International HoldingsLimited, a company incorporated in Guernsey;

• all remaining non-financial services investments are held by Sandown Capital Proprietary Limited, a wholly owned subsidiary, and its associates.

In terms of the restructuring of BEE shareholding :

• Peregrine repurchased from Nala and its subsidiary 28 584 059 Peregrine shares for an aggregate purchase price of R294 701 648, following whichsuch shares were cancelled. These 28 584 059 Peregrine shares were purchased cum the ordinary and special dividends declared on 6 June 2012 (note 9);

• Nala acquired, by way of subscription, a 20% shareholding in SA Holdings (the entity which houses the restructured South African operating subsidiariesas more fully referred to above) for a subscription price of R380 million, which implied a value of R1.9 billion for SA Holdings. In this regard an opinionwas obtained from PricewaterhouseCoopers Corporate Finance Proprietary Limited, the independent experts appointed for such purpose, that suchprice is fair to the shareholders of Peregrine. Their opinion is contained in the circular to shareholders dated 6 August 2012. As Nala is a related partyunder the JSE Listings Requirements, this transaction was treated as a related party transaction for the purposes of the JSE Listings Requirements.Nala obtained the funding required, inter alia, to fund the difference between the subscription price and the repurchase price from Standard Bank ofSouth Africa. In order to facilitate such funding, SA Holdings furnished the funders with appropriate guarantees (note 44).

As a consequence of Peregrine Holdings Limited having a 30% shareholding in Nala (note 16), the non-controlling interest in SA Holdings is aneffective 14%.

117

Group

Goodwill Customer Trade Intellectual Hedge fund Totalrelationships name property track record

R’000 R’000 R’000 R’000 R’000 R’00014 Intangible assets

2013

Carrying value at beginning of the year 855 566 348 390 87 095 1 976 - 1 293 027 Cost 858 799 468 616 108 870 2 207 2 946 1 441 438 Amortisation and impairment (3 233) (120 226) (21 775) (231) (2 946) (148 411)

Amortisation - (34 844) (5 968) (160) - (40 972)

Impairment (633 442) (215 335) (42 040) (2 003) - (892 820) -

Translation difference 140 781 35 478 10 115 187 - 186 561 Cost 13 897 13 773 5 898 - - 33 568 Amortisation and impairment 126 884 21 705 4 217 187 - 152 993

Carrying value at end of the year 362 905 133 689 49 202 - - 545 796 Cost 872 696 482 389 114 768 2 207 2 946 1 475 006 Amortisation and impairment (509 791) (348 700) (65 566) (2 207) (2 946) (929 210)

2012

Carrying value at beginning of the year 778 077 335 244 81 820 1 876 2 946 1 199 963 Cost 781 310 415 124 96 260 1 951 2 946 1 297 591 Amortisation and impairment (3 233) (79 880) (14 440) (75) - (97 628)

Acquisitions through business combinations 7 000 3 000 - - - 10 000

Amortisation - (30 123) (5 270) (142) - (35 535)

Impairment - - - - (2 946) (2 946) -

Translation difference 70 489 40 269 10 545 242 - 121 545 Cost 70 489 50 492 12 610 256 - 133 847 Amortisation - (10 223) (2 065) (14) - (12 302)

Carrying value at end of the year 855 566 348 390 87 095 1 976 - 1 293 027 Cost 858 799 468 616 108 870 2 207 2 946 1 441 438 Amortisation and impairment (3 233) (120 226) (21 775) (231) (2 946) (148 411)

The cash generating units (CGU) to which the intangibles relate are as detailed in the segmental report. Goodwill is not amortised but assessed annuallyfor impairment. Customer relationships comprise client mandates acquired on the acquisition of Deloitte Private clients in 2006, the Stenham group in2009, Montier Partners in 2011 and Global Treasury Solutions ("GTS") in the prior year (note 12.2.1). Customer relationships, except those pertainingto GTS, are amortised on a straight-line basis over the average life of a client mandate being 20 and 15 years respectively. GTS customer relationshipsare amortised on a straight-line basis over its estimated life of 2 years. The Stenham trade name is amortised on a straight-line basis over 20 years.Intellectual property is amortised on a straight-line basis over 15 years and arose on the acquisition of Montier Partners in 2011.

Following the annual test for impairment the recoverable amount of Stenham's goodwill and other intangible assets has been significantly reduced, anda charge for impairment has been included in the current year. Further details are set out in note 42.1.1.

With effect from 1 December 2011, Citadel Holdings Proprietary Limited acquired goodwill of R7 million and a customer relationship intangible assetof R3 million on the acquisition of GTS (note 12.2.1).

For the year ended 31 March 2012, Hedge fund track records were impaired as it was not envisaged that the business would be a going concern inthe foreseeable future. The business was closed with effect from 30 November 2012.

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14 Intangible assets (continued)

No internally generated intangibles are recognised.

Critical accounting estimates and assumptions applied in testing for the impairment of goodwill and intangibles are detailed in note 42.1.

2013 2012 2013 2012R’000 R’000 R’000 R’000

15 Interest in subsidiaries

Shares at cost 605 493 7 195 Share schemes (note 30.2) 63 149 44 138

668 642 51 333

Following on a group reorganisation (note 13), full details of which were incorporated in a circular to shareholders dated 6 August 2012, PeregrineHoldings Limited acquired the shares of Peregrine SA Holdings Proprietary Limited and Sandown Capital Proprietary Limited from Peregrine FinancialServices Holdings Limited with effect from 28 September 2012. Book value (carry-over basis) accounting was applied on the basis that the investmentswere simply moved from one part of the group to another.

Details of principal subsidiary companies are set out in Annexure A.

16 Investment in associate companies

Shares at cost 41 298 25 873 Share of post-acquisition reserves 54 897 23 925 Loans (note 16.3) 5 750 5 642

101 945 55 440

Movement for the year:At beginning of the year 55 440 33 723 Acquisitions during the year 15 425 25 642 Disposals during the year - (13 351)Reduction in purchase consideration relating to interestacquired in an associate in a prior reporting period - (1 777)Share of post-acquisition reserves 57 395 40 081 Distributions (30 041) (35 195)Foreign exchange translation differences 3 618 23 Elimination of associated share of unrealised losseson a transaction with an associate - 810 Loan receivable repayments - (6 573)Loan receivable advances 108 5 642 Reversal of impairment in carrying value of loan receivable - 6 415

101 945 55 440

Details of the group’s investments in associate companies are set out in Annexure B.

The group’s share of post-acquisition profit or loss in associates for the year under review was R57.4 million (2012: R40.1 million).

Group Company

119

2013 2012R’000 R’000

16 Investment in associate companies (continued)

Summarised financial information of associates:

Assets 1 147 225 906 663Liabilities (917 896) (809 588)

229 329 97 075

Revenue 336 404 207 017Profit 138 568 94 246

16.1 Acquisition during the current year

During the year the shareholding in Stenham Real Estate Equity Fund increased to 34% and it has therefore been treated as an associate as at31 March 2013. Previously it was accounted for as a financial investment at fair value through profit or loss.

16.2 Acquisitions and disposals relating to the prior year

With effect from 1 April 2011, Peregrine Financial Services Holdings Limited (”PFS”) acquired a 30% interest in Nala Empowerment Investment CompanyProprietary Limited, the group’s BEE entity which held, inter alia, just over 30 million Peregrine shares. The group's associated share of unrealised profitson Peregrine shares amounted to R45 082.

With effect from 1 April 2011, Peregrine Securities Proprietary Limited acquired 47.5% of the issued share capital of Main Street 749 Proprietary Limited(“Main Street”) for R84 567. A further agterskot payment of R288 853 was made during the current year. Main Street holds 100% interest in LegaeSecurities Proprietary Limited.

With effect from 1 September 2011 the group acquired, through Citadel Holding Proprietary Limited (”Citadel”), an additional 50% interest in OrthogonalInvestments Proprietary Limited (“Orthogonal”), which was subsequently renamed to Citadel Asset Management Proprietary Limited (note 12.2.2), fromthe management consortium of Orthogonal for a cash consideration of R84. In line with IAS 28, the 50% interest held by the group, through PFS, priorto Citadel acquiring the additional 50% from the management of Orthogonal, was derecognised and the resultant loss of R6.8 million reflected in profitor loss (note 6). The group acquired its original 30% shareholding in Orthogonal in October 2006 for a purchase consideration of R7.5 million, of whichR2.2 million was settled in cash and the balance of R5.3 million by the transfer of 561 000 Peregrine shares. The group subsequently acquired anadditional 20% interest in Orthogonal in October 2010, increasing its shareholding to 50%, for a purchase consideration of R7.5 million, which was settledby capitalising R7.5 million of the total loan to the cost of the investment. In terms of an addendum to the sale of shares agreement, signed 30 September2011, the purchase price payable by the group, in respect of its original 30% interest was reduced to R5.7 million, with the 561 000 Peregrine shares(not all of which had vested) being reduced to 373 934 shares and the remaining 187 066 shares being returned to the group.

With effect from 1 December 2011, the group acquired, through Peregrine International Holdings Limited (29.9%) and Peregrine Direct Limited (20%),a 49.9% interest in SA Alpha Capital Management Limited for a cash consideration of R10.6 million ($1.3 million).

With effect from 29 February 2012, Citadel acquired a 50% interest in The Wealth Corporation Proprietary Limited for a cash consideration of R15 million.

With effect from 1 August 2011, PFS disposed of its 49% interest in Vunani Fund Managers Proprietary Limited. The loss on disposal of R150 204 hasbeen reflected in profit or loss (note 6).

16.3 Terms of loans

The loans to associates comprise:

• A shareholder loan of R4.8 million (2012: R4.8 million) to Main Street and

• A loan of R891 710 (2012: R818 067) to Legae Staff Trust that bears interest at the bank call rates and is repayable on demand.

The group has interests of 20% or more in various investments which are not accounted for as associates. The investments form part of a portfolio ofprivate equity investments held as part of the group’s investing activities. All of the investments held within the private equity portfolio are designatedas at fair value through profit or loss.

Group

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2013 2012R’000 R’000

17 Policyholder investment contract investments and liabilities

17.1 Investments linked to policyholder investment contracts

Citadel Life investments 3 977 981 3 550 461 Collective investment schemes 2 695 257 2 167 192 Variable rate debentures – unlisted 1 282 724 1 383 269

Non-Citadel Life investments Variable rate debentures – unlisted 750 308 882 100

Total investments linked to policyholder investment contracts 4 728 289 4 432 561

17.2 Policyholder investment contract liabilities

Citadel Life investments contract liabilitiesBalance at the beginning of the year 3 528 901 3 098 139 Premium income 552 028 589 076 Investment income (note 3.1) 48 780 35 458 Interest 36 340 30 082 Dividends received – local 12 141 5 374 Dividends received – foreign 299 2

Fund balance adjusted for gross fund inflows 4 129 709 3 722 673 Policy surrenders paid (398 134) (182 704)Policy transfers out (10 049) (303)Annuities paid (114 728) (96 838)Death claims paid (32 435) (16 522)Commissions paid (26 317) (19 513)Management and operating expenses (16 752) (15 568)Movement in policyholder tax withheld (note 17.3) (27 616) 8 387 Capital gains tax recovered from policyholders (2 028) (919)Switches in transfer (2 553) 3 465 Net realised and unrealised changes in fair value of investments 429 708 126 743

Balance at the end of the year 3 928 805 3 528 901

Non-Citadel Life investment contract liabilitiesVariable rate debentures 750 308 882 100

4 679 113 4 411 001

17.3 Policyholder tax withheld

Balance at the beginning of the year 21 560 29 947 Movement for the year 27 616 (8 387)Taxation paid (13 002) (33 925)Current tax expense 40 618 25 538

Balance at the end of the year 49 176 21 560

17.4 Total policyholder investment contract liabilities 4 728 289 4 432 561

The amounts due to policyholders under these contracts are based on the fair value of the financial asset held within the appropriate unit-linked funds.The contractual maturity amount of this liability is therefore the same as its carrying amount. No changes in the fair value of this liability are consideredto be attributable to changes in the group's credit risk, as fair value is determined based on the fair value of the financial assets supporting the policies.

Group

121

Group

2013 2012R’000 R’000

18 Financial investments

18.1 Non-current investments

Private equity investments (note 18.3) 81 339 327 585 Listed 31 581 205 025 Unlisted 49 758 122 560 Property fund investments – unlisted 222 289 193 808 Share portfolio investments – unlisted 243 2 218 Unit trusts – unlisted 3 018 3 500

306 889 527 111

18.2 Current investments

Financial assets at fair value through profit or loss 2 365 836 900 591 Hedge funds – unlisted 152 118 135 968 Unit trusts – unlisted 16 814 35 172 Variable rate debentures – unlisted 2 160 1 934 Property fund investments – unlisted 51 098 19 922

2 588 026 1 093 587

18.3 Private equity investments

Comprise:Proprietary investments 70 394 67 622 Investment in private equity fund 10 945 259 963

81 339 327 585

A register of investments is available for inspection at the registered office of the company in terms of Section 26 of the Companies Act no. 71 of 2008as amended.

In terms of current International Financial Reporting Standards certain of the group's proprietary hedge fund investments are required to be consolidateddue to the fact that the group has effective control both in terms of kick-out rights and with direct and indirect holdings being close to 100%. The HedgeFund designates all debt and equity investments at fair value through profit or loss upon initial recognition as it manages these securities on a fair valuebasis in accordance with its documented investment strategy. Internal reporting and performance measurement of these securities are on a fair valuebasis.

The unlisted hedge fund investments at March 2013 were presented net of loans amounting to R73 million. The investments, made with PeregrineCapital Proprietary Limited and its associated fund managers, are on a geared basis with permissible loan to value ratios of up to 80%. The loan bearsinterest at prime and is repayable on demand. Disinvestment is at the discretion of the group and is allowed on a monthly basis.

The fair value of unlisted private equity investments are primarily based on comparative earnings multiple models, offers received and discounted cashflow models, which include some assumptions, however all significant inputs are based on observable market prices or rates. The significant assumptionsand inputs to the valuation models are as disclosed per note 42, Critical accounting estimates and judgements.

Peregrine is a 50% partner in the private equity fund. The fund is consolidated into the group results.

Refer to note 44.1 for full assessment of market risk.

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19 Loans and receivables

Repurchase agreement loans 301 627 - G3 Market Neutral En Commandite Partnership shareholder loans 9 270 8 825 Nala Empowerment Investment Company Proprietary Limited 1 387 88 003 Generation of Leader Discovered Consulting Proprietary Limited (GOLD Consulting) 600 340 Thorburn Holdings Proprietary Limited - 12 615 Executive management within the Stenham group - 12 207 Vendor loan - 8 471

312 884 130 461 Less: Current portion disclosed under current assets (310 897) (29 911)Repurchase agreement loans (301 627) - G3 Market Neutral En Commandite Partnership shareholder loans (9 270) (8 825)Thorburn Holdings Proprietary Limited - (12 615)Vendor loan - (8 471)

1 987 100 550

Collateral held in respect of loans and receivables:Fair value of collateral held 304 524 20 678

The repurchase agreement loans are secured by the following floating rate notes:

• Standard Chartered Bank floating rate note with a book value of R100,000,000 and a market value of R101,479,819;• FirstRand Bank floating rate note with a book value of R200,000,000 and a market value of R203,044,312.

The loans to the shareholders of G3 Market Neutral En Commandite Partnership are unsecured, bear interest at Standard Bank's call rate and arerepayable either within 10 days after disinvestment from the fund or on 90 days' notice.

The loan to Nala Empowerment Investment Company Proprietary Limited, in which the group has a 30% interest (note 16.2), is unsecured and bearsinterest at Standard Bank's prime lending rate. R87 million, inclusive of interest, was settled during the course of the year. The balance of the loan hasno fixed terms of repayment. No impairment is considered necessary.

The loan to GOLD Consulting is unsecured, interest free and repayable within a three year period from the date of advance, thus before December2014. No impairment is considered necessary. The financial ability of the borrower to make payment and past credit history was considered in assessingthe need for impairment.

The loan to Thorburn Holdings Proprietary Limited was unsecured, bore interest at 1.25% per month and was repaid in April 2012.

The loans to executive management within the Stenham group bore interest at the UK bank rate (“base”) plus 1% and were repayable as and whendividends were paid by Stenham Limited (“SL”), or earlier at the discretion of the borrower. The loans were secured by the shares in SL, which shareshad a fair value of R12.2 million as at 31 March 2012. The shares were repurchased by SL during the current year and the loans were settled in full(note 41.5).

In February 2011, a management consortium acquired 100% of Stenham group's trade finance division. Part of the consideration included a vendorloan of R15.6 million (£1.4 million), of which R8.5 million (£690,961), inclusive of interest, was repaid during the current year. The loan was subject tointerest at UK base plus 3% and was secured against a share pledge in the sale entities.

Refer to note 44.2 for full assessment of credit risk.

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2013 2012R’000 R’000

20 Deferred taxation

Recognised deferred tax assets and liabilities are attributable to the following:Investments (5 550) (5 550)Estimated tax losses 40 670 54 442 Capital allowances 2 239 2 064 Fair value adjustments - financial instruments (15 712) (34 027)Prepayments (1 117) (1 263)Accruals 42 615 21 957 Other 1 350 1 324

64 495 38 947

Deferred tax asset 69 436 65 234 Deferred tax liability (4 941) (26 287)

64 495 38 947

Reconciliation of movement in deferred tax balance:At beginning of the year 38 947 62 963 Acquisitions - 3 795 Settlement - (5 068)Movement through profit and loss: 24 907 (23 366)Tax losses utilised (17 045) (12 930)Estimated assessable losses for set-off against future income 3 273 1 032 Capital allowances (103) 752 Fair value adjustments - financial instruments 18 315 (12 816)Prepayments 146 (258)Accruals 20 295 2 569 Other 26 (735)Rate change - financial instruments - (980)

Movement through equity: 641 623 Currency translation differences 641 623

64 495 38 947

21 Trade and other receivables

Trade and other receivables 336 850 269 643 Balances due from brokers 331 221 240 337 Prepayments 16 177 14 310 Trade receivables due from associates (note 41.2) 12 967 5 071

697 215 529 361

Balances due from brokers represent cash deposits with brokers, transferred as collateral against open futures and forward contracts, cash collateralfor borrowed securities and sales transactions awaiting settlement. In accordance with the Hedge Fund's policy of trade date accounting for regularway sale transactions, sale transactions awaiting settlement represent amounts receivable for securities sold, but not yet settled as at the reporting date.

No allowance for impairment, other than as disclosed in note 44.2.3, has been made based on management's assessment of the recoverability ofaccounts receivable. This assessment has taken account of factors such as previous payment history of clients and the ageing of debt at year end.


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2013 2012R’000 R’000

22 Financial assets and liabilities arising from stockbroking activities

22.1 Amounts receivable in respect of stockbroking activities

Securities trading balances (note 22.1.1) 632 500 597 312 Dividend claims 7 896 21 667 Collateral for scrip-lending facilities (note 22.1.2) 20 918 52 816 Strate settlement account 210 476 405 738 Financial assets held-for-trading (note 22.3) 6 417 497 4 075 935 Amounts receivable in respect of equity swaps and option positions 857 747 134 841 SAFEX and JSE margins 144 235 102 760

8 291 269 5 391 069

22.1.1 Securities trading balances

Amounts owing in respect of unsettled equity transactions by:Clients 632 500 597 312 Agents - - Brokers - -

632 500 597 312

22.1.2 Collateral for scrip-lending facilities

As at 31 March 2013, Peregrine Equities Proprietary Limited has pledged cash in the amount of R20.9 million (2012: R52.8 million) and scrip to thevalue of R9.3 billion (2012: R5.6 billion) as collateral for scrip lending facilities.


22.2 Amounts payable in respect of stockbroking activities

Securities trading balances (note 22.2.1) 820 103 616 141 Dividend claims 688 3 789 Client collateral 138 830 390 310 Financial liabilities held-for-trading (note 22.3) 6 126 420 3 790 485 Equity swaps and futures margins 757 318 596 065 Amounts payable in respect of equity swaps and option positions 17 901 34 013

7 861 260 5 430 803

22.2.1 Securities trading balances

Amounts owing in respect of unsettled equity transactions by:Clients 819 696 605 824 Agents - - Brokers 407 10 317

820 103 616 141

Amounts owing to clients are stated net of an amount of R3.4 billion (2012: R2.9 billion) lodged with JSE Trustees Proprietary Limited.

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22.3 Financial assets held-for-trading, client collateral and margin accounts

The group enters into various contracts for derivatives, both as principal for trading purposes and on behalf of clients. These include exchange tradedfutures, options and equity swaps. The instruments underlying OTC derivatives are equity securities listed on the JSE Securities Exchange Limited.The risks associated with derivative instruments are monitored in the same manner as for the underlying instruments. In the case of proprietary positions,derivative positions are entered into as a hedge against underlying stock positions. In the case of OTC derivative trades with clients, exposure to changesin the market price of the derivative is hedged by a corresponding long or short position in the stock underlying the derivative instrument.

Long positions Short positions Net fair value

R’000 R’000 R’000

2013

Principal trades (note 22.3.1) 650 503 (3 277 138) (2 626 635)Trading securities 5 766 994 (2 849 282) 2 917 712

Option contracts (note 22.3.2) 90 181 (595 807) (505 626)Equity swaps (note 22.3.3) 5 676 813 (2 253 475) 3 423 338

6 417 497 (6 126 420) 291 077

2012

Principal trades (note 22.3.1) 235 044 (1 829 128) (1 594 084)Trading securities 3 840 891 (1 961 357) 1 879 534

Option contracts (note 22.3.2) - (127 291) (127 291)Equity swaps (note 22.3.3) 3 840 891 (1 834 066) 2 006 825

4 075 935 (3 790 485) 285 450

2013 2012 R’000 R’000

22.3.1 Principal trades

Stock positions – fair value (2 626 635) (1 594 084)Long positions 650 503 235 044Short positions (3 277 138) (1 829 128)

Futures – fair value 2 620 933 1 596 830

Fair values are determined based on market prices of listed securities quoted by the JSE Limited on the last trading day for the year under review.

As at 31 March 2013 Peregrine Equities Proprietary Limited, Peregrine Direct Limited and Peregrine Securities Proprietary Limited held TOPI futuresposition with a fair value of R2.6 billion (2012: R1.4 billion) and DTOP futures positions with a fair value of nil (2012: R232 million) to hedge an underlyingbasket position of shares. The position was not completely risk neutral as the market risk is not perfectly hedged.

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22.3 Financial assets held-for-trading, client collateral and margin accounts (continued)

2013 2012 Net Positive Negative Net Positive Negative

R’000 R’000 R’000 R’000 R’000 R’00022.3.2 Option contracts

Options – fair value 505 626 595 807 (90 181) 127 291 127 291 -Options written (90 181) - (90 181) - - -Options purchased 595 807 595 807 - 127 291 127 291 -

Stock positions – fair value (505 626) (127 291)Long positions 90 181 - Short positions (595 807) (127 291)

Net exposure - -

NotionalOptions written (90 181) - (90 181) - - -Options purchased 595 807 595 807 - 127 291 127 291 -

505 626 595 807 (90 181) 127 291 127 291 -

Notional Replacement Notional Replacementcost cost

R’000 R’000 R’000 R’000

Maturity analysisUp to one year 505 626 505 626 127 291 127 291 One to five years - - - - Greater than five years - - - -

505 626 505 626 127 291 127 291

Counterparty analysisFinancial institutions 505 626 505 626 127 291 127 291 Non-financial institutions - - - -

505 626 505 626 127 291 127 291

22.3.3 Equity swaps

Equity swaps are entered into for both long and short positions. The positions are covered by an initial margin deposit which is represented by the marginaccount as part of amounts receivable and payable in respect of stockbroking activities. Unrealised profit on the positions is hedged by the variationmargin which is settled on a daily basis.

2013 2012 R’000 R’000

Stock positions – fair value 3 423 338 2 006 825Long positions 5 676 813 3 840 891 Short positions (2 253 475) (1 834 066)

Initial margin held 837 797 626 779

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2013 2012 2013 2012 R’000 R’000 R’000 R’000

23 Cash and cash equivalents

Bank balances 975 484 799 045 461 380Bank overdraft 1 (316 353) - - -

659 131 799 045 461 380

1 Peregrine Equities Proprietary Limited had a R400 million settlement facility in place with First National Bank Limited, which facility was secured by a cession and pledge ofany and/or all Peregrine Equities Proprietary Limited and Peregrine Nominees Proprietary Limited right, title and interest in and to any and/or all shares/script, together withall dividends, interest or other sums of money or rights of whatever kind and nature which may become due or claimable in respect of the shares/script.

24 Share Capital R’000 R’000 R’000 R’000

Authorised500 million ordinary shares of 0,1 cents each 500 500 500 50010 million preference shares of 0,1 cents each - 10 - 10

Issued206,790 (2012: 228,128) million ordinary shares of 0,1 cents each 207 228 207 228

Movement in the number of shares in issue: ’000 ’000 ’000 ’000

At beginning of the year 228 128 228 128 228 128 228 128New shares issued 7 246 - 7 246 -Shares repurchased and cancelled (28 584) - (28 584) -

206 790 228 128 206 790 228 128

The 10 million authorised preference shares were cancelled following a special resolution passed on 26 October 2012.

As a result of the vesting of the first tranche of shares relating to the share scheme which was implemented during 2010 (comprising an executiveincentive scheme and a junior share option scheme with shares vesting in three equal tranches in November 2012, 2013 and 2014), 7 246 182 newPeregrine shares were allotted and issued on 16 January 2013 at a price of R7.64675 per share (note 30.2).

At the special general meeting of shareholders held on 4 September 2012, all necessary resolutions were passed which enabled the group to implementthe restructuring (full details of which were incorporated in the circular to shareholders dated 6 August 2012), in terms of which Nala effectively switchedits 12.5% shareholding in Peregrine Holdings Limited for a 20% shareholding in Peregrine SA Holdings Proprietary Limited with effect from 12 October2012 (note 13). As a result, 28 584 059 shares were cancelled and delisted.

The unissued ordinary shares are under the control of the directors in terms of a resolution of members passed at the last Annual General Meeting ofshareholders. This authority is valid until the next Annual General Meeting.

Treasury shares ’000 ’000Movement in the number of treasury shares:At beginning of the year 10 553 10 366 Shares acquired 21 187 Shares sold (90) -

10 484 10 553

Held by:Subsidiaries 8 445 8 514 Share trust 2 039 2 039

10 484 10 553

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24 Share Capital (continued)

Details of the movement in share capital, share premium and treasury shares are provided in the statement of changes in equity.

In terms of a scrip lending agreement entered into between the company and Nala, in which the group has a 30% interest (note 16.2), Nala borrowed1 470 360 Peregrine shares from the group. Nala delivered such shares to the group on 28 September 2012.

2013 2012 2013 2012R’000 R’000 R’000 R’000

25 Non-distributable reserves

Foreign currency translation reserve 109 110 (124 679) - -Share buy-back reserve (289 909) - (289 909) -Loan funding capitalised - 60 655 - -Arising from reduction in amounts due to vendors 39 930 39 930 39 930 39 930Capital redemption reserve 6 6 6 6

(140 863) (24 088) (249 973) 39 936

Movement in non-distributable reserves:Foreign Share Loan funding Arising from Capital Total

currency buy-back capitalised3 reduction in redemptiontranslation reserve2 amounts due reserve5

reserve 1 to vendors4

R’000 R’000 R’000 R’000 R’000 R’000

2013

Balance at 31 March 2012 (124 679) - 60 655 39 930 6 (24 088)Translation of foreign subsidiaries 233 789 - - - - 233 789Repurchase and cancellation ofshares of the holding company - (289 909) - - - (289 909)Contingent consideration receivedrelating to an agreement to disposeof an interest in a subsidiary - - (60 655) - - (60 655)

109 110 (289 909) - 39 930 6 (140 863)

2012

Balance at 31 March 2011 (251 977) - - 39 930 6 (212 041)Translation of foreign subsidiaries 127 298 - - - - 127 298 Contingent consideration receivedrelating to an agreement to disposeof an interest in a subsidiary - - 60 655 - - 60 655

(124 679) - 60 655 39 930 6 (24 088)

1 This comprises foreign exchange differences arising from the translation of the financial statements of foreign operations.2 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 (notes 13 and 24).3 This related to an agreement to dispose of an interest in a subsidiary company and the subsequent issue of additional shares resulted in loan funding being capitalised into

shares. 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 profits of the subsidiary company being 65%.

4 This relates to amounts provided for in terms of warranty clauses due to vendors, which subsequently were not met resulting in the amounts being recycled tonon-distributable reserves.

5 Reserve arising on the redemption of redeemable preference shares.

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129

2013 2012R’000 R’000

26 Interest-bearing borrowings

Investec Bank Limited - 179 236 Term debt facility - 70 998 Revolving credit facility - 108 238

Less: Current portion included in current liabilities - (21 688)Term debt facility - (21 688)

Long term portion included in non-current liabilities - 157 548 Term debt facility - 49 310 Revolving credit facility - 108 238

The liability to Investec Bank Limited (“Investec”) comprised a restructured term debt facility of R71 million and a revolving credit facility (“RCF”) of R300million, of which R108 million was drawn down at end of March 2012.

The restructured term debt facility bore interest at 3-month JIBAR plus margin of 3.0% and was repaid in full in September 2012 without penalty.

The RCF bore interest at 3-month JIBAR rate plus 2.75%. Interest was payable quarterly in arrears and capital at the end of June 2014. Any capitalamount repaid or prepaid was available to be re-drawn. A commitment fee of 1.00% p.a (excluding VAT) was payable quarterly on the undrawn portionof the RCF. The RCF was settled in full in September 2012 without penalty.

The facilities were subject to positive and negative undertakings and financial covenants including, but not limited to various quarterly and/or semi-annualcoverage ratios and restrictions on share buy-backs and further incurrence of debt. In addition, undertakings had been given not to create any securityinterest over assets of the group including the shares in Stenham Limited. All loan covenants were met up to date of repayment during the month ofSeptember 2012.

As security for the obligations in terms of the facilities:• Peregrine Holdings Limited (“Holdings”) had given a joint and several guarantee, together with Peregrine Financial Services and other group companies, to Investec;• Holdings and other group companies had ceded to Investec: (i) all their rights, title and interest in and to the shares in certain subsidiaries (excluding Stenham Limited), and (ii) all investments or assets held in any hedge fund from time to time (note 18.2).

27 Loans and other payables

Loans: 500 5 775 Elite Group Proprietary Limited - 5 775 Shareholder loan to Southchester Holdings Proprietary Limited 500 - Other payables: 39 469 72 700 Payables in respect of put options 38 494 55 947 Vendor obligation 975 1 655 Private equity fund – accrual for profit participations - 15 098 Debentures 1 366 954 - Repurchase agreement loan 201 466 - Operating lease obligation under IAS 17 5 502 4 806

1 613 891 83 281 Less: Current portion of loans and other payables (1 593 899) (21 670) Shareholder loan to Southchester Holdings Proprietary Limited (500) - Payables in respect of put options (24 004) - Vendor obligation (975) (797) Debentures (1 366 954) -

Repurchase agreement loan (201 466) - Private equity fund - accrual for profit participations - (15 098) Elite Group Proprietary Limited - (5 775)Less: Current portion of loans and other payables includedin trade and other payables (note 29) (978) (1 068) Operating lease obligation under IAS 17 (978) (1 068)

19 014 60 543

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27 Loans and other payables (continued)

The loan from Elite Group Proprietary Limited was unsecured, bore interest at 3 month JIBAR plus 6% and was repaid in full during the course of the year.

The shareholder loan to Southchester Holdings Proprietary Limited, is unsecured, interest-free and repayable on demand.

Payables in respect of put options comprise:

• A liability in favour of the D Shareholder of Stenham Asset Management Holdings Limited, based on the fair value of the D shares being R16.7 million(£1.2 million) (2012: R36.8 million (£3 million)), which amount has been reclassified as a current liability as it can be exercised in September 2013, and

• A put option written by Stenham Limited in respect of 16 481 of its own shares, representing 1.91% of its issued share capital, in favour of a nonexecutive director of Stenham Limited valued at R21.8m (£1.5 million) (2012: R19.2 million (£1.5 million)). As Stenham Limited does not have theunconditional right to avoid the delivery of cash in respect of the put option in favour of the non-executive director, management has classified theseshares as a liability and the value has been assessed based on the price determined in a signed agreement between the parties. In the prior yearthe value of the liability was recognised at its undiscounted amount and the discount of R1.4 million (£117,040) was expensed to profit or loss. Thefirst tranche of the put option is exercisable on or before 30 June 2013. R7.3 million (£523,156) has been classified as a current liability.

In 2011, a subsidiary of Stenham Limited acquired the business of Montier Partners, a niche discretionary investment management provider. Underthe terms of the agreement a deferred consideration of £200,000 was payable to the vendors over a three year period. R975,100 (£70,000) (2012: R1.7million (£135,000)) of the vendor obligation represents a guaranteed amount payable within the next twelve months.

Peregrine is a 50% partner in a private equity fund which is consolidated by the group. Payables due in respect of profit participations are linked to thereturns generated within the private equity fund. The total payable amount vested during the year ended 31 March 2012 and was repaid in May 2012.

The debentures are unsecured and bear interest on the principal amount from the issue date to the maturity date at the rate stipulated in the debenturecertificate. Interest is settled on a regular basis. The debenture holder has the right to redeem the debentures on any business day before the maturitydate by giving written notice to the Transfer Secretary in accordance with the Conditions.

Terms of the repurchase agreement loan are as follows:Loan amount received: R200 448 106Interest rate: 5.3%Trade date: 25 February 2013Maturity date: 2 August 2014Total obligation: R201 466 821

2013 2012R’000 R’000

28 Financial instrument liabilities

Financial liabilities at fair value through profit or loss 892 067 572 270 Net assets attributable to outside investors in the Hedge Funds 22 304 11 145 Interest rate swap 5 291 3 653

919 662 587 068 Less: Current portion of financial instrument liabilities (919 662) (583 415) Financial liabilities at fair value through profit or loss (892 067) (572 270) Net assets attributable to outside investors in the Hedge Funds (22 304) (11 145) Interest rate swap (5 291) -

- 3 653

Group

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131

28 Financial instrument liabilities (contined)

In terms of current International Financial Reporting Standards certain of the group's proprietary hedge fund investments are required to be consolidateddue to the fact that the group has effective control both in terms of kick-out rights and with direct and indirect holdings being close to 100%. The HedgeFund designates all debt and equity investments at fair value through profit or loss upon initial recognition as it manages these securities on a fair valuebasis in accordance with its documented investment strategy. Internal reporting and performance measurement of these securities are on a fair value basis.

Net assets attributable to outside investors in Hedge Funds represents their share of the net asset value of the Fund and has been classified as afinancial liability in terms of IAS 32 as there is a contractual obligation to deliver cash on disinvestment from the Fund. Disinvestment is at the discretionof the outside investor and is allowed on a quarterly or monthly basis (depending on the Fund).

With effect from 8 July 2011, Peregrine SA Holdings Proprietary Limited (previously Peregrine Structuring Proprietary Limited) entered into a three yearinterest rate swap transaction with Standard Bank of South Africa.

The terms of the transaction are as follows:

Notional amount: R100 000 000Trade date: 8 July 2011Effective date: 30 June 2012Resetting: Every quarter month end September, December, March and June.Termination date: 30 June 2015Fixed amount: Structuring pays a fixed rate of 7.89%Floating amount: Structuring receives 3 month JIBAR

The interest rate swap has been reclassified as a current liability as it was closed out subsequent to year-end at a value of R5.6 million.

2013 2012 2013 2012R’000 R’000 R’000 R’000

29 Trade and other payables

Trade and administrative 267 713 145 080 291 212Due to brokers 441 343 347 648 - -Trade payables due from associates (note 41.2) - 82 - -Employee costs 236 296 304 153 - -Lease obligation under IAS 17 978 1 068 - -

946 330 798 031 291 212

Balances due to brokers represent cash purchase transations awaiting settlement. In accordance with the Fund's policy of trade date accounting forregular way purchase transactions, purchase transactions awaiting settlement represent amounts payable for securities purchased, but not yet settledas at the reporting date.

30 Employee benefits

30.1 Post-retirement benefits

The group operates a retirement benefit scheme on behalf of its locally held subsidiaries, other than Citadel Holdings Proprietary Limited, who operatesits own scheme.

The scheme is a defined contribution plan and is governed by The Pensions Fund Act. The underlying subsidiary companies have no commitment tofund benefits under the rules of the fund. 20 (2012: 21) employees are members of the fund. Contributions to the fund charged to the profit or lossamount to R1.3 million (2012: R1.8 million).

Citadel Investment Services Proprietary Limited, a subsidiary of Citadel Holdings Proprietary Limited, operates a defined contribution plan on behalf ofits local employees. The fund is governed by The Pension Funds Act and the assets are held independently of the group’s assets. All of Citadel’s 303(2012: 323) local employees are members of the fund. The fund is subject to an annual statutory review by actuaries which review takes place in Juneeach year and is facilitated by the administrators of the fund. The company has no commitment to fund benefits under the rules of the fund. Contributionsto the fund charged to the income statement amount to R24.5 million (2012: R22.2 million).

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30.2 Share schemes

Prior to the 2010 year-end an executive incentive scheme was implemented, which resulted in senior staff members purchasing 20.4 million sharesat R8.10 per share on a deferred basis. The price per share has been and will be reduced by the amount of any special dividends declared and paidby shareholders between the implementation date and the relevant vesting date. The first tranche vested on 15 November 2012 and the remainingtranches will vest, in equal tranches, in November 2013 and 2014. Each participant was obliged to pledge an equal number of Peregrine shares assecurity for payment of the deferred purchase consideration. In addition, a share option scheme for other members of staff was implemented. The optionprice, before the reduction of any special dividends, is R8.10 per share. If any of the share options are not exercised within fourteen days of the relevanttranche date, the share options relating to that tranche date lapse.

The schemes are treated as equity settled schemes and were valued on the grant date, 24 March 2010, using a binomial model and the following inputs:

Number of deferred shares: 19 987 880Number of options: 2 243 188Dividend yield: 25%Volatility: 38% 1

Interest (NACQ): 3 years – 7.5%; 4 years – 7.8%; 5 years – 8.0%Fair value of deferred shares at grant date: R3.47 per shareFair value of options at grant date: R3.66 per share

1 The volatility used in the calculation is a projected forecast of the actual expected future volatility of the Peregrine share price. The volatility was estimated by calculating theactual historical volatility of the Peregrine share price using daily close prices over a two year historical period. The actual historical volatility was then adjusted by comparinga matrix of similar shares and the relationship between their actual and implied volatility.

The total expense of R77.6 million will be recognised over five years. The expense of R19 million (2012: R22 million) was recognised during the currentfinancial year. The balance on the share-based payment reserve at 31 March 2013 is R63 million (2012: R44 million).

As a result of the vesting of the first tranche of shares relating to the share scheme which was implemented during 2010 (comprising an executiveincentive scheme and a junior share option scheme with shares vesting in three equal tranches in November 2012, 2013 and 2014), 7 246 182 newPeregrine shares were allotted and issued on 16 January 2013 at a price of R7.64675 per share (after taking into account the special in specie distributionreferred to in note 9).

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 thespecial dividend of 28 cents per share referred to in note 9).

Prior to year-end, an extension to the executive incentive scheme was implemented, which resulted in senior staff members purchasing 2 561 034 sharesat R11.30 per share on a deferred basis, which price per share will be reduced by the amount of any special dividends declared and paid to shareholdersbetween the implementation date and 15 November 2015 on which date these shares vest. Each participant was obliged to pledge a number of Peregrineshares as security for payment of the deferred purchase consideration equal to 50% of the shares purchased.

Reconciliation of movement in number of deferred shares and options:Total Deferred shares Options

Outstanding at the beginning of the year 22 231 068 19 987 880 2 243 188 Movement for the year: (4 789 205) (4 041 564) (747 641)Granted 2 651 034 2 651 034 - Forfeited (194 057) (44 409) (149 648)Exercised (7 246 182) (6 648 189) (597 993)Expired - - -

Outstanding at the end of the year 17 441 863 15 946 316 1 495 547

The number of deferred shares granted to directors is disclosed in the Directors' report on page 80.

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Group Company

2013 2012 2013 2012R’000 R’000 R’000 R’000

31 Reconciliation of profit before taxation to cashgenerated from/(utilised by) operations

(Loss)/profit before taxation (368 917) 572 673 1 022 033 79 929Adjusted for: Depreciation 12 126 17 067 - - Amortisation of intangible assets 40 972 35 535 - - Impairment to intangible assets 892 820 2 946 - - Bargain purchase on acquisition of controlling interest in associate company - (2 292) - - Share-based payment cost 19 011 21 915 - - Movement in provisions 5 949 - - - Loss on exchange differences 5 722 4 537 - - Fair value gains on linked financial investments (580 690) (244 985) - - Fair value loss on policyholder contract liabilities 580 690 244 985 - - Profit on disposal of property, plant and equipment (24) (24) - - Loss/(profit) on sale of financial investments 1 099 (55 914) - - Fair value of financial investments (24 056) (135 198) - - Reversal of impairment to loans and receivables - - - - Interest income on financial investments – non cash portion (9 688) (8 168) - - Interest income on loans and receivables – non cash portion (445) - - - Interest expense on loans against hedge fund investments – non cash portion 5 338 - - - Interest expense on financial liabilities – non cash portion 88 393 - - - Straightlining adjustment – lease payments and receipts 696 (2 450) - - Dividends received – financial investments (9 489) (15 240) - - Dividends received – subsidiary - - (1 022 342) (80 300) Net interest received (47 050) (21 719) (856) (8) Income from associate companies (57 395) (40 081) - - Capital items - 6 936 - -

555 062 380 523 (1 165) (379)Working capital changes (393 805) (254 391) 79 (4) Decrease in financial assets and liabilities at fair value through profit or loss 99 358 80 552 - - Increase in trade and other receivables (146 860) (291 762) - - Increase in amounts receivable in respect of stock-broking activities (2 900 200) (598 269) - - Increase/(decrease) in trade and other payables 123 440 173 009 79 (4) Increase in amounts payable in respect of stock-broking activities 2 430 457 382 079 - -

Cash generated from/(utilised by) operations 161 257 126 132 (1 086) (383)

32 Taxation paid

Unpaid at beginning of the year 21 046 21 415 Acquisition through business combinations - (583)Transfer from deferred tax 14 558 - Current tax expense through profit or loss 94 453 87 014 Prior year under/(over) provision through profit or loss 8 492 (4 001)Foreign exchange difference 1 256 500 Unpaid at end of the year (33 493) (21 046)

106 312 83 299

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33 Acquisition of subsidiary companies – prior year

33.1 With effect from 1 December 2011, Citadel Holdings Proprietary Limited acquired a 100% interest in Global Treasury Solutions Proprietary Limited for a cash consideration of R10 million (note 12.2.1).

Assets 9 225 Intangible asset 3 000 Trade and other receivables 723 Taxation receivable 583 Cash and cash equivalents 4 919 LiabilitiesTrade and other payables (6 225)Fair value of identifiable net assets assumed 3 000 Goodwill 7 000 Cash consideration 10 000 Less: Cash and cash equivalents assumed (4 919)

Cash paid 5 081

33.2 With effect from 1 September 2011, the group acquired, through Citadel Holdings Proprietary Limited, an additional 50% interest in Orthogonal InvestmentsProprietary Limited (“Orthogonal”), which was subsequently renamed to Citadel Asset Management Proprietary Limited, from the management consortiumof Orthogonal for a cash consideration of R84 (note 12.2.2).

Assets 4 921 Deferred taxation 3 795 Trade and other receivables 286

Cash and cash equivalents 840 Liabilities Trade and other payables (61)Fair value of identifiable net assets assumed 4 860 Less: Fair value of 50% interest retained (2 568)

2 292 Bargain purchase (2 292)Cash consideration - Less: Cash and cash equivalents assumed (840)

Cash paid (840)

Total cash paid 4 241

34 Acquisition of additional interest in subsidiary company from non-controlling interest holders

During the year a shareholder of a subsidiary company of Stenham Limited ceased to be employed by the company, and the shares were subsequentlypurchased by a subsidary company of Stenham Limited for a consideration of R10.8 million (£802,600).

35 Acquisition of associate companies – prior year

35.1 With effect from 1 December 2011, the Group acquired a 49.9% interest in SA Alpha Capital Management Ltd for a cash consideration ofR10.6 million ($1.3 million) (note 16.2).

35.2 With effect from 29 February 2012, Citadel Holdings Proprietary Limited acquired a 50% interest in The Wealth Corporation Proprietary Limitedfor a cash consideration of R15 million (note 16.2).

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36 Disposal of subsidiary company

With effect from 1 April 2010, the group sold 35% of the total issued share capital of Peregrine Securities Proprietary Limited ("Securities") to a consortium,comprising current management of Securities. The transaction comprised an immediate cash payment of R10.3 million, plus a number of paymentsover the next three years, some of which are linked to the financial performance of that business.

2013 2012 R’000 R’000

Carrying value of net assets disposed of 9 159 9 159 Gain on disposal 32 689 23 200 Proceeds to date 41 848 32 359 Less: Proceeds due included in trade and other receivables (4 727) (5 045)Add: Proceeds received in prior year (27 314) (15 759)

Cash received 9 807 11 555

37 Decrease in non-controlling interest arising on share buy-back

During the course of the year Stenham Limited repurchased 76 215 shares from its shareholders for a cash consideration of R85 million (£5.5 million)and subsequently cancelled such shares. The effect of these transactions has been to increase the group's effective interest in Stenham Limited from57.62% to 62.71%.

During the course of the prior year Stenham Limited repurchased 86 661 shares from its shareholders for a cash consideration of R94 million (£6 million)and subsequently cancelled such shares. The effect of these transactions has been to increase the group's effective interest in Stenham Limited from52.75% to 57.62%.

38 Assets under management R’000 R’000

The group manages assets on behalf of clients, which atyear end amounted to 78 640 699 72 775 545

Where these assets are invested via Citadel Life or into local hedge funds, the assets are reflected in the group’s balance sheet as detailed in note17 and 18.

39 Contingent liabilities

39.1 Peregrine Financial Service Holdings Limited (“PFS”) has bound itself as surety for and co-principal debtor with Violation Enforcement Systems ProprietaryLimited (in which Peregrine has made a private equity investment) in favour of Investec Private Bank, guaranteeing due payment of all amounts arisingin respect of working capital and the purchase of capital equipment, which guarantee is limited to a maximum of R12.1 million. As at 31 March 2013,the amount owing in terms of such facility is R3 million (2012: R3 million).

39.2 In respect of its derivative broking activities, Peregrine Securities Proprietary Limited, the holding company of Peregrine Equities Proprietary Limited,Peregrine Financial Products Proprietary Limited and Peregrine Derivatives Proprietary Limited, has guaranteed all obligations on behalf of PeregrineDerivatives Proprietary Limited that arise, or may arise, in respect of a SAFEX clearing agreement with Societe Generale. As at 31 March 2013 thecontingent liability, representing one days variation margin due from broking clients, totalled R11.1 million (2012 : R5.8 million). All obligations weresettled subsequent to year-end.

2013 2012R’000 R’000

40 Commitments

40.1 Operating leases – office premises

The minimum commitments in respect ofnon-cancellable operating leases are: 254 379 181 389Due in one year 41 504 36 874Due in two to five years 134 156 83 079Thereafter 78 719 61 436Effect of straightlining already accrued in statement of financial position (5 502) (4 806)

Future expense 248 877 176 583

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40 Commitments (continued)

40.2 Capital expenditure

The minimum commitments are: - 345 Contracted - - Authorised, but not yet contracted - 345

It is intended that operating lease and capital expenditure commitments are funded from internally generated funds.

The amounts expensed to the profit or loss during the year in respect of the above leases is R52.7 million (2012: R41.1 million).

41 Related party information

41.1 Subsidiaries

Details of interest in subsidiaries are disclosed in note 15 and Annexure A. Transactions between subsidiaries are conducted in the ordinary course ofbusiness at arm’s length. Dividends paid by subsidiary companies are recognised as investment income by the holding company. Intercompanytransactions and balances are eliminated on consolidation. Peregrine Capital Proprietary Limited (“Peregrine Capital”) and Peregrine Fund PlatformProprietary Limited ("PFP") manage funds on behalf of other companies in the group. This is done on market related terms and conditions, similar tothose arranged with third parties.

2013 2012 R’000 R’000

Loans to subsidiary companies comprise: 125 895 71 154 Peregrine Share Incentive Trust 68 410 13 000 Sandown Capital Proprietary Limited 57 485 - Peregrine Financial Services Holdings Limited - 58 154

Loans from subsidiary companies comprise: 98 491 - Citadel Investment Services Proprietary Limited 60 980 - Peregrine Financial Services Holdings Limited 36 120 Peregrine SA Holdings Proprietary Limited 1 391 -

The amounts due by/to subsidiary companies are considered to be of a short-term nature, unsecured and repayable on demand. All the loans areinterest–free except for the loan from Citadel Investment Services Proprietary Limited which bears interest at the prevailing call rate.

41.2 Associates

During the year, certain of the group’s subsidiaries, in the ordinary course of business, entered into various transactions with associates:

2013 2012R’000 R’000

Fees charged for services rendered:CAM Fund Management Limited 6 764 7 598 Stenpark Management IC 1 293 1 202 SA Alpha Capital Management Limited 17 386 4 085 Legae Securities Proprietary Limited 1 220 855 Green Oak Capital Proprietary Limited 155 235 The Wealth Corporation Proprietary Limited 145 -

Commissions charged:Stenham Real Estate Equity Fund 283 -

Fees paid for services rendered:Green Oak Capital Proprietary Limited - 335

Costs recovered:Legae Securities Proprietary Limited 1 317 -

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41.2 Associates (continued)

R8.3 million (2012: R2.1 million) of the amounts charged for services rendered and commissions remains unpaid at year-end and is included in trade andother receivables. Rnil (2012: R82 116) of the amount paid for services rendered remains unpaid at year end and is included in trade and other payables.

During the course of the prior year the group entered into a loan agreement with Nala Empowerment Investment Company Proprietary Limited (“Nala”).Interest received for the current year amounted to R7 million (2012: R14 million), of which R3.1 million (2012: R7.6 million) has been included in investmentincome (note 2) and the balance of R3.9 million (2012: R6.4 million) included in net interest received (note 5). The loan receivable as at 31 March 2013amounted to R1.4 million (2012: R174 million), the entire amount of which has been included in Loans and other receivables (2012: R88 million in Loansand other receivables and R86 million in Financial Investments). In terms of this loan agreement, the group is also entitled to receive a profit participationfrom Nala based on the upside of Nala's investment in Consolidated Infrastructure Group Limited. The current year share of this profit amounts to R4million (2012: R20 million) and has been included in investment income (note 2).

During current year the group sold 1 million (2012: 60 million) Vunani Limited shares to Green Oak Capital Proprietary Limited at 165 cents per share(2012: 5 cents per share). Loss on disposal of the shares amounts to R350 000 (2012: profit R600 000) and has been included in investment income(note 2). The receivable due as at 31 March 2013 amounts to R4.6 million (2012: R3 million) and has been included in trade and other receivables.

41.3 Directors

Details of directors’ shareholding in the company are disclosed in the directors’ report. Directors’ emoluments are disclosed in note 4.

Gains on share options arising on the vesting of the first tranche of shares related to the Peregrine Share Scheme (note 30.2) amounted to R9.8 million.

41.4 Key management

Key management comprises the directors of all of the group’s operating subsidiaries. Key management remuneration is disclosed in note 4.

41.5 Staff loans and investments

Included in financial investments is an amount of R6.9 million (2012: R2.2 million) representing investments into the hedge funds on behalf of staffemployed by Peregrine Capital. Returns on the investment accrue to staff over a three year period linked to the individuals ongoing employment.

Included in loans and receivables in the prior year was an amount of R12.2 million (£995,698) representing loans to employees of Stenham Limited(“SL”) (note 19). The loans were made to facilitate SL employees to purchase shares in the company, were secured over the shares, were interest-bearing and repayable out of dividends declared by the company or earlier at the discretion of the borrower. The shares were repurchased by SL duringthe current year and the loans were settled in full. The fair value of these shares was R12.2 million (£995,698) which was equal to the loans outstandingat 31 March 2012.

41.6 Fees and services

Staff are entitled to invest into certain of the funds managed by the group. Other than the reduced management fees for Stenham staff investing intothe Stenham funds, the investments are on an arm’s length basis and fees are as charged to external clients.

Citadel key management who are Citadel clients do not pay advisory fees (structuring, management and performance fees) but pay administration andproduct fees on an arms length basis.

42 Critical accounting estimates and judgements

42.1 Estimated impairment of goodwill and intangibles

The group tests annually whether goodwill and intangibles have suffered any impairment, in accordance with the accounting policy disclosed.The recoverable amounts of cash-generating units (CGU) have been determined based on value-in-use calculations.

42.1.1 Stenham group

The intangible assets acquired as a result of the acquisition by the group of Stenham Limited during the course of the 2009 financial year were valuedusing historical and forecast profits and cash flows and assets under management. The Stenham trade name was valued using the relief from royaltymethod, in which the subject intangible asset is valued by reference to the amount of royalty income it would generate if the intangible were licensedin an arm's length transaction. The income approach was used to value the customer relationships. In this approach, an economic benefit stream ofthe asset under analysis is selected, usually based on historical or forecast cash flow. The focus is to determine a benefit stream that is reasonablyreflective of the assets most likely future benefit stream. The selected benefit stream is discounted to present value with an appropriate risk-adjusteddiscount rate. Discount factors include general market rates of return at the valuation date, business risks associated with the industry in which thecompany operates and risks specific to the asset being valued.

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42.1 Estimated impairment of goodwill and intangibles (continued)

42.1.1 Stenham group (continued)

The value attributed to intangible assets acquired as a result of the acquisition by a subsidiary company of Stenham Limited of the business of MontierPartners in 2010 related to the value placed on the Montiers Partners reputation and brand name and the value of the asset management team whichjoined the Stenham group.

The valuations have been updated by management at 31 March 2013 based on actual results achieved for the year under review, budgets and forecasts,past experience and future business development expectations. In addition, the fair value of goodwill at 31 March 2013 has been determined usingthe income approach.

The most significant driver of the valuation is the assumed growth of assets under management in the Asset Management and Property divisions. Overall,annual growth rates were assumed for the 3 year forecast to 31 March 2016. These values were informed by forecast asset subscriptions and redemptions,investment returns and movements in foreign exchange rates, which are based on past experience and external sources of data.The recoverable amount as at 31 March 2013 is based on the 3 year growth outlook to 2016 and the standard group assumptions. During the yearmanagement reassessed the assumptions used and as a result the discount rate was increased from 10.69% to 13.95%.These changes were supportedby market based evidence.

The valuation indicated that the recoverable amounts of the goodwill and intangibles attributable to the Stenham Asset Management and Propertydivisions were lower than their respective net book values as at 31 March 2013 and that an impairment of these assets was required. The materialchanges to the key assumptions which impacted on the valuations, relative to the prior year, were:

• The increased discount rate of 13.95% (2012: 10.69%);• The reduced level of assets under management for Asset Management.

The cash generating units to which the goodwill and other intangibles relate have been identified as follows:

• Stenham Asset Management (Hedge Funds);• Stenham Property (Property);• Stenham Trustees (Trust and fiduciary).

The effect of these impairments, by category of asset, is set out in the table overleaf.

The allocation of goodwill and other intangibles are allocated to the cash generating units as per overleaf:

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42.1.1 Stenham group (continued)

42.1.2 Wealth management

The carrying value of goodwill and intangibles (customer relationships) relating to the wealth management division, Citadel Holdings Proprietary Limited,following on the acquisition of Deloitte Private Clients Proprietary Limited (“DPC”) in 2005 and Global Treasury Solutions Proprietary Limited (“GTS”), whichwas subsequently renamed Peregrine FX Proprietary Limited, in the prior year (note 12.2.1), is R240,331 million (2012: R243,315 million) at year-end.

The fair value of goodwill and intangibles has been determined using the income approach.

The significant driver of the valuation of goodwill arising on acquisition of Citadel, of R214,526 million, is expected growth in assets under managementresulting from new fund inflows and investment returns and taking into account client withdrawals, mandate cancellations and levels of client retention.The assumptions applied for each of these variables are conservative and match those applied in the preparation of group budgets and forecasts.Assumptions are supported by past experience. Future cash flows were discounted at a rate of 14.36% (2012: 14.33%) over a 10 year term and assuminga growth rate of 3% beyond year 10.

Management of Citadel has considered the goodwill amount of R7 million which arose from the acquisition of GTS during the prior year for impairmentand impairment was not considered necessary as the expected future cash flows arising from the business combination exceed the carrying valueof goodwill.

Customer relationships arising from the acquisition of DPC were valued at the date of acquisition and the estimated life was determined as 20 years,over which period it is being amortised. The valuation method used in calculating the intangible asset was the calculation of the net present value ofthe anticipated future revenue streams in respect of the assets purchased. This intangible asset is tested annually for impairment. The carrying valueat 31 March 2013 is R17,805 million (2012: R19,289 million).

Group

Net book value at Impairment Amortisation Translation Net book Recoverablethe beginning of the year difference value at the amount

end of the year R’000 R’000 R’000 R’000 R’000 R’000

2013Trade name 87 095 (42 040) (5 967) 10 114 49 202 57 921Customer relationships 326 602 (215 335) (31 867) 35 484 114 884 141 988 Hedge funds 209 050 (179 706) (20 148) 21 201 30 397 30 395 Property 66 351 (35 629) (6 612) 7 498 31 608 31 607 Trust and fiduciary 51 201 - (5 107) 6 785 52 879 79 986Intellectual Property Hedge funds 1 977 (2 003) (160) 186 - -Goodwill 608 578 (633 442) - 140 782 115 918 121 857 Hedge funds 517 893 (565 401) - 121 533 74 025 74 025 Property 62 346 (68 041) - 15 389 9 694 9 694 Trust and fiduciary 28 339 - - 3 860 32 199 38 138

1 024 252 (892 820) (37 994) 186 566 280 004 321 766

2012Trade name 81 820 - (5 270) 10 545 87 095 117 573Customer relationships 314 470 - (28 139) 40 271 326 602 520 963 Hedge funds 201 083 - (17 792) 25 759 209 050 241 986 Property 63 999 - (5 840) 8 192 66 351 184 538 Trust and fiduciary 49 388 - (4 507) 6 320 51 201 94 439Intellectual Property Hedge funds 1 877 - (142) 242 1 977 1 977Goodwill 538 091 - - 70 487 608 578 658 950 Hedge funds 457 909 - - 59 984 517 893 524 315 Property 55 125 - - 7 221 62 346 91 996 Trust and fiduciary 25 057 - - 3 282 28 339 42 639

936 258 - (33 551) 121 545 1 024 252 1 299 463

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42.1.2 Wealth management (continued)

Customer relationships arising from the acquisition of GTS were valued at the date of acquisition and the estimated life was determined as 2 years,over which period it is being amortised. The valuation method used in calculating the intangible asset was determined by the net present value of thefuture expected benefits to be received from the employee recourse agreement determined on the date of acquisition. This intangible asset is testedannually for impairment. The carrying value at 31 March 2013 is R1 million (2012: R2,5 million).

42.2 Valuation of unlisted private equity investments

Sectors in which investments are held: Infrastructure and other industrial.

Factors applied in the valuation of investments are set out below.Earnings projections: based on management’s projections.Recent transaction prices.

42.3 Valuation of shares issued as part of the purchase consideration arising on the acquisition of trade and business assets

42.3.1 Value of D shares in Stenham Asset Management Holdings Limited

As the Stenham group does not have the unconditional right to avoid the delivery of cash in respect of the D shares (note 27), management has classifiedthese shares as a liability and is required to reassess the fair value at each reporting date.

The fair value of the liability is subjective as it relates to an assessment of the value of the asset management division and an assessment of the non-controlling interest discount on that value.

42.3.2 Presentation and measurement of C shares in Stenham Asset Management Holdings Limited

Contingent on uncertain future events the Stenham group was required in the prior year to deliver cash in relation to the C shares; however as managementconsidered these contingent events to be extremely remote, the C shares were presented as a non-controlling interest rather than as a liability. Thenon-controlling interest had been measured at fair value at the date of acquisition. In April 2012, the C shares were purchased by a subsidiary companyof Stenham Limited (note 34).

42.4 Share-based payment transactions

The critical estimates and assumptions used in the IFRS 2 calculations are disclosed in note 30.2.

42.5 Financial guarantee contracts

Terms of the guarantee are disclosed in note 44.2.1

43 Events subsequent to reporting date

Subsequent to year-end, Peregrine increased its holding from 62.71% to 63.94% in Stenham following another share-repurchase transaction.

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44 Risk management - Group

Having regard to the fact that managing risk is an inherent part of the group’s activities, risk management and the ongoing improvement in correspondingcontrol structures remain a key focus of management in building a successful and sustainable business. Within a complex financial services environment,the board recognises that risk management is a dynamic process and that the risk framework should be robust enough to effectively manage and reactto change in an efficient and timeous manner. Peregrine has historically evolved as separate, independent operating units with minority ownership and/orparticipation by management in each of the group’s subsidiaries.

Formalisation of a risk management framework for the group is the responsibility of Peregrine Holdings and the board of directors.The framework ensures:

• efficient allocation of capital across various activities in order to maximise returns and diversification of income streams;• risk taking within levels acceptable to the group as a whole and within the constraints of the relevant business unit;• efficient liquidity management and control of funding costs, and• appropriate risk management and control.

Whilst the board is ultimately responsible for the management of risk, the board relies on management to operate within the control structures andframeworks established by the board and has delegated the responsibility for implementation of the risk framework to functions within the operatingunits. The structure of the group promotes the active participation of executive management in all of the operational and strategic decisions affectingtheir business units. This creates a strong culture of ownership and accountability.

Senior management take an active role in the risk management process and are responsible for the implementation, ongoing maintenance of andultimate compliance with the risk process as it applies to each business unit. The board is kept abreast of developments through formalised reportingstructures, ongoing communication with management, group risk and compliance committee, regular board meetings at an operating subsidiary leveland through representation of executive members of the board on certain of the forums responsible for the management of risk at an operating subsidiarylevel. The group remains committed to employing the highest calibre of staff to ensure a strong financial and operational infrastructure within each ofthe business units.

Risk management structure

The group’s risk management framework is summarised below. Key responsibilities lie with the following management bodies and committees.

Group board of directors: responsible to shareholders for the strategic direction, supervision and control of the group and for defining the group’s overalltolerance for risk.

Risk and Compliance committees: responsible for assisting the board of directors of the group and subsidiary entities in fulfilling their responsibilitiesby providing guidance regarding risk governance and the development of the group’s risk profile, including regular review of major risk exposures andthe management of risk limits.

Audit committees: responsible for assisting the various boards in fulfilling their oversight responsibilities by monitoring management’s approach withrespect to financial reporting, internal controls, accounting, taxation and legal and regulatory compliance.

Internal auditors: responsible for assisting the boards, audit committees and management in fulfilling their responsibilities by providing an objective andindependent evaluation of the effectiveness of control, risk management and governance processes. The nature of key risks to which the group isexposed are categorised as follows:

44.1 Market risk

Market risk is the potential change in the value of a financial instrument resulting from changes in market conditions. The group’s activities expose itprimarily to the financial risks of changes in equity prices, foreign currency exchange rates and interest rates.

44.1.1 Funds under management

As a wealth and asset management group, Peregrine’s revenue is dependent on the level of funds under management, as well as the performance ofthese funds relative to various benchmarks. The value of these funds fluctuates with market movements. The investment of clients’ funds is managedthrough structured investment processes within a strong operating control environment.

2013 2012

R'000 R'000The total fair value of the funds under management at reporting date is 78 640 699 72 775 545

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44.1 Market risk (continued)

44.1.2 Equity pricing risk

44.1.2.1 Key risk exposures

The management of the group’s statement of financial position is split between capital allocation for business imperatives and capital allocated forinvestment purposes. The Peregrine Holdings' executive team is responsible for the management and allocation of capital to new and existing businessopportunities. Capital allocation for investment activities, including investment into hedge funds, property funds, share portfolio investments, moneymarket investments and private equity opportunities, is managed by a separate business unit, under mandate from the board and subject to specificinvestment criteria.

The group's investment into a variety of investments exposes the group to market risk. The group's investment into hedge funds creates market riskexposure as a result of the investment into the funds. Where the hedge funds have been consolidated, the group is exposed to market risk associatedwith the underlying investments held by the hedge funds. The group also has exposure to equity price movements as a result of listed and unlistedinvestments held as part of its investment banking activities and through Peregrine Equities Proprietary Limited (“Peregrine Equities”). PeregrineEquities has market exposure as a result of certain transactions undertaken as part of its stockbroking activities. Each of these investment activitiesand the associated risks are discussed in more depth below.

As at reporting date, group capital (net of third party investments into the private equity fund) (note 18) was allocated as follows:

2013 2012R'000 R'000

Hedge funds unconsolidated 152 117 135 968 Gross exposure 225 462 135 968 Loans (73 345) -Equities, bonds and preference sharesheld by consolidated hedge funds 1 096 139 900 591Property fund investments 273 387 213 730Private equity investments 75 867 197 110Unit trust investments 3 018 24 982Share portfolio investments 243 2 218Money market instruments 1 269 697 -

2 870 468 1 474 599

At reporting date, the value of equity positions held as a hedge against equity swaps, option and futures positions withinPeregrine Equities (note 22.3) was:

Long positions 6 417 497 4 075 935Short positions (6 126 420) (3 790 485)

291 077 285 450

Futures 2 620 933 1 596 830Options 505 626 127 291Equity Swaps (3 423 338) (2 006 825)

(296 779) (282 704)

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44.1.2.2 Equity sensitivity analysis

Investment into hedge funds and instruments held by consolidated hedge funds

To date, the group has successfully invested funds with Peregrine Capital and, on a smaller scale, into certain of the funds managed by PeregrineFund Platform (”PFP”), Green Oak and the Natural Selection Fund.

Peregrine Capital manages a suite of hedge funds, which focuses on South African listed equity counters. Stock selection is primarily bottom up,based on fundamental research employing disciplined and consistent research procedures. The funds aim to achieve positive returns regardless ofthe direction of the equity market.

The group continues to expand on the success achieved by Peregrine Capital by taking equity stakes in or entering into profit sharing arrangementswith other single strategy managers across various hedge fund styles. At year-end, this included Protiya Capital, housed within PFP, Green OakCapital and Tower Capital Management. The decision to invest and the quantum thereof forms part of the group’s capital allocation decision implementedand managed by the Holdings’ executives. The decision to remain invested in the funds once they have achieved financial success forms part of theinvestment of group capital.

In 2011 a subsidiary of the group provided the necessary capital to seed the establishment of certain new funds under the auspices of the NaturalSelection Fund (“The Fund”), an initiative driven by Peregrine Securities. The Fund seeks to invest in smaller hedge funds with the potential for growth.The Fund has two related aims - to achieve above-average returns on its investments by identifying fledgling funds with a genuine competitive edgeand to assist younger funds with the promise to extend their track record and increase their professional profile in order to reach a wider investmentaudience. At year-end Peregrine Securities was invested in three (2012: four) such funds.

In both cases referred to above, fund managers are subject to appropriate due diligence and selected on the basis of the managers’ track recordand experience, their approach to investment and risk management, as well as their ability to demonstrate sound operational procedures and acceptablelegal infrastructure. Investment into the funds is on an arm’s length basis.

Operational controls surrounding the investment process include:

• management according to a fund mandate, which sets out investment parameters including target investments, maximum holdings and exposures, and various investment limits;• investor review by way of daily access to portfolio information and regular reporting;• monitoring of positions against mandate limits;• utilisation of external administrators for the provision of independent accounting, administration and valuation services;• utilisation of an appropriate prime broker;• internal audit of controls and procedures surrounding fund valuations, mandate monitoring and KYC compliance, and• an annual audit of the funds by the group’s external auditors.

Investments into the funds managed by Peregrine Capital are diversified between growth and performance funds. Through PFP, Green Oak and TheFund, investments are further diversified as the selected managers employ a variety of trading styles and strategies. The selection of funds andmanagers is part of the on-going and active management of the group’s statement of financial position and fits in with the core focus of the group inthe hedge fund industry.

Peregrine measures the profit or loss of its proprietary investment portfolio monthly or more regularly if required and has the ability to exit investmentson a monthly basis. As the majority of the funds in which the group has invested to date are managed in-house, Peregrine has access to detailedportfolio composition, risk reports and the ability to review underlying investment decisions of the fund manager. The risk management processsurrounding the funds is viewed as fundamental and primary to the long-term success of the funds.

The fair value of the group's investments into South African hedge funds is determined using the underlying market values of the investments heldby each fund.

As a result of the nature of the funds into which the group has invested, the investments are largely exposed to movements in the prices of equityinstruments listed on the JSE.

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44.1.2.2 Equity sensitivity analysis (continued)

Investment into hedge funds and instruments held by consolidated hedge funds (continued)

The table below depicts the sensitivity of the group’s South African hedge fund investments, those consolidated and those that are not, to variousmarket indices (variables) over a range of market movements (up or down). The measurement of the impact on profit or loss is based on a fund beta,determined for each fund and for each of the market variables selected. The fund beta measures the correlation of the fund to a change in theunderlying variable. The beta is derived by regression analysis of the fund's historic monthly performance relative to the performance of the variableselected, from the date of inception of the fund. A portfolio beta for the portfolio of hedge fund investments has been determined from the betas ofthe individual funds, weighted for the % invested in each fund at the reporting date. Funds with fewer than 10 observations have been excluded fromthe analysis.

It is important to note that the results of the regression analysis may not be statistically significant due to the small number of observations for certainof the newer funds. Also, past performance is not necessarily an indicator of future events. Consequently, the impact on profit or loss as presentedmay not accurately reflect the future performance of the funds under the scenarios presented.

Based on the simple regression analysis performed a 10% appreciation in the respective beta’s would result in the following impact on pre-taxprofit or loss:

% change in variable % change in portfolio Impact on pre-tax profit or loss

2013 2012 2013 2012Market Variable R'000 R'000

ALSI 10 2,08 1,82 9 762 8 257Mid cap 10 3,10 3,31 14 541 14 984Small cap 10 3,42 3,08 16 023 13 958ALBI 10 1,72 2,22 8 061 10 064

The fair value of the group's investment into a global emerging market equity fund of funds managed by Stenham Asset Management is determinedusing the net asset value of the underlying funds. As a result of the nature of the fund into which the group has invested, the investment is exposedto movements in the equity indices of specifically selected emerging markets. No sensitivity analysis was performed because less than 10 observationsare available as the inception date of the fund was 1 September 2012.

Investment into property funds

As part of its long-term investment portfolio, the group invested in unlisted offshore property funds. As a result of these investments the group isexposed to equity price and foreign exchange risk. The group's management of the foreign exchange exposure is more fully discussed under note 44.1.3.

The group holds both liquid and illiquid proprietary property fund investments housed within Stenham Property Investments Limited ("SPIL") andCitadel Guernsey Limited (“CGL”). Proprietary investments held by SPIL include an investment in Stenham Real Estate Equity Fund, in which theprofit or loss is measured weekly, together with other investments where the profit or loss is measured on a semi-annual basis. The group has theability to exit the investment in Stenham Real Estate Equity Fund on a weekly basis. The group also holds a number of illiquid investments wherethe profit or loss is measured semi-annually. The investments are in vehicles where exit occurs upon sale of the underlying property assets or mayoccur from time to time depending on market demand for the shares. As the investment vehicles in which the group invests are managed by thegroup's property divisions, the group has access to detailed portfolio composition, risk reports and the ability to review underlying investment decisionsof the investment manager. The risk management process surrounding the investment vehicles is viewed as fundamental and primary to the longterm success of the investments.

Investments held as part of the group’s investment banking activities

The group has approximately 2.6% (2012: 13.4%) of its proprietary capital invested in listed and unlisted entities as part of its investment bankingactivities, the balance being invested in hedge and property funds and share portfolio investments. Investment decisions are structured within a fundmandate, approved by the board and implemented and managed as part of the investment of group capital. The mandate prescribes overall privateequity exposure as a proportion of the group’s investable assets and limits exposure to individual investments and investment types. Positions inunlisted investments are revalued on a semi-annual basis.

The largest portion of the group’s investment banking activities are held directly in Sandown Capital, a wholly owned subsidiary. The private equity investments consist of investments in mostly unlisted entities and on a smaller scale in listed equity instruments. A portion of the group’s investment

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Investments held as part of the group’s investment banking activities (continued)

banking activities are conducted through an investment in Firefly Investments 61, a private equity fund that operates as an investment partnership. The fund houses primarily listed equity instruments. The sensitivity analysis is presented for the portfolio of investment banking assets held directlyand on a see-through basis for the investments held through the private equity fund.

Unit trust investments

Unit trust investments of the group are held by a subsidiary of Citadel Holdings Proprietary Limited (“Citadel”). The sensitivities of these investmentsare linked directly to the investment strategies of the selected Asset Managers and indirectly to the general market movements. Citadel managesthis exposure to equity pricing risk by investing with reputable Asset Managers who control the asset allocation of the underlying investments. Theseinvestments are diversified between market neutral, growth and offshore funds. This risk is also managed through on–going management, evaluationand monitoring of the Asset Managers and is overseen by Citadel’s Investment Monitoring Committee.

Money market instruments

Money market instruments of the group are held by Southchester, a subsidiary of Peregrine Securities and consist of floating rate notes issued byfour of the large reputable banks, short term bonds and treasury bills. Management of Southchester's assets is carried out by Peregrine Equities, afellow subsidiary of Southchester, in terms of an asset mandate approved by the board of Southchester. Peregrine Equities is approved as a CategoryII and IIA discretionary asset manager by the Financial Services Board. The mandate specifies principles for overall risk management, as well asdetailed written policies covering and the use of derivatives and non-derivative financial instruments. Equity price risk is influenced by movements ininterest rates, credit spreads and liquidity premiums.

Share portfolio investments

Share portfolio investments of the group consist of an unlisted preference share portfolio held within Citadel.

The table below depicts the sensitivity of the valuation of the group’s listed and unlisted private equity, property fund investments, unit trust and shareportfolio investments and money market instruments to a 10% change in the significant variables (discount rates and comparative earnings multiples)assumed in valuing the investments.

% change in variable Impact on pre-tax profit or loss

2013 2012Assets R’000 R’000

Private equity investments 10 27 338 34 131 Property fund investments 10 7 587 12 369 Unit trusts 10 302 2 498 Share portfolio investments 10 24 222 Money market instruments 10 126 970 -

162 221 49 220

No sensitivity analysis has been performed on the unlisted property fund investments classified as level 3 fair value investments (note 44.4) due tothe fact that the fair value of these investments are based on internal and external professional advice in respect of the underlying property values(market value benchmarking) and performing the above analysis on these investments would not be a true reflection of the impact of a change invariables on the investment values.

Investments held as part of the group’s stockbroking activities

As part of the service offering of Peregrine Equities, the company has entered into structured transactions with institutional and hedge fund clientsand select private clients, involving OTC options, equity swaps and futures instruments. Relevant equity swap, scrip lending and International SwapDealers Association (“ISDA”) agreements cover all positions.

The instruments underlying equity swap, option and futures contracts are equity securities listed on the JSE Limited. Market risk arising from thecontracts is hedged via a position in the underlying listed equity. Contracts are subject to initial and daily variation margining arising out of the mark-to-market of the underlying equity security. Due to the fact that the group is fully exposed to variations in the movement of the underlying instruments,the group’s primary exposure is to market risk.

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Investments held as part of the group’s stockbroking activities (continued)Due to the fact that group’s exposure to market risk, being the total net position of the equity swaps, options and futures contracts hedged by theunderlying equity instruments, is considered to be immaterial, a sensitivity analysis has not been performed.

2013 2012 R'000 R'000

Net PositionEquity Swap positions (3 423 338) (2 006 825)Option positions 505 626 127 291 Futures positions 2 620 933 1 596 830 Equity positions 291 077 285 450

(5 702) 2 746

44.1.3 Foreign currency risk


The group is exposed to foreign currency risk as a result of foreign exchange transaction exposures.

Transaction exposures arise when a business undertakes a transaction in a currency other than its functional currency. As various funds undermanagement are denominated in foreign currencies, the Stenham group carries currency exposure in respect of revenues earned within its hedgefund of funds business. To manage this exposure, non-Sterling revenues are converted promptly on receipt and forward foreign exchange contracts(FEC's) are, in certain instances, entered into to hedge cash flows arising from non-Sterling debtors. At reporting date, the group had no forwardforeign exchange contracts in place. Outside these exposures, in the normal course, the group does not have significant transaction exposures otherthan those in respect of transactions with foreign subsidiaries.

The main functional currencies in which the group transacts are Rand (ZAR), Sterling (GBP), Euro (EUR) and, on a lesser scale, US dollar (USD),Swiss Franc (CHF), Australian Dollar (AUD) and Yen (JPY).

Foreign exchange gains and losses are accounted for in profit or loss.

The mandates of some of the funds under management permit investment in offshore instruments as well as foreign currency. The effects of movementsin these instruments and currencies as a result of currency fluctuation is reflected within the funds realised or unrealised gains/losses earned/incurredand are not separately disclosed. Such exposure to currency fluctuations is considered to be part and parcel of the hedge fund management activities,and is viewed together with equity price risk and managed simultaneously.

Whilst foreign exchange translation exposure, arising from the translation of the group's offshore operations into rands is not considered a foreigncurrency exposure under IFRS, it is important to note that, following on the acquisition of Stenham in 2009 and the incorporation of PeregrineInternational Holdings in 2012, a significant portion of the group's revenues are earned in foreign currencies and the volatility of these currenciesrelative to the rand will impact the group's rand profit or loss and asset values.

The carrying amounts of the group’s foreign currency denominated monetary assets and liabilities at the reporting date are as follows:

2013 2012

USD GBP EUR CHF JPY AUD Total USD GBP EUR CHF JPY TotalR’000 R’000 R’000 R’000 R’000 R'000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

Non-current assets 82 869 - 91 205 - 2 706 - 176 780 7 917 - 47 784 167 2 949 58 817Current assets 195 656 10 371 75 528 2 330 3 965 406 288 256 108 347 481 102 599 4 728 1 666 217 821

Total assets 278 525 10 371 166 733 2 330 6 671 406 465 036 116 264 481 150 383 4 895 4 615 276 638

Non-current liabilities (7 174) - - - - - (7 174) (736) - - - - (736)Current liabilities (37 520) - (12 645) (677) (295) - (51 137) (44 149) (239) (13 497) (597) (431) (58 913)

Total liabilities (44 694) - (12 645) (677) (295) - (58 311) (44 885) (239) (13 497) (597) (431) (59 649)

Net exposure 233 831 10 371 154 088 1 653 6 376 406 406 725 71 379 242 136 886 4 298 4 184 216 989

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44.1.3.1 Key risk exposures (continued)

The following significant exchange rates were applied at reporting date: 2013 2012

1USD: ZAR 9,17 7,671GBP: ZAR 13,93 12,261EUR: ZAR 11,78 10,221CHF: ZAR 9,71 8,511JPY: ZAR 0,10 0,111AUD: ZAR 9,61 -

44.1.3.2 Foreign currency sensitivity analysis

The table below depicts the group’s sensitivity to a 10% change in value of the rand against the various currencies. The sensitivity analysis measuresthe impact on the group's exposure in rands (based on a change in the reporting date spot rate) and the impact on the group's rand profitability givena simultaneous change in all currencies to which the group is exposed at reporting date.

A positive number below indicates an increase in profit and other equity following a 10% weakening of the rand against the other currencies. For a10% strengthening of the rand, there would be an equal and opposite impact on the profit and the balances below would be negative.

2013 2012R'000 R'000

Profit 40 673 33 629

44.1.4 Interest rate risk


Interest rate risk refers to the impact on future cash flows and earnings of interest sensitive assets and liabilities as a result of interest rates repricing.Interest earned by the group is classified into interest earned as part of the group’s revenue generating activities and interest earned as part of thegroup’s financing decisions.

The most significant component of revenue interest comprises interest earned from the group’s prime broking activities. Peregrine Equities earnsand pays interest on funding provided and amounts borrowed on long and short equity swap positions, on cash collateral placed with scrip lendersand in respect of initial margin held, which amounts are detailed in notes 1.1.1 and 1.1.2. In addition, Peregrine Equities earns interest on the netcash balances arising from these activities. As interest earned and paid is based on variable short term rates with similar bases (base rate), the netinterest earned is not vulnerable to the risk of a repricing of the base rate. Rather interest income is vulnerable to margin pressure, declines in marketactivity and/or client losses all of which would adversely affect profit or loss. The interest rate sensitivity analysis presented overleaf, consequently,excludes this category of interest. In addition, through its investment in Southchester, the group is exposed to interest rate fluctuation risk whichprimarily arises from the mismatch in the payment obligations of its issued debt compared to the income stream generated by its assets (being itsmoney market instruments). However, due to the close matching of interest income and expenses a change in interest rates is not expected to havea significant impact on the financial results. Hence, the interest rate sensitivity analysis presented overleaf, consequently, also excludes the impactof interest rate fluctuations on the money market instruments and related debt.

Financial assets and liabilities that are sensitive to interest rate risk comprise those financial instruments carried at amortised cost. This includes cashbalances, loans receivable, interest-bearing borrowings and loans and payables. Borrowings include amounts borrowed against hedge fund investments(note 18). The decision to gear against certain of the hedge fund investments is to enhance investment returns rather than as a result of a fundingdecision. The rates paid on hedge fund gearing are thus managed as part of the overall return expectation of group capital.

The group manages interest rate exposure arising from other borrowings as part of the overall management of group capital. The decision to borrowand the levels at which borrowings are maintained are evaluated on a regular basis. Considerations include historic and anticipated investment yieldsand the cost of borrowing, the group's liquidity requirements and the current state of credit markets. The efficient allocation of capital should enhanceprofitability over the longer term.

In respect of free cash flow, the group manages interest rate risk through a centralised treasury function locally and within the Stenham group. Thetreasury aims to protect and enhance net interest income, to ensure cost-effective sources of funding and to mitigate against residual undesirableinterest rate risks. Margin deposits placed with Peregrine Equities and other cash balances arising from stockbroking activities are retained in thestockbroker to meet liquidity and JSE capital adequacy requirements. Cash requirements are monitored daily and cash is placed with high credit ratedfinancial institutions or invested in UK government bonds.

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44.1 4.2 Interest rate sensitivity analysis

The repricing profile of financial assets and liabilities carried at amortised cost that are sensitive to interest rate fluctuations is presented in the tablebelow. Short term financial assets and liabilities carried at amortised cost whereby the effects of discounting are considered to be immaterial arereflected as "non-rate" in the sensitivity analysis. Non-interest bearing assets and liabilities carried at amortised cost are specifically classified as non-rate financial instruments (note 10).

A 2% increase or decrease represents management’s assessment of the reasonably possible change in interest rates. The table depicts the sensitivityof a 2% parallel shift in all applicable rates.

Group

Carrying value of Interest rate Current years Reasonable Impact onfinancial instrument interest income/ change in pre-tax

at amortised cost expense* rate (2%) profit or loss**

R'000 R'000 R'000 R'0002013

Interest sensitivity gap

Interest bearing financial assetsFinancial investments 51 098 Non rate - - - Loans and other receivables 312 884 4.76%–5.35% 20 633 22 796 2 164 Trade and other receivables 679 616 Non rate - - - Amounts receivable in respect of stockbroking activities 1 873 772 Non rate - - - Cash and cash equivalents 975 484 0.05%-4.5% 28 525 36 750 8 225

3 892 854 49 158 59 546 10 389

Interest bearing financial liabilitiesLoans and other payables 1 591 673 Non rate - - - Trade and other payables 714 504 Non rate - - - Amounts payable in respect of stockbroking activities 1 734 840 Non rate - - - Bank overdraft 316 353 8,50% 695 12 204 11 508

4 357 370 695 12 204 11 508

2012

Interest sensitivity gap

Interest bearing financial assetsLoans and other receivables 130 461 2.32% – 8.50% 7 038 12 266 5 228 Trade and other receivables 510 981 Non rate - - - Amounts receivable in respect of stockbroking activities 1 315 134 Non rate - - - Cash and cash equivalents 799 045 5,00% 29 791 23 707 (6 084)

2 755 621 36 829 35 973 (856)

Interest bearing financial liabilitiesInterest bearing borrowings 179 236 3 month Jibar +3% 33 743 18 990 (14 753)Loans and other payables 26 597 Non rate - - - Trade and other payables 541 655 Non rate - - - Amounts payable in respect of stockbroking activities 1 640 318 Non rate - - -

2 387 806 33 743 18 990 (14 753)

* The current year's interest income/expense relates only to those most significant interest bearing financial instruments.** Impact on profit or loss of a change in rates would be based on the financial instruments closing balance at year end.

(i.e. it is not a shock of the current year's interest expense, rather it calculates the impact on the following year's net finance cost if rates were shocked by 2%).

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44.2 Credit risk

44.2.1 Key risk exposures

Credit risk is the risk of loss resulting from the default of a counterparty. Credit risk includes settlement risk.

The board of Peregrine Securities, the holding company of Peregrine Equities, has overall responsibility for the business undertaken by PeregrineEquities. Limits are agreed and approved by the board. Daily risk management and enforcement of compliance with limits has been designated toappropriate individuals within the operating unit with oversight by a trading risk committee. The risk management processes and the development oftechnology to enhance the implementation and enforcement of such processes remains an on-going area of focus.

Within the Stenham group credit risk exists within the property division to the extent that the underlying funds have insufficient liquidity to settlemanagement fees due to the group. The property division is actively involved in the day-to-day management of the funds and monitors the liquidityof each fund through its treasury function.

Other assets that expose the group to credit risk consist principally of cash deposits and trade receivables. Cash is placed on deposit with high creditrated financial institutions. Credit risk with respect to trade receivables is limited due to the high credit rating of the group's counterparties.

Other than for off-balance sheet exposures, the carrying value of financial assets recorded in the financial statements, which is net of the allowancefor impairment losses, represents the group’s maximum exposure to credit risk.

Peregrine SA Holdings has guaranteed the obligations of Nala to The Standard Bank of South Africa Limited ("Standard Bank") under a preferenceshare agreement entered into between Nala and Standard Bank on 5 October 2012.

Peregrine SA Holdings must make payment to Standard Bank if Nala:

• defaults on payment of the preference dividends (including any taxes which result from the manifestation of the tax risk carried by Nala), or• defaults on the payment of the redemption amount (including early redemption), or• does not make payment when scheduled.

Peregrine SA Holdings is not required to compensate Standard Bank for any amounts in excess of the loss that the bank incurs as a result of defaultby Nala. Peregrine SA Holdings is required to pay all amounts that would put Standard Bank in the same net economic (after-tax) position that it wouldhave been if Nala had not defaulted.

The guarantee is not automatically triggered. Nala must first default on its obligations in order to trigger payment by Peregrine SA Holdings in termsof the guarantee.

Peregrine SA Holdings is required to maintain certain covenants. If these covenants are breached Standard Bank may require Nala to redeem thepreference shares immediately. However, the guarantee is only triggered if Nala cannot perform on redemption.

Due to the economic interests held by Nala the possibility of default by Nala is remote and therefore there is no credit exposure to the group relatingto this off-balance sheet item.

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44.2 Credit risk (continued)

44.2.1 Key risk exposures (continued) 2013 2012

R'000 R'000 Credit exposure relating to financial assets and liabilities designated at fair value through profit and loss are:

Investment linked to policyholder investment contracts 4 728 289 4 432 561 Policyholder investment contract liabilities (4 728 289) (4 432 561)

44.2.2 Unimpaired financial assets

The ageing of financial assets past due and not impaired at the reporting date is set out below:

Financial instrument class Maximum Not past Past due Non- Carrying Collateral exposure due financial value held

to credit risk instrumentsand financialinstrumentsbeyond the

scope of IFRS7

<30 days 30+ days 60+ days 90+ daysR’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

2013

Loans and receivables 312 884 312 884 - - - - - 312 884 304 524 Financial investments 51 098 51 098 - - - - - 51 098 -Trade and other receivables 679 329 554 213 100 597 3 153 3 190 18 175 17 599 696 927 -Amounts receivable in respectof stockbroking activities(excluding financial assetsclassified as held-for-trading) 1 873 772 1 843 330 5 068 9 989 5 553 9 832 - 1 873 772 17 417Cash and cash equivalents 975 484 975 484 - - - - - 975 484 -

3 892 567 3 737 009 105 665 13 142 8 743 28 007 17 599 3 910 165 321 941

2012

Loans and receivables 130 461 130 461 - - - - - 130 461 20 678 Trade and other receivables 510 793 398 263 101 937 938 2 214 7 441 18 380 529 173 -Amounts receivable in respectof stockbroking activities(excluding financial assetsclassified as held-for-trading) 1 315 134 1 315 134 - - - - - 1 315 134 37 209Cash and cash equivalents 799 045 799 045 - - - - - 799 045 -

2 755 433 2 642 903 101 937 938 2 214 7 441 18 380 2 773 813 57 887

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44.2.2 Unimpaired financial assets (continued)

The credit quality of financial assets neither past due nor impaired is as follows:

2013 2012Strong Satisfactory High Risk Total Strong Satisfactory High Risk Total

R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000

Loans and receivables 261 786 51 098 - 312 884 130 461 - - 130 461 Financial investments 51 098 - - 51 098 - - - - Trade and other receivables 553 157 1 056 - 554 213 396 905 1 358 - 398 263 Amounts receivable in respectof stockbroking activities(excluding financial assetsclassified as held-for-trading) 1 843 330 - - 1 843 330 1 315 134 - - 1 315 134 Cash and cash equivalents 975 484 - - 975 484 799 045 - - 799 045

3 684 855 52 154 - 3 737 009 2 641 545 1 358 - 2 642 903

Financial statement descriptions can be summarised as follows:

Strong: there is a very high likelihood that the asset will be recovered in full.

Satisfactory: there is still a high likelihood that the asset will be recovered in full however the counterparty has indicated some evidence of deteriorationand is being monitored more carefully.

High Risk: there is concern over the counterparty's ability to make payments when due. These receivables have not yet been impaired, and thecounterparty is continuing to make payments when due and is expected to settle all outstanding amounts.

44.2.3 Impairment

Impairment losses are accounted for in terms of accounting policy note 7. Default, delinquency in payment and significant financial difficulties areconsidered indicators that a receivable is impaired. Based on historic default rates and the credit quality of clients, the group does not believe thatimpairment is required in respect of the assets indicated as past due per the analysis above.

The movement in the allowance for impairment in respect of trade receivables is as follows:

2013 2012R'000 R'000

At beginning of the year 5 305 5 759 Reversal of allowances raised - (536)Bad debts (209) - Increase in allowances raised 638 - Effect of exchange rate changes 41 82

5 775 5 305

The impairment allowance account is used to record potential impairment losses unless the group is satisfied that no recovery of the amount owingis possible. At that point the amounts are considered irrecoverable and are written off against the financial asset directly.

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44.2.3 Impairment (continued)

The ageing of impaired financial assets at the reporting date is set out below. The figures presented here are the gross receivable values beforeimpairment.

Financial instrument class Past due Carrying Collateral value held

<30 days 30+ days 60+ days 90+ daysR’000 R’000 R’000 R’000 R’000

2013

Trade and other receivables 897 1 721 594 2 851 6 063 - Provision for impairment (832) (1 689) (584) (2 670) (5 775) -

65 32 10 181 288 -

2012

Trade and other receivables 2 808 641 898 1 146 5 492 -Provision for impairment (2 808) (641) (710) (1 146) (5 305) -

- - 188 - 188 -

44.2.4 Nature of collateral held

Collateral held against loans and receivables is detailed in note 19.

Collateral held against amounts reflected as part of securities trading balances and as part of amounts receivable in respect of equity swaps andoption positions comprises initial cash margin deposits placed with Peregrine Equities as security for obligations arising in respect of equity swaptrades (“equity swap receivables”). The initial margin is calculated as a percentage of the nominal value of the trade and is repayable on the businessday following the completion or termination of the equity swap contract. The equity swap receivables outstanding at year-end, in respect of whichcollateral is held, amounts to R39.7 million (2012: R53.3 million).

44.3 Liquidity risk

44.3.1 Key risk exposures

Liquidity risk refers to the ability to meet funding obligations as they fall due. The group’s treasury function is centralised locally and within the Stenhamgroup, thus ensuring that capital is appropriately allocated across the group and that funding and commitments are met timeously.

As the group is not involved in deposit taking and lending activities the group is not exposed to liquidity risks associated with the matching of assetand liability maturities as within a traditional banking environment.

The group has the ability to draw down on hedge fund investments on a monthly basis.

Within the stockbroking business, liquidity is managed through the appropriate capitalisation of Peregrine Equities, treasury management at theoperations level and by ensuring that business growth is within the constraints of available credit lines and existing capital resources.

There were no breaches of or defaults on any loan obligations during the current year or at year-end.

Group

44.3 Liquidity risk (continued)

44.3.2 Liquidity mismatch table

A summary of the group’s undiscounted liquidity profile is reflected in the table below. Assets and liabilities including the group's derivative financialinstruments are allocated according to their contractual maturity dates. The allocation of the group's derivative instruments was done on this basisdue to the fact that the group does not intend to sell or settle these instruments prior to their respective contractual maturity dates. The group hasthe ability to disinvest from the hedge funds on a monthly basis. Other investment banking assets (including listed equities) are shown as realisablein greater than a year.

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Group

Demand Up to 1–3 months 3–6 months 6 months 1–5 years >5 years Non-financial Interest Total1 month – 1 year instrument and adjustment

financialinstrumentsbeyond the

scope of IFRS 7

2013R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

SA liquidity mismatch table

Assets 10 640 929 1 224 023 334 424 97 584 5 476 4 909 625 10 818 452 092 - 17 674 971Non-financial assets andfinancial assets beyondthe scope of IFRS 7 - - - - - - - 452 092 - 452 092Other financial assets 10 640 929 1 224 023 334 424 97 584 5 476 4 909 625 10 818 - - 17 222 879

Liabilities (10 964 868) (25 617) (217 727) - (33 261) (4 719 724) (414) (271 784) - (16 233 395)Non-financial liabilities andfinancial liabilities beyondthe scope of IFRS 7 - - - - - - - (271 784) - (271 784)Derivatives - - - - (5 291) - - - - (5 291)Other financial liabilities (10 964 868) (25 617) (217 727) - (27 970) (4 719 724) (414) - - (15 956 320)

Equity - - - - - - - (1 441 576) - (1 441 576)Liquidity gap (323 939) 1 198 406 116 697 97 584 (27 785) 189 901 10 404 (1 261 268) - -Cumulative liquidity gap (323 939) 874 467 991 164 1 088 748 1 060 963 1 250 864 1 261 268 - - -

UK liquidity mismatch table

Assets 320 293 38 865 114 028 - 7 483 - 178 910 322 543 - 982 122Liabilities - (6 542) (63 487) - (42 634) (14 490) (10 517) (56 287) - (193 957)

Other financial liabilities - (6 542) (63 487) - (42 634) (14 490) (10 517) (56 287) - (193 957)Equity - - - - - - - (788 165) - (788 165)Liquidity gap 320 293 32 323 50 541 - (35 151) (14 490) 168 393 (521 909) - -Cumulative liquidity gap 320 293 352 616 403 157 403 157 368 006 353 516 521 909 - - -

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44.3 Liquidity risk (continued)

44.3.2 Liquidity mismatch table (continued)

Group

Demand Up to 1–3 months 3–6 months 6 months 1–5 years >5 years Non-financial Interest Total1 month – 1 year instrument and adjustment

financialinstrumentsbeyond the

scope of IFRS 7

2012R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

SA liquidity mismatch table

Assets 619 936 6 491 162 16 951 74 869 112 988 4 838 840 105 182 425 378 - 12 685 306Non-financial assets andfinancial assets beyondthe scope of IFRS 7 - - - - - - - 425 378 - 425 378Derivatives - 4 976 539 1 934 - - - - - - 4 978 473Other financial assets 619 936 1 514 623 15 017 74 869 112 988 4 838 840 105 182 - - 7 281 455

Liabilities (70 413) (6 330 371) (25 262) (31 053) (46 755) (4 601 442) - (297 913) 30 653 (11 372 556)Non-financial liabilities andfinancial liabilities beyondthe scope of IFRS 7 - - - - - - - (297 913) - (297 913)Derivatives - (4 362 755) - - - (3 653) - - - (4 366 408)Other financial liabilities (70 413) (1 967 616) (25 262) (31 053) (46 755) (4 597 789) - - 30 653 (6 708 235)

Equity - - - - - - - (1 312 750) - (1 312 750)Liquidity gap 549 523 160 791 (8 311) 43 816 66 233 237 398 105 182 (1 185 285) 30 653 -Cumulative liquidity gap 549 523 710 314 702 003 745 819 812 052 1 049 450 1 154 632 (30 653) - -

UK liquidity mismatch table

Assets 395 400 - 101 707 9 930 - 12 670 105 180 1 045 049 - 1 669 936Liabilities - (3 832) (66 433) - (1 681) (46 222) (20 329) (65 461) - (203 958)

Non-financial liabilities andfinancial liabilities beyondthe scope of IFRS 7 - - - - - - - (65 461) - (65 461)Derivatives - - - - - (36 780) - - - (36 780)Other financial liabilities - (3 832) (66 433) - (1 681) (9 442) (20 329) - - (101 717)

Equity - - - - - - - (1 465 978) - (1 465 978)Liquidity gap 395 400 (3 832) 35 274 9 930 (1 681) (33 552) 84 851 (486 390) - -Cumulative liquidity gap 395 400 391 568 426 842 436 772 435 091 401 539 486 390 - - -

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44.4 Fair value hierarchy

The fair values of financial instruments traded in active markets is based on quoted market prices at reporting date. A market is regarded as active ifquoted prices are readily available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices representactual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the group isthe current bid price. These instruments are included in level 1.

The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. These valuation techniquesmaximise the use of observable data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required tofair value the instrument are observable, the instruments are included in level 2.

If one or more significant inputs are not based on observable market data, the instrument is included in level 3.

Specific valuation techniques used to value financial instruments include:

• Quoted market prices or dealer quotes for similar instruments;

• In the prior year, the fair value of the two unlisted private equity investments were based on a net book value and a sales price determined in termsof a sales agreement respectively. It was management's belief that at that reporting date, these values best represented the fair value of these twoinvestments. These two instruments were therefore classified as level 3 fair value investments;

• The fair value of the unlisted property fund investments classified as level 2 are based on recognised quoted prices for a monthly trading asset. Thefair value of the unlisted property fund investments classified as level 3 are based on internal and external professional advice in respect of theunderlying property values (market value benchmarking);

• The fair value of interest rate swaps is determined using the relevant market related rate at reporting date, with the resulting value discounted topresent value;

• The fair value of hedge fund investments is determined based on the fair values of the underlying investments held by the hedge funds;

• Payables in respect of put options classified as level 3 are based on internal assessments of the value of the Asset Management division withinStenham Asset Management Proprietary Limited and an assessment of the non-controlling interest discount on that value, and

• Other techniques such as discounted cash flow analysis are used to determine the fair value of the remaining financial instruments.

During the previous financial year Sandown Capital Proprietary Limited (”Sandown”) acquired a 100% interest in the Elite Group Two ProprietaryLimited (”EG2”). In terms of the transaction Sandown has a R10 million funding facility to EG2 that earns interest at JIBAR plus 700bps. The totalamount advanced at year-end is R10.4 million (2012: R1.5 million).

Sandown has the option to convert the outstanding loan to EG2 into EG2 shares on the option date, being 1 August 2013. If Sandown Capital exercisesthis option, Elite Group Proprietary Limited (“Elite”) has the option to buy Sandown's interest in EG2. In terms of this option Peregrine Financial Services(”PFS”) could be required to provide additional funding to EG2. The option is an instrument linked to the value of Elite’s shares. Elite is an unlistedequity instrument. A quoted market price is therefore not available and the fair value cannot be reliably determined.

During the current year, the Securities group acquired a controlling stake in Southchester Holdings Proprietary Limited ("Southchester"). Southchesterholds a portfolio of money market instruments comprising collective investment schemes and call accounts (reflected as level 1), floating rate deposits,bonds and treasury bills (reflected as level 2). To manage its price risk Southchester diversifies its portfolio. Diversification of the portfolio is carriedout in accordance with the prudential investments limits set by the company and approved by Peregrine Equities' Risk Committee.

Peregrine Capital Proprietary Limited (“Peregrine Capital”), a subsidiary of Peregrine SA Holdings (previously PFS prior to the reorganisation (note 13)),has preference shares that are held by its directors. In terms of the agreement, should a director no longer be eligible to hold these preference shares,Peregrine SA Holdings could have an obligation to buy a portion of their shares, should these not be taken up by the other directors or Peregrine Capital.The price at which these shares will be put to Peregrine SA Holdings is dependent on the performance and valuation of Peregrine Capital, an unlistedentity. A quoted market price is therefore not available. The value would be determined using a valuation model. Some of the inputs to this modelare unobservable and the fair value can therefore not be reliably determined.

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44.4 Fair value hierarchy (continued)

The following table presents the group's assets and liabilities that are measured at fair value as at 31 March:

2013 2012Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000Financial assets atfair value though profit or loss

Held-for-trading: 1 371 056 7 431 252 - 8 802 308 910 047 4 082 103 - 4 992 150Unit trusts – unlisted 13 062 - - 13 062 13 690 - - 13 690Unit trusts – listed 3 752 - - 3 752 - - - -Variable rate debenture - 2 161 - 2 161 - 1 934 - 1 934Amounts receivable inrespect of stockbroking activities: 258 103 7 429 091 - 7 687 194 - 4 075 935 - 4 075 935 Equities - 6 417 497 - 6 417 497 - 4 075 935 - 4 075 935 Money market instruments 258 103 1 011 594 - 1 269 697 - - - -Equities and bondsheld by Hedge funds 1 096 139 - - 1 096 139 896 357 - - 896 357Preference sharesheld by Hedge funds - - - - - 4 234 - 4 234

Designated at inception: 34 597 5 023 150 129 548 5 187 295 208 525 4 815 373 113 146 5 137 044Investments linkedto policyholderinvestment contracts - 4 728 289 - 4 728 289 - 4 432 561 - 4 432 561Share portfolio investments – unlisted - 243 - 243 - 2 218 - 2 218Private equity investments – listed 31 581 - - 31 582 205 025 - - 205 025Private equity investments – unlisted - 47 923 1 835 49 758 - 119 380 3 180 122 560Property fund investments – unlisted - 94 576 127 713 222 289 - 103 764 109 966 213 730Hedge fundinvestments – unlisted - 152 117 - 152 117 - 135 968 - 135 968Unit trusts – unlisted 3 016 2 - 3 018 3 500 21 482 - 24 982

1 405 653 12 454 402 129 548 13 989 603 1 118 572 8 897 476 113 146 10 129 194

Financial liabilities atfair value though profit or loss

Held-for-trading: (892 067) (6 131 711) - (7 023 778) (572 270) (3 794 138) - (4 366 408)Amounts payablein respect ofstock broking activities: - (6 126 420) - (6 126 420) - (3 790 485) - (3 790 485) Equities - (6 126 420) - (6 126 420) - (3 790 485) - (3 790 485)Instruments held byHedge Funds–short equity positions,options and bonds (892 067) - - (892 067) (572 270) - - (572 270)Interest rate swap - (5 291) - (5 291) - (3 653) - (3 653)

Designated at inception: - (4 701 417) (16 716) (4 718 133) - (4 422 145) (36 780) (4 458 925)Net assets attributable tooutside investorsin the Hedge Funds - (22 304) - (22 304) - (11 145) - (11 145)Policyholder investmentcontract liabilities - (4 679 113) - (4 679 113) - (4 411 000) - (4 411 000)Payables in respectof put options - - (16 716) (16 716) - - (36 780) (36 780)

(892 067) (10 833 128) (16 716) (11 741 911) (572 270) (8 216 283) (36 780) (8 825 333)

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Group

44.4 Fair value hierarchy (continued)

With regards to Level 3 financial instruments the following is a reconciliation of the opening and closing balances:

2013 2012

Financial instruments at fair Financial instruments at fairvalue through profit or loss value through profit or loss

Designated at inception Designated at inception

Assets Liabilities Assets LiabilitiesR'000 R'000 R'000 R'000

Opening balance 113 146 (36 780) 102 799 (48 560)Total gains/ (losses) recognised in: Profit or loss 1 11 783 20 036 (7) 17 564 Investment and other income 11 783 20 036 (7) 11 031 Finance costs - - - 6 533 Other comprehensive income 12 474 (5 010) 10 439 (5 784)Purchases 43 995 - 31 343 - Issues - - - - - Settlements and disposals (51 850) 5 038 (32 963) - Transfer from level 2 into level 3 - - 1 535 -

Closing balance 129 548 (16 716) 113 146 (36 780)

1 The amount of gains/(losses) for the period that are attributable to gains/(losses) relating to those assets and liabilities held at the end of the reporting period pertain tomovements in the fair value of the property fund investments (note 18) and payables in respect of put options (note 27). These gains/(losses) have been presented in thestatement of comprehensive income within the line items investment and other income and net interest received.

At 31 March 2013 and 2012 a change of one or more of the inputs used in the fair value measurement calculation of the level 3 instruments did notresult in a significant change to the fair values of these instruments.

45 Risk management - Company

Assets and liabilities consist of primarily non-financial assets and liabilities. These are not subject to market, credit and liquidity risk for disclosurepurposes.

46 Capital risk management

The group manages its capital to ensure that each of the entities in the group will be able to continue as a going concern whilst maximising the returnto stakeholders through the optimisation of the group's capital structure. An optimal capital structure should reduce the cost of capital whilst takingcognisance of the group's risk appetite, growth opportunities and credit markets.

The board reviews the capital structure on an on-going basis as required. Decisions to alter the capital structure give consideration to the cost of capitaland the risks associated with each class of capital. In calculating the ratio debt includes long-term borrowings, net of policyholder investment contractsand equity comprises all capital and reserves of the group.

During the course of the year, the group settled in full all its interest-bearing borrowings (note 26).2013 2012

Debt - 182 888Equity 1 706 938 2 184 309

Debt to equity ratio 0,0% 8,4%

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Nature of business % holding Cost of Investment Share schemes

2013 2012 2013 2012 2013 2012Companies: R’000 R’000 R’000 R’000

Directly held Peregrine Financial Services Holdings Limited Holding company 100 100 7 195 7 195 9 657 44 138Peregrine SA Holdings (Pty) Limited Investment holding company(previously Peregrine Structuring (Pty) Limited)1 & investment and trading 80 - 470 845 - 53 492 -Sandown Capital (Pty) Limited1 Investment holding company 100 - 127 453 - - -

& investment and tradingIndirectly heldCitadel Holdings Limited and its subsidiaries Wealth management 100 100Peregrine Capital (Pty) Limited Asset management 50 50Peregrine Direct Limited Financial broking 65 65Peregrine Derivatives (Pty) Limited Financial broking 65 65Peregrine Equities (Pty) Limited Financial broking 65 65Peregrine Financial Products (Pty) Limited Financial structuring 65 65Peregrine Fund Platform (Pty) Limited Asset management 100 100Peregrine Management Services (Pty) Limited Management services 100 100Peregrine Securities (Pty) Limited Financial services 65 65Peregrine Strategic Investments (Pty) Limited Investment holding company 100 100Peregrine SA Holdings (Pty) Limited Investment holding company(previously Peregrine Structuring (Pty) Limited)1 & investment and trading - 100Peregrine International Holdings Limited Investment holding company 100 100Sandown Capital (Pty) Limited1 Investment holding company - 100

& investment and tradingStenham Limited and its subsidiaries Asset and Property management & Trust 62,71 57,62

and Corporate administrative servicesStenham Investments (Pty) Limited Investment holding company 100 100TWF Investments (Pty) Limited Investment banking 70 70

Share Trusts:Directly heldPeregrine Share Incentive Trust 100 100Indirectly heldCitadel Holdings Limited Employee Share Participation Scheme 100 100Deloitte Private Clients Employee Share Trust 100 100

Partnership:Indirectly heldFirefly Investments 61 Investment banking 50 50

Hedge Funds:PNF Peregrine Fund en Commandite Partnership 100 100Peregrine Partners Fund en Commandite Partnership 100 100Protiya Multi Strategy Fund En Commandite Partnership 84 - G3 Market Neutral En Commandite Partnership 75 75Bell Rock Partnership (2012: PIM Investments 18 Trust) 100 100Salient Quants Partnership (2012: PIM Investments 18 Trust) 100 100

605 493 7 195 63 149 44 138

1 With effect from 28 September 2012, Peregrine Holdings Limited became holding company of Peregrine SA Holdings Proprietary Limited and Sandown Capital Proprietary Limited

following on the group reorganisation, full details of which were incorporated in the circular to shareholders dated 6 August 2012.

A comprehensive list of subsidiaries is available on request at the registered office of the company. Peregrine Direct Limited is incorporated in the British VirginIsles. Citadel Holdings Limited indirectly owns 100% of the issued share capital of Citadel Offshore Holdings Limited, Citadel Guernsey Limited and PeregrineInternational Wealthcare Limited, which companies are incorporated in Guernsey and Peregrine Advisory Services Limited, which company is incorporated inthe UK. Stenham Limited and its subsidiaries are incorporated in the UK, British Virgin Isles and Guernsey. Peregrine International Holdings Limited is incorporatedin Guernsey. All other subsidiary companies are incorporated in the Republic of South Africa.

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AnnexureAs at 31 March

Details of principal subsidiary companiesA

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Cam Fund The Wealth Caveo Fund Green Oak SA Alpha Stenpark Stenham Legae Nala Total Management Corporation Solutions Capital Capital Management Real Estate Securities Empowerment

Limited 1 (Pty) Limited 1 (Pty) Limited 2 (Pty) Limited 2 Management IC 3 Equity Fund (Pty) Limited 4 InvestmentLimited 2 (Pty) Limited 3 Company

(Pty) Limited 5

R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

2013

Percentage held 50,0% 50,0% 49,9% 50,0% 49,9% 50,0% 34,0% 47,5% 30,0%

Shares at cost 37 15 000 - - 10 558 194 15 136 373 - 41 298Share of post acquisition reserves 6 168 2 824 6 677 2 112 4 227 3 226 3 586 (490) 26 567 54 897

6 205 17 824 6 677 2 112 14 785 3 420 18 722 (117) 26 567 96 195Loan - - - - - - - 5 750 - 5 750Cost - - - - - - - 5 750 - 5 750Impairment - - - - - - - - - -

6 205 17 824 6 677 2 112 14 785 3 420 18 722 5 633 26 567 101 945 -

Summarised financial information:Assets 16 836 28 844 20 940 9 094 52 669 7 653 43 179 334 334 633 676 1 147 225Liabilities 5 163 5 241 7 546 4 871 40 614 813 974 326 109 526 565 917 896

11 673 23 603 13 394 4 223 12 055 6 840 42 205 8 225 107 111 229 329

Revenue 52 131 29 772 25 021 10 018 93 434 17 957 1 519 17 692 88 860 336 404Profit 35 879 7 045 9 771 4 222 8 367 3 448 3 055 117 66 664 138 568

2012

Percentage held 50,0% 50,0% 49,9% 50,0% 49,9% 50,0% 47,5% 30,0%

Shares at cost 37 15 000 - - 10 558 194 - 84 - 25 873Share of post acquisition reserves 5 397 127 4 800 - 421 781 - (546) 12 945 23 925

5 434 15 127 4 800 - 10 979 975 - (462) 12 945 49 798Loan - - - - - - - 5 642 - 5 642Cost - - - - - - - 5 642 - 5 642Impairment - - - - - - - - - -

5 434 15 127 4 800 - 10 979 975 - 5 180 12 945 55 440 -

Summarised financial information:Assets 30 151 22 958 16 673 4 700 35 567 3 372 - 291 596 501 646 906 663Liabilities 19 029 5 004 7 050 4 699 28 432 687 - 283 488 461 199 809 588

11 122 17 954 9 623 1 7 135 2 685 - 8 108 40 447 97 075

Revenue 53 521 1 726 19 256 6 129 36 149 11 821 - 20 320 58 095 207 017Profit / (loss) 38 044 254 6 336 1 379 1 952 9 085 - (3 251) 40 447 94 246

1 Wealth management2 Asset management3 Property management4 Stockbroking5 Group investments

All associate companies are incorporated in the Republic of South Africa, with exception of CAM Fund Management Limited and South Africa Alpha Capital Management Limited, which isincorporated in Bermuda, Stenpark Management IC which is incorporated in Jersey, Channel Islands and Stenham Real Estate Equity Fund which is incorporated in Guernsey.

All associate companies’ reporting dates are 31 March, with exception of CAM Fund Management Ltd, which is 31 December. In this case, twelve months' profit to 31 March 2013 has beenincorporated into the group's results in line with the requirements of IAS 27.

Details of associate companiesB

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Reconciliation of Segment ReportIncome statement to Income statementC

Wealth and Broking and Stenham Total from Group Non-reportable TotalAsset Management Structuring operating segment1

reportable segments

R'000 R'000 R'000 R'000 R'000 R'000 R'000

For year ended 31 March 2013

Revenue and investment income per segmental analysis 678 127 385 303 538 580 1 602 010 121 048 - 1 723 058Reconciling items: (20 827) 124 984 - 104 157 (78 088) (11 822) 14 247Operating revenue – internal (20 827) 130 851 - 110 024 - - 110 024Investment income – internal - (5 867) - (5 867) (78 088) 83 955 -Investment income ofnon-reportable segment – external - - - - - (95 777) (95 777)

Revenue and investment income per income statement 657 300 510 287 538 580 1 706 167 42 960 (11 822) 1 737 305

Profit from ordinary activities per segmental analysis 243 896 95 037 (188 565) 150 368 (519 285) - (368 917)Reconciling revenue and investment income items (20 827) 124 984 - 104 157 (78 088) (11 822) 14 247Operating expenses ofnon-reportable segment – external - - - - - (14 247) (14 247)

Profit 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 552 444 332 424 664 391 1 549 259 205 318 - 1 754 577Reconciling items: (17 005) (5 265) - (22 270) (52 065) 86 847 12 512Operating revenue – internal (17 005) (3 737) - (20 742) - - (20 742)Investment income – internal - (1 528) - (1 528) (52 065) 53 593 -Investment income ofnon-reportable segment – external - - - - - 33 254 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 177 582 95 746 186 923 460 251 119 358 - 579 609Reconciling revenue and investment income items (17 005) (5 265) - (22 270) (52 065) 86 847 12 512Operating expenses ofnon-reportable segment – external - - - - - (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.

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Reconciliation of Segment ReportStatement of financial position to Statement of financial positionD

Segmental reporting Statutory IFRS disclosure Impact of consolidationof hedge funds

2013 2012 2013 2012 2013 2012R'000 R'000 R'000 R'000 R'000 R'000

Assets

Non-current assets 5 790 092 6 493 000 5 790 092 6 493 000 - -

Property, plant and equipment 35 750 19 077 35 750 19 077 - -Intangible assets 545 796 1 293 027 545 796 1 293 027 - -Investment in associate companies 101 945 55 440 101 945 55 440 - -Investments linked to policyholder investment contracts 4 728 289 4 432 561 4 728 289 4 432 561 - -Financial investments 306 889 527 111 306 889 527 111 - -Loans and receivables 1 987 100 550 1 987 100 550 - -Deferred taxation 69 436 65 234 69 436 65 234 - -

Current assets 11 650 833 6 974 898 12 867 002 7 862 242 1 216 169 887 344

Financial investments 1 804 533 511 811 2 588 026 1 093 587 783 493 581 776Loans and receivables 301 627 21 086 310 897 29 911 9 270 8 825Trade and other receivables 368 274 296 045 697 215 529 361 328 941 233 316Amounts receivable in respect of stockbroking activities 8 296 022 5 398 402 8 291 269 5 391 069 (4 753) (7 333)Taxation 4 111 19 269 4 111 19 269 - -Cash and cash equivalents 876 266 728 285 975 484 799 045 99 218 70 760

Total assets 17 440 925 13 467 898 18 657 094 14 355 242 1 216 169 887 344

Equity and liabilities

Equity 2 229 742 2 778 728 2 229 742 2 778 728 - -

Equity attributable to holders of the company 1 706 938 2 184 309 1 706 938 2 184 309 - -Non-controlling interests 522 804 594 419 522 804 594 419 - -

Non-current liabilities 4 752 244 4 680 592 4 752 244 4 680 592 - -

Interest-bearing borrowings - 157 548 - 157 548 - -Policyholder investment contract liabilities 4 728 289 4 432 561 4 728 289 4 432 561 - -Loans and other payables 19 014 60 543 19 014 60 543 - -Financial instrument liability - 3 653 - 3 653 - -Deferred taxation 4 941 26 287 4 941 26 287 - -

Current liabilities 10 458 939 6 008 578 11 675 108 6 895 922 1 216 169 887 344

Interest-bearing borrowings - 21 688 - 21 688 - -Loans and other payables 1 593 899 21 670 1 593 899 21 670 - -Financial instrument liabilities 5 291 - 919 662 583 415 914 371 583 415Trade and other payables 558 124 450 383 946 330 798 031 388 206 347 648Amounts payable in respect of stockbroking activities 7 947 668 5 474 522 7 861 260 5 430 803 (86 408) (43 719)Taxation 37 604 40 315 37 604 40 315 - -Bank overdraft 316 353 - 316 353 - - -

Total equity and liabilities 17 440 925 13 467 898 18 657 094 14 355 242 1 216 169 887 344

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SHAREHOLDERINFORMATION

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163

SECTIONNo.

05

Shareholders’ diary

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Financial year-end 31 March 2013

Annual general meeting 25 October 2013

Announcement of annual results 6 June 2013

Annual report posted August 2013

Announcement of interim results November 2013

Dividend timetable

The salient dates for the 2013 final dividend are as follows:

Last day to trade cum dividend Friday, 19 July 2013

Shares trade ex dividend Monday, 22 July 2013

Record date Friday, 26 July 2013

Payment date Monday, 29 July 2013

Dividend timetable

Analysis of shareholders

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Shareholder profile Number of % Number of %shareholders shares held

Analysis of shareholdingIndividuals and corporates 1 463 85,1 113 402 783 54,8Investment and insurance companies 38 2,2 27 328 966 13,2Nominees and trusts 130 7,6 27 975 818 13,5Pension and provident funds 88 5,1 38 083 320 18,4

1 719 100 206 790 887 100

Range of shareholding1 to 1 000 714 41,5 294 545 0,11 001 to 10 000 579 33,7 2 304 083 1,110 001 to 100 000 243 14,1 9 391 860 4,5100 001 to 1 000 000 142 8,3 47 100 403 22,8more than 1 000 000 41 2,4 147 699 996 71,4

1 719 100 206 790 887 100

Shareholder spread analysisTo the best knowledge of the directors and after reasonable enquiry, as at 31 March 2013, the spread of shareholders, as defined in the listing requirements ofthe JSE Limited, was as follows:

Public/non-public shareholding split:

Type of shareholders Number of Number of %shareholders shares held

Public 1 691 150 158 068 72,6Non-public 28 56 632 819 27,4

1 719 206 790 887 100

Analysis of non-public shareholders:

Type of shareholders Number of Number of %shareholders shares held

Directors and associates of the company 14 43 232 616 20,9Subsidiaries directors 8 2 915 889 1,4Treasury stock 4 8 444 989 4,1Employee share schemes 2 2 039 325 1,0

28 56 632 819 27,4

Save as set out in the Directors' report on page 80, no other single shareholder holds more than 5% of the issued share capital of Peregrine Holdings Limited.

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Letter from the Chairman

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Dear Shareholder

Peregrine Holdings Limited Annual General Meeting

On behalf of the board of directors of Peregrine, I have pleasure in extending an invitation to youto attend Peregrine’s annual general meeting, which will be held on 25 October 2013 at 10h00at 6A Sandown Valley Crescent, Sandown, Sandton. If you are unable to attend, please arrangeto vote by proxy in accordance with the instructions on the proxy form.

The board recognises the importance of its shareholders’ presence at the annual general meeting.This is an opportunity for shareholders to participate in discussions relating to items included inthe notice of meeting. In addition, the chairmen of board appointed committees as well as theexternal auditor and head of internal audit will be present to respond to questions from shareholders.

The notice of meeting, which is set out on pages 168 to 171 of the integrated report, is accompaniedby explanatory notes setting out the effects of all proposed resolutions included in the notice.

I look forward to your presence at the meeting.

Yours faithfully

LN Harris SCChairman JHB23 AUGUST

2013

Notice of Annual General Meeting

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Notice is hereby given to the shareholders of the company as at Friday, 18 October 2013, being the record date to receive notice of theAnnual General Meeting in terms of section 59(1)(a) of the Companies Act, 71 of 2008, as amended (“Companies Act”), that the AnnualGeneral Meeting of the company will be held at 6A Sandown Valley Crescent, Sandown, Sandton, at 10h00 on 25 October 2013 to (i) considerand, if deemed fit to pass, with or without modification, the following ordinary and special resolutions, in the manner required by the CompaniesAct, as read with the JSE Limited (“JSE”) Listings Requirements (“JSE Listings Requirements”); and (ii) deal with such other business asmay lawfully be dealt with at the meeting, which meeting is to be participated in and voted at by shareholders registered as such as at Friday,18 October 2013, being the record date to participate in and vote at the Annual General Meeting in terms of section 62(3)(a), read withsection 59(1)(b), of the Companies Act.

NB: Section 63(1) of the Companies Act – Identification of meeting participants

Kindly note that meeting participants (including proxies) are required to provide reasonably satisfactory identification before beingentitled to attend or participate in a shareholders’ meeting. Forms of identification include valid identity documents, drivers’licences and passports.

Peregrine Holdings Limited Registration No: 1994/006026/06 | Share code: PGR | ISIN: ZAE000078127 | (“Peregrine” or “the company”)

Ordinary resolutions

Ordinary resolution 1: Adoption of financial statements

“Resolved that the financial statements of the company for the yearended 31 March 2013, including the Directors’ Report and the reportof the Audit Committee, be and are hereby received and adopted.”

Ordinary resolution 2: Re-election of director

“Resolved that J Hertz, who, in accordance with article 6.1.7 of thecompany’s memorandum of incorporation was appointed on atemporary basis as the Chief Executive Officer with effect from 1April 2013 to fill the vacancy created by the resignation of JC vanNiekerk and who is eligible and available for re-election, be re-elected as a director of the company.”

The curriculum vitae in respect of J Hertz is included on page 26of the annual report of which this notice forms part.

Ordinary resolution 3: Re-election of director

“Resolved that, in order to fill the vacancy created by the retirementof V N Magwentshu, S Sithole be elected as a director of thecompany with effect from the date of this annual general meeting.”

The curriculum vitae in respect of S Sithole is included on page 29of the annual report of which this notice forms part.

Ordinary resolution 4: Not filling vacancy

“Resolved that, in accordance with article 6.1.4.6 of the company’smemorandum of association, the vacancy created by the retirementof L M Ndlovu not be filled.”

Ordinary resolution 5: Appointment of auditors

“Resolved that KPMG be and are hereby re-appointed as auditorsof the company for the ensuing financial year and the directors beand are hereby authorised to fix the remuneration of the auditorsand to note that the individual registered auditor who will undertakethe audit during the financial year ending 31 March 2014 will beHeather Berrange.”

Ordinary resolution 6: Appointment of Audit Committee members

“ Resolved that the members of the company’s Audit Committee setout below be and are hereby appointed, each by way of a separatevote, with effect from the end of this meeting in terms of section94(2) of the Companies Act. The membership as proposed by theboard of directors is BC Beaver, S Sithole and SI Stein (Chairmanof the Audit Committee), all of whom are independent non-executivedirectors.”

The curriculum vitae in respect of the above Audit Committeemembers is included on pages 28-29 of the annual report of whichthis notice forms part.

Ordinary resolution 7: Control over unissued ordinary shares

“Resolved that the authorised, but unissued, shares in the capitalof the company be and are hereby placed under the control of thedirectors of the company until the next Annual General Meetingto allot or issue such shares at their discretion, subject to theprovisions of the Companies Act and the JSE Listings Requirements,provided that such allotment and/or issue shall not exceed 10%of the company’s issued share capital as from the date of passingof this ordinary resolution less the aggregate number of shares,if any, held by the company and its subsidiaries (but specificallyexcluding any share trusts), from time to time, as treasury shares.”

Ordinary resolution 8: Signature of documentation

“Resolved that any director of the company or the company secretarybe and is hereby authorised to sign all such documents and doall such things as may be necessary or incidental to theimplementation of ordinary resolutions 1 to 7, and special resolutions1,2 and 3.”

In order for each of ordinary resolutions 1 to 8 to be adopted, thesupport of a majority of the total number of votes exercisable byshareholders, present in person or by proxy, is required.

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Special resolutions

Special resolution 1: Directors’ fees

“Resolved as a special resolution that payment to the non-executivedirectors of a maximum of the following annual fees for services asdirectors with effect from the date of this Annual General Meetinguntil the date of the next be and is hereby authorised:

Proposedannual fee –2014/15R

BoardChairman R435 265Board member R160 000Audit CommitteeChairman R275 265Member R210 000Remuneration CommitteeChairman R138 000Member R138 000Risk & Compliance CommitteeChairman R138 000Member R138 000Social & Ethics CommitteeChairman NilMember Nil

Reason for and effect of special resolution 1

The reason for special resolution 1 is to comply with the provisionsof the Companies Act. The effect of the special resolution is that,if approved by the shareholders at the Annual General Meeting, thefees payable to non-executive directors until the next Annual GeneralMeeting will be no more than as set out above. Executive directorsare not remunerated for their services as directors but areremunerated as employees of the company.

The above rates have been proposed to ensure that the remunerationof non-executive directors remains competitive in order to enablethe company to retain and attract persons of the calibre, appropriatecapabilities, skills and experience required in order to makemeaningful contributions to the company.

Special resolution 2: Repurchase of shares

“Resolved as a special resolution that, subject to the CompaniesAct, the JSE Listings Requirements and the restrictions set outbelow, the repurchase of shares of the company either by thecompany or by any subsidiary of the company be and is herebyauthorised, on the basis that:

(a) the general authority given in terms of this special resolutionshall remain in force from the date of passing of this specialresolution until the conclusion of the next Annual GeneralMeeting of the company or fifteen months from the date onwhich this resolution is passed, whichever is the earlier date.

(b) the general authority shall provide authorisation to the boardof directors to repurchase on behalf of the company, sharesin the issued share capital of the company as follows:

(i) it will be limited, in any financial year of the company, to amaximum of 20% of the issued share capital of the company(or 10%) where the repurchase is affected by a subsidiary)on the date on which this special resolution is passed;

(ii) the repurchase of shares issued by the company may notbe at a price which exceeds 10% of the weighted averageof the market value at which Peregrine shares of the sameclass traded on the JSE for the five business daysimmediately preceding the date on which the transactionis effected;

(iii) any such repurchase will be implemented through the orderbook operated by the JSE trading system and done withoutany prior understanding or arrangement between thecompany and the counter party;

(iv) an announcement will be published as soon as the companyhas repurchased ordinary shares constituting, on a cumulativebasis, 3% of the number of ordinary shares in issue priorto the repurchase pursuant to which the aforesaid 3%threshold was reached (and for each 3% in aggregate ofthe initial number of that class acquired thereafter). Suchannouncement must contain full details of such repurchases;

(v) the company (or any subsidiary) must be authorised to doso in terms of its memorandum of incorporation;

(vi) at any point in time, the company may only appoint one agentto effect any repurchase(s) on the company’s behalf; and

(vii) repurchases may not take place during a prohibited periodas defined in paragraph 3.67 of the JSE ListingsRequirements unless there is a repurchase programme inplace and the dates and quantities of shares to berepurchased during the prohibited period are fixed and fulldetails thereof have been disclosed in an announcementover SENS prior to commencement of the prohibited period.

(c) the exercise by the directors of the authority to procure therepurchase by the company’s subsidiaries of shares in termsof (b) shall be subject, mutatis mutandis, to the same termsand conditions as those set out above.

Having considered the aggregate effect of the maximumrepurchase of 20% of the company’s issued share capital in anyone financial year pursuant to the general authority to repurchaseshares, the board of directors is of the opinion that, for a periodof 12 months after the date of this notice of Annual GeneralMeeting:

(i) the company and the group will be able to repay their debts,in the ordinary course of business;

(ii) the company’s and the group’s assets will be in excess ofthe liabilities of the company and the group. For this purpose,the assets and liabilities should be recognised and measuredin accordance with the accounting policies used in the latestaudited group annual financial statements;

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(iii) the company’s and the group’s ordinary share capital andreserves will be adequate for ordinary business purposes;and

(iv) the company and the group will have sufficient workingcapital for the ordinary business purposes.

The board is of the opinion that this authority should be in placeso as to enable the company, as and when the opportunity presentsitself, to repurchase shares. The company’s sponsor will confirmthe adequacy of the company’s working capital for purposes ofundertaking the repurchase of shares in writing to the JSE priorto the company (or any subsidiary) entering the market to proceedwith the repurchase.

The following additional information, some of which may appearelsewhere in the integrated report of which this notice forms part,is provided in terms of the JSE Listings Requirements for purposesof this general authority:

• directors and management (including of certain subsidiarieswhich are not “major subsidiaries” as defined in the JSE ListingsRequirements) – see pages 26-29 and 172-174 of the integratedreport;

• major beneficial shareholders – see page 165 of the integratedreport;

• directors’ interests in ordinary shares – see page 80 of theintegrated report; and

• share capital of the company – see page 127 of the integratedreport.

Litigation statement

The directors, whose names appear on page 26 of the integratedreport of which this notice forms part, are not aware of any legalor arbitration proceedings, including proceedings that are pendingor threatened, that may have or have had in the recent past, beingat least the previous twelve (12) months, a material effect on thefinancial position of the company or its subsidiaries.

Directors’ responsibility statement

The directors, whose names appear on page 26 of the integratedreport of which this notice forms part, collectively and individuallyaccept full responsibility for the accuracy of the information pertainingto this special resolution and certify that, to the best of their knowledgeand belief, there are no facts that have been omitted which wouldmake any statement false or misleading and that all reasonableenquiries to ascertain such facts have been made and that thespecial resolution contains all necessary information.

Material changes

Other than the facts and developments reported on in the integratedreport of which this notice forms part, there have been no materialchanges in the affairs or financial position of the company and itssubsidiaries since the date of signature of the audit report and upto the date of this notice.

Reason for and effect of special resolution number 2

The reason for the passing of special resolution number 2 is toauthorise the company to repurchase shares issued by it and toenable its subsidiary companies to acquire shares in its share capital.

The effect of the passing of special resolution number 2 is that thecompany is authorised to repurchase shares issued by it and thatthe company’s subsidiary companies will be able to repurchaseshares in the share capital of the company, as set out above.

Special resolution number 3:

Allotment and issue of shares to directors and prescribed officersunder the Peregrine Share Incentive Trust

“Resolved that, to the extent required by section 41(1) of theCompanies Act, the allotment and issue by the company of shares,securities convertible into shares, or the grant of options or anyother rights exercisable for securities in the capital of the companyto any director, future director, prescribed officer and/or futureprescribed officer of the company and persons related or inter-related, as defined in the Companies Act, to a director or prescribedofficer of the company pursuant to the implementation of the shareincentive scheme operated via the Peregrine Share Incentive Trustbe and is hereby ratified and approved.”

Reason for and effect of special resolution number 3

The reason for passing special resolution number 3 is to facilitatethe implementation of the share incentive scheme operated via thePeregrine Share Incentive Trust by authorising, to the extent required,the company to allot and issue shares or grant options or otherforms of securities to any director, future director, prescribed officerand/or future prescribed officer of the company and persons relatedor inter-related, as defined in the Companies Act, to a director and/orprescribed officer of the company.

The effect of passing special resolution number 3 is that the companyis authorised, to the extent required, in terms of section 41(1) of theCompanies Act to issue shares or grant options or other forms ofsecurities to any of the parties specified in special resolution number3 in order to facilitate the implementation of the company’s shareincentive scheme operated via the Peregrine Share Incentive Trust.

In order for each of special resolutions 1, 2 and 3 to be adopted,the support of at least 75% of the total number of votes exercisableby shareholders, present in person or by proxy, is required.

Any matters raised by shareholders, with or without advancenotice to the company

To deal, at the Annual General Meeting, with any matters raisedby shareholders, with or without advance notice to the company.

Quorum

A quorum for the purposes of considering the resolutions aboveshall consist of three shareholders of the company personallypresent (and if the shareholder is a body corporate, the representativeof the body corporate) and entitled to vote at the annual generalmeeting. In addition, a quorum shall comprise 25% of all votingrights entitled to be exercised by shareholders in respect of theresolutions above.

Form of proxy

A form of proxy is attached for the convenience of any Peregrineshareholder holding certificated shares who cannot attend theAnnual General Meeting of Peregrine shareholders or who wishes

Notice of Annual General Meeting Continued

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JHB 23 AUGUST2013

to be represented thereat. Forms of proxy may also be obtained onrequest from the company’s registered office. The completed formsof proxy must be deposited at or posted to the office of the transfersecretaries of the company to be received by not later than 10h00on Thursday, 24 October 2013. Any member who completes andlodges a form of proxy will nevertheless be entitled to attend andvote in person at the Annual General Meeting should the membersubsequently decide to do so.

Peregrine shareholders who have already dematerialised theirPeregrine shares through a Central Securities Depository Participant(“CSDP”) or broker and who wish to attend the Annual GeneralMeeting of Peregrine shareholders must instruct their CSDP orbroker to issue them with the necessary Letter of Representationto attend.

Dematerialised Peregrine shareholders, who have elected own-name registration in the sub-register through a CSDP and who areunable to attend, but wish to vote at the Annual General Meetingof Peregrine shareholders, must complete and return the attachedform of proxy and lodge it with the transfer secretaries of thecompany, by 10h00 on Thursday, 24 October 2013.

Dematerialised Peregrine shareholders, who have not electedown–name registration in the sub-register through a CSDP andwho are unable to attend but who wish to vote at the AnnualGeneral Meeting of Peregrine shareholders should ensure thatthe person or entity (such as a nominee) whose name has beenentered into the sub-register maintained by a CSDP or broker

completes and returns the attached relevant forms of proxy interms of which they appoint a proxy to vote at the Annual GeneralMeeting of Peregrine shareholders.

Electronic Participation

Shareholders or their proxies may participate in the meeting by wayof telephone conference call. Shareholders or their proxies whowish to participate in the Annual General Meeting via theteleconference facility will be required to advise the company thereofby no later than 17h00 on Tuesday, 22 October 2013 by submitting,by email to Mr M Yachad at [email protected], or by fax tobe faxed to 011 722 7445, for the attention of Mr M Yachad relevantcontact details including email address, cellular number and landline,as well as full details of the shareholder’s title to the shares issuedby the company and proof of identity, in the form of copies of identitydocuments and share certificates (in the case of certificatedshareholders), and (in the case of dematerialised shareholders)written confirmation from the shareholder’s CSDP confirming theshareholder’s title to the dematerialised shares. Upon receipt of therequired information, the shareholder concerned will be providedwith a secure code and instructions to access the electroniccommunication during the Annual General Meeting.

Shareholders who wish to participate in the Annual General Meetingby way of telephone conference call must note that they will not beable to vote during the annual general meeting. Such shareholders,should they wish to have their vote counted at the Annual GeneralMeeting, must, to the extent applicable,(i) complete the form ofproxy; or (ii) contact their CSDP or broker, in both instances, as setout above.

By order of the board

Peregrine Management Services Proprietary LimitedCompany secretarySandton

Directors and management

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Principal activity/functionName Business address

Leonard Neal Harris

Sean Alan Melnick

Jonathan Hertz

Robert Eric Katz

Mandy Yachad

Bernard Clive Beaver

Pauline Goetsch

Veronica Nomfanelo Magwentshu

Lungile Myrtle Ndlovu

Steven Ivan Stein

Non-executive group chairman

Deputy group chairman and chairman ofStenham Limited

CEO and non-executive director of each of the materialsubsidiaries

Group CFO and non-executive director of each of thematerial subsidiaries

Executive director responsible for company secretaryand general legal functions within the Peregrine group

Non-executive director and member of the AuditCommittee

Non-executive director

Non-executive director and member of the AuditCommittee

Non-executive director and chairman of theSocial & Ethics Committee

Non-executive director, chairman of theAudit Committee, Risk Committeeand Remuneration Committee

2nd Floor, Rex Welsh House, SandownVillage, c/r Maude Str & Gwen Lane,Sandown 2196, Sandton

3rd floor, 180 Great Portland Street,London, W1W 5QZ

5th Floor, 6A Sandown Valley Crescent,Sandown 2196, Sandton








Peregrine Holdings Limited

Peregrine SA Holdings Proprietary Limited

Sean Alan Melnick

Jonathan Hertz

Robert Eric Katz

Mandy Yachad

Lungile Gcinumzi Mazwai

Stefaan Sithole

Rupesh Govan

Deputy group chairman and chairman ofStenham Ltd

CEO and non-executive director of each of thematerial subsidiaries

Group CFO and non-executive director of eachof the material subsidiaries

Executive director responsible for company secretaryand general legal functions within the Peregrine group



Executive director

3rd floor, 180 Great Portland Street,London, W1W 5QZ







Stenham Limited

Sean Alan Melnick

Edwin Wulfsohn

Michael Hyam Fienberg

Leon Unterhalter

Sean Kevin Jelley

Paul Maurice Arenson

Kevin Eric Arenson

Damian Brannan

Dominique Christian Montier

Anne Elizabeth Wilby

Wayne Graham Betrand

Patsy Anne Watson

Chairman of Stenham Limited

Deputy chairman of Stenham Limited

Non-executive director of Stenham Limited

Non-executive director of Stenham Limited

Chief financial officer of Stenham Limited

Executive director of Stenham Ltd and managingdirector of Stenham Property Limited

Chief investment officer of Stenham Advisors plc

Managing director of Stenham Asset ManagementHoldings Inc

Senior executive of Stenham Advisors plc

Managing director of Stenham Trustees

Managing director of Stenham Trustees

Director, finance of Stenham Property Limited

3rd Floor, 180 Great Portland Street,London, W1W 5QZ


Kingsway House, Havilland Street,St Peter Port, Guernsey, GY12QE

Kingsway House, Havilland Street,St Peter Port, Guernsey, GY12QE






La Corvee House, La Corvee, Alderney,GY93TQ

Kingsway House, Havillland Street, St PeterPort, Guernsey, GYIZQE


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Citadel Holdings Proprietary Limited

Andrew Pierre Moller

Andries Willem du Toit

Andrew Finlayson

Barend Mattheus Griesel

Chief executive officer and Head of WealthManagement

Chief operating officer

Head of Marketing

Head of Citadel Asset Management responsible forthe asset management tea, Head of Wealth Planning

MontClare Place, 4th Floor, 21 Main Road,Claremont, Cape Town, 7700

Eastwood Office Park, Block B, ProteaHouse, LizJohn Street, Lynnwood RidgeExt 13, 0081

MontClare Place, 4th Floor, 21 Main Road,Claremont, Cape Town, 7700

3rd Floor, 6A Sandown Valley Crescent,Sandown, 2196, Sandton

Citadel Holdings Proprietary Limited (continued)

Marina Knox

Petrus Arnoldus Swart

Jonathan Hertz

Head of Human Resources

Chief Financial Officer

Chairman

Eastwood Office Park, Block B, ProteaHouse, LizJohn Street, Lynnwood RidgeExt 13, 0081

Eastwood Office Park, Block B, ProteaHouse, LizJohn Street, Lynnwood Ridge,Ext 13, 0081

5th Floor, 6A Sandown Valley Crescent,Sandown, 2196, Sandton

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Directors and management Continued

Peregrine Securities Proprietary Limited

Gavin Michael Betty

Warren Hampden Chapman

Johannes Jacobus Esterhuysen

Edward Reuben Ochse

Dean Garreth Murgatroyd

Evan Macris

Director of Peregrine Securities and Managing directorPeregrine Derivatives

Director of Peregrine Securities and Managing directorof Peregrine Equities

Director of Peregrine Securities and Managing directorof Peregrine Fund Platform

Director of Peregrine Securities responsible forderivative consulting

Financial director of Peregrine Securities

Director of Peregrine Securities and responsible forprivate fund trading

5th Floor, Montclare Place21 Main Street, Claremont, 7700


Simeka House, Vinyard Office Estate, 99Jip De Jager Drive, Bellville, 7530

Simeka House, Vinyard Office Estate, 99Jip De Jager Drive, Bellville, 7530



Peregrine Capital Proprietary Limited

David Alastair Kenneth Fraser

Tobias Christiaan Lochner

David Jacques Conradie

Executive director and chairman responsible for theoverall direction of the company and for portfoliomanagement focusing on long/short equity fundstrategies

Managing director responsible for overall managementof the company as well as portfolio managementfocusing on long/short equity fund strategies

Executive director responsible for portfoliomanagement focusing on long/short equity fundstrategies




Definitions

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AUMAssets under management

B-BBEE or BEEBroad-based black economic empowerment

the boardThe board of directors of Peregrine Holdings

CILConsolidated Infrastructure Group Limited

CitadelCitadel group of companies, subsidiary of Peregrine Holdings

the CodesDepartment of Trade and Industry’s B-BBEE Codes of Good Practice

the Companies ActThe Companies Act (Act no. 71 of 2008)

the company, Peregrine Holdings or PeregrinePeregrine Holdings Limited

the groupPeregrine Holdings Limited and its subsidiaries

IFRSInternational Financial Reporting Standards

JSEJSE Limited

King III ReportKing Report on Governance for South Africa 2009

LegaeLegae Securities, division of Peregrine Securities

NalaNala Empowerment Investment Company Proprietary Limited, the B-BBEEpartner of Peregrine

NPATNet profit after tax

Peregrine CapitalPeregrine Capital Proprietary Limited, subsidiary of Peregrine Holdings

Peregrine DerivativesPeregrine Derivatives Proprietary Limited, subsidiary of PeregrineSecurities

Peregrine EquitiesPeregrine Equities Proprietary Limited, subsidiary of Peregrine Securities

Peregrine Financial ProductsPeregrine Financial Products Proprietary Limited, subsidiary of PeregrineSecurities

Peregrine International HoldingsPeregrine International Holdings Limited, the internationally basedoperations wholly owned subsidiary of Peregrine Holdings

PFPPeregrine Fund Platform Proprietary Limited, subsidiary of PeregrineHoldings

PFSPeregrine Financial Services Limited, subsidiary of Peregrine Holdings

Peregrine SecuritiesPeregrine Securities Proprietary Limited, subsidiary of Peregrine Holdings

the previous/prior yearThe year ended 31 March 2012

Sandown CapitalSandown Capital Proprietary Limited

Peregrine SA HoldingsPeregrine SA Holdings Proprietary Limited (previously PeregrineStructuring Proprietary Limited), the holding company of the South Africanoperating subsidiaries, namely Citadel, Peregrine Capital, PeregrineSecurities and other South African subsidiaries

SENSStock Exchange News Service

SEDSocial Economic Development

SHESafety, Health and Environment

StenhamThe Stenham group of companies based in the UK and Channel Islands

SubsidiariesPeregrine SA Holdings; Citadel; Peregrine Capital; Peregrine Derivatives;Peregrine Equities; Peregrine Financial Products; PFP; PeregrineSecurities; Peregrine International Holdings; Stenham and SandownCapital

the year/the year under reviewThe year ended 31 March 2013

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1. Ethical leadership and corporate citizenship

1.1 The board should provide effective leadership based on an ethical foundation. �

1.2 The board should ensure that the company is and is seen to be a responsible �

corporate citizen.

1.3 The board should ensure that the company’s ethics are managed effectively. �

2. Boards and directors

2.1 The board should act as the focal point for and custodian of corporate governance. �

2.2 The board should appreciate that strategy, risk, performance and sustainability are inseparable. �

2.3 The board should provide effective leadership based on an ethical foundation. �

2.4 The board should ensure that the company is and is seen to be a responsible corporate citizen. �

2.5 The board should ensure that the company’s ethics are managed effectively. �

2.6 The board should ensure that the company has an effective and independent audit committee. �

2.7 The board should be responsible for the governance of risk. �

2.8 The board should be responsible for information technology (IT) governance. �

2.9 The board should ensure that the company complies with applicable laws andconsiders adherence to non-binding rules, codes and standards. �

2.10 The board should ensure that there is an effective risk-based internal audit. �

2.11 The board should appreciate that stakeholders’ perceptions affect the company’s reputation. �

2.12 The board should ensure the integrity of the company’s integrated report. �

2.13 The board should report on the effectiveness of the company’s system of internal controls. �

2.14 The board and its directors should act in the best interests of the company. �

2.15 The board should consider business rescue proceeding or other turnaround mechanismsas soon as the company is financially distressed as defined in the Act, if applicable. �

2.16 The board should elect a chairman of the board who is an independent non-executive director. �

The Chief Executive Officer of the company should not also fulfil the role of chairman of the board.

2.17 The board should appoint the Chief Executive Officer and establish a framework �

for the delegation of authority.

2.18 The board should comprise a balance of power, with a majority of non-executive directors. �

The majority of non-executive directors should be independent.

2.19 Directors should be appointed through a formal process. �

2.20 The induction of and ongoing training and development of directors should be conductedthrough formal processes. �

2.21 The board should be assisted by a competent, suitably qualified and experienced �

company secretary.

DescriptionPrinciple Number Compliance

King III compliance checklist

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2.22 The evaluation of the board, its committees and the individual directors should be Partially compliant.performed every year. Refer to page 65

for comment.

2.23 The board should delegate certain functions to well-structured committees but �

without abdicating its own responsibilities.

2.24 A governance framework should be agreed between the group and its subsidiary boards. �

2.25 Companies should remunerate directors and executives fairly and responsibly. �

2.26 Companies should disclose the remuneration of each individual director and certain senior executives. �

2.27 Shareholders should approve the company’s remuneration policy. Partially compliant.Refer to page 72for comment.

3. Audit committee

3.1 The board should ensure that the company has an effective and independent Audit Committee. �

3.2 Audit Committee members should be suitably skilled and experienced independent �

non-executive directors.

3.3 The Audit Committee should be chaired by an independent non-executive director. �

3.4 The Audit Committee should oversee integrated reporting. �

3.5 The Audit Committee should ensure that a combined assurance model is applied to provide �

a co-ordinated approach to all assurance activities.

3.6 The Audit Committee should satisfy itself of the expertise, resources and experience of �

the company’s finance function.

3.7 The Audit Committee should be responsible for overseeing of internal audit. �

3.8 The Audit Committee should be an integral component of the risk management process. �

3.9 The Audit Committee should be responsible for recommending the appointment of the external �

auditor and overseeing the external audit process.

3.10 The Audit Committee should report to the board and shareholders on how it has discharged its duties. �

4. The governance of risk

4.1 The board should be responsible for the governance of risk. �

4.2 The board should determine the levels of risk tolerance. �

4.3 The Risk Committee or Audit Committee should assist the board in carrying out its risk responsibilities. �

4.4 The board should delegate to management the responsibility to design, implement and �

monitor the risk management plan.

4.5 The board should ensure that risk assessments are performed on a continual basis. �

4.6 The board should ensure that the frameworks and methodologies are implemented to increase the �

probability of anticipating unpredictable risks.


King III checklist Continued

180

4.7 The board should ensure that management considers and implements appropriate risk responses. �

4.8 The board should ensure continual risk monitoring by management. �

4.9 The board should receive assurance regarding the effectiveness of the risk management process. �

4.10 The board should ensure that there are processes in place enabling complete, timely, relevant, �

accurate and accessible risk disclosure to stakeholders.

5. The governance of information technology

5.1 The board should be responsible for information technology (IT) governance. �

5.2 IT should be aligned with the performance and sustainability objectives of the company. �

5.3 The board should delegate to management the responsibility for the implementation of an �

IT governance framework.

5.4 The board should monitor and evaluate significant IT investments and expenditure. �

5.5 IT should form an integral part of the company’s risk management. �

5.6 The board should ensure that information assets are managed effectively. �

5.7 A Risk Committee and Audit Committee should assist the board in carrying out its IT responsibilities. �

6. Compliance with laws, rules, codes and standards

6.1 The board should ensure that the company complies with applicable laws and considers adherence �

to non-binding rules, codes and standards.

6.2 The board and each individual director should have a working understanding of the effect of the �

applicable laws, rules, codes and standards on the company and its business.

6.3 Compliance risk should form an integral part of the company’s risk management process. �

6.4 The board should delegate to management the implementation of an effective compliance �

framework and processes.

7. Internal audit

7.1 The board should ensure that there is an effective risk based internal audit. �

7.2 Internal audit should follow a risk based approach to its plan. �

7.3 Internal audit should provide a written assessment of the effectiveness of the company’s system �

of internal control and risk management.

7.4 The Audit Committee should be responsible for overseeing internal audit. �

7.5 Internal audit should be strategically positioned to achieve its objectives. �


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8. Governing stakeholder relationships

8.1 The board should appreciate that stakeholders perception affect a company’s reputation. �

8.2 The board should delegate to management to proactively deal with stakeholder relationships. �

8.3 The board should strive to achieve the appropriate balance between its various stakeholder �

groupings, in the best interests of the company.

8.4 Companies should ensure the equitable treatment of shareholders. �

8.5 Transparent and effective communication with stakeholders is essential for building and maintainingtheir trust and confidence. �

8.6 The board should ensure that disputes are resolved as effectively, efficiently and expeditiouslyas possible. �

9. Integrated reporting and disclosure

9.1 The board should ensure the integrity of the company’s integrated report. �

9.2 Sustainability reporting and disclosure should be integrated with the company’s financial reporting. �

9.3 Sustainability reporting and disclosure should be independently assured. �

The detailed King III compliance checklist is available online at www.peregrine .co.za

Administration

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Secretary and Registered Office

Peregrine Management Services Proprietary Limited(Registration number 1997/003532/07)6A Sandown Valley Crescent, Sandown, Sandton, 2196PO Box 650361, Benmore, 2010Telephone: 27 11 722 7400Facsimile: 27 11 722 7410Website: www.peregrine.co.za

Independent Auditors

KPMG Inc.85 Empire Road, Parktown, 2193Private Bag 9, Parkview, 2122

Transfer secretaries

Computershare Investor Services Proprietary Limited(Registration number 2004/003647/07)70 Marshall Street,Johannesburg, 2001PO Box 61051, Marshalltown, 2107

Corporate Advisor and Sponsor

Java Capital(Registration number: 2002/03186/07)2 Arnold Road, Rosebank, 2196PO Box 2087, Parklands, 2121

Attorneys

Werksmans Attorneys Inc.155 5TH Street, Sandown, Sandton, 2196Private Bag X10015, Sandton, 2146

Commercial bankers

The Standard Bank of South Africa Limited(Registration number: 1962/06073/06)Fourways Crossing Branch1 Twilight Avenue, Lonehill Ext 56, Fourways CrossingPrivate Bag X103, Bryanston, 2021

Nedbank Limited

A division of Nedcor Bank(Registration number: 1951/000009/06)135 Rivonia Road, Sandown, Sandton, 2196PO Box 1144, Johannesburg, 2000

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Peregrine Holdings Limited Registration No: 1994/006026/06 | Share code: PGR | ISIN: ZAE000078127 | (“Peregrine” or “the company”)

Form of proxy

Ordinary resolutions For Against Abstain

1. To adopt the annual financial statements of the company for the yearended 31 March 2013, including the Directors’ Report and thereport of the Audit Committee.

2. To re-elect J Hertz as a director of the company3. To appoint S Sithole as a director of the company4. To not fill the vacancy created by the retirement of LM Ndlovu5. To re-appoint the auditors, KPMG Inc. and Heather Berrange as the

individual registered auditor and to fix their remuneration6. To appoint the following members of the Audit Committee:

6.1 BC Beaver as a member of the Audit Committee6.2 S Sithole as a member of the Audit Committee6.3 SI Stein as a member of the Audit Committee

7. To place unissued shares under directors’ control8. To authorise the directors or the company secretary to sign documentation

Special resolutions

1. To approve the fees payable to non-executive directors2. To grant a general authority to directors to repurchase company shares3. To allot and issue shares to directors and prescribed officers

under the Peregrine Share Incentive Trust

Important Please read notes on the reverse side hereof

For use by holders of certificated Peregrine ordinary shares or holders of dematerialised Peregrine ordinary shares held througha Central Securities Depository Participant (“CSDP”) or broker and who have selected own-name registration, at the Annual GeneralMeeting of the company to be held at 10:00 on Friday, 25 October 2013 (or such later date as is advised on SENS and in the pressin relation to any adjournment of the Annual General Meeting) at 6A Sandown Valley Crescent, Sandown, Sandton, 2196.

Additional forms of proxy are available from the company’s registered office or from the transfer secretaries of the company.

Not for use by holders of the company’s dematerialised ordinary shares who have not selected own-name registration. The CSDP or broker, as thecase may be, of dematerialised Peregrine ordinary shareholders who have not elected own-name registration, should contact such Peregrine ordinary shareholdersto ascertain the manner in which they wish to cast their vote at the Annual General Meeting and thereafter cast their vote in accordance with their instructions.Such instructions should be communicated to the CSDP or broker, as the case may be, in terms of the agreement between the Peregrine ordinary shareholderand his/her CSDP or broker. If such dematerialised Peregrine ordinary shareholder concerned has not been contacted, it would be advisable for them to contacttheir CSDP or broker, as the case may be, and furnish them with their instructions. Dematerialised Peregrine ordinary shareholders who are not own-namedematerialised Peregrine ordinary shareholders and who wish to attend the Annual General Meeting must obtain their necessary letter of representation fromtheir CSDP or broker, as the case may be, and submit same to Peregrine‘s transfer secretaries to be received by no later than 10h00 on Thursday, 24 October 2013.This must be effected in terms of the agreement entered into between the dematerialised Peregrine ordinary shareholder and his/her/its CSDP or broker.If the CSDP or broker, as the case may be, does not obtain instructions from such dematerialised Peregrine ordinary shareholder, they will be obliged to actin terms of the mandate furnished to them, or, if the mandate is silent in this regard, to abstain from voting.

I/We (names in block letters)

of (address in block letters)

being the holder/s of shares in the company

do hereby appoint of

or failing him/her of

or failing him/her the chairman of the Annual General Meeting as my/our proxy to act for me/us at the Annual General Meeting of the companyto be held at 6A Sandown Valley Crescent, Sandown, Sandton, at 10h00 on Thursday, 24 October 2013, and at any adjournment thereof,and to vote for me/us on my/our behalf in respect of the undermentioned resolutions.

Signed at on the day of 2013

Signature Assisted by (where applicable)

184

Notes to the form of proxy

1. This form of proxy is only to be completed by those ordinaryshareholders who are:

1.1 holding ordinary shares in certificated form; or1.2 recorded in the sub-register in electronic form in their

“own name”, on the date on which shareholders must berecorded as such in the register maintained by the transfersecretaries, Computershare Investor Services ProprietaryLimited, in order to vote at the Annual General Meetingbeing Friday, 25 October 2013, and who wish to appointanother person to represent them at the Annual GeneralMeeting.

2. Certificated shareholders wishing to attend the Annual GeneralMeeting have to ensure beforehand with the transfer secretariesof the company (being Computershare Investor ServicesProprietary Limited) that their shares are registered in theirname.

3. Beneficial shareholders whose shares are not registered intheir “own name”, but in the name of another, for example, anominee, may not complete a proxy form, unless a form ofproxy is issued to them by a registered shareholder and theyshould contact the registered shareholder for assistance inissuing instruction on voting their shares, or obtaining a proxyto attend, speak and, on a poll, vote at the Annual GeneralMeeting.

4. A Peregrine shareholder may insert the name of a proxy orthe names of two alternative proxies of the shareholder’s choicein the space. The person whose name stands first on the formof proxy and who is present at the Annual General Meetingwill be entitled to act as proxy to the exclusion of those whosenames follow.

5. A proxy appointed by a Peregrine shareholder in terms hereofmay not delegate his authority to act on behalf of the Peregrineshareholder to any other person.

6. If duly authorised, companies and other corporate bodies whoare shareholders of the company having shares registered intheir own name may, instead of completing this form of proxy,appoint a representative to represent them and exercise all oftheir rights at the meeting by giving written notice of theappointment of that representative. This notice will not beeffective at the Annual General Meeting unless it is accompaniedby a duly certified copy of the resolution or other authority interms of which that representative is appointed and is receivedat Computershare Investor Services Proprietary Limited, atGround Floor Marshall Street, Johannesburg, to reach thecompany by no later than Wednesday, 23 October 2013.

7. A Peregrine shareholder’s instructions to the proxy must beindicated by means of a tick or a cross in the appropriate boxprovided. Failure to comply with the above will be deemed toauthorise the proxy to vote or to abstain from voting at theAnnual General Meeting as he/she deems fit in respect of allthe Peregrine shareholder’s votes exercisable thereat relatingto the resolutions proposed in this form of proxy.

8. The forms of proxy must be lodged at Computershare InvestorServices Proprietary Limited, Ground Floor, 70 Marshall Street,Johannesburg, 2001 or posted to PO Box 61051, Marshalltown,2107 so as to be received by not later than 10h00 on Thursday,24 October 2013.

9. The completion and lodging of this form of proxy will notpreclude the relevant Peregrine shareholder from attendingthe Annual General Meeting and speaking and voting in personthereat to the exclusion of any proxy appointed in terms hereof,should such Peregrine shareholder wish to do so. In additionto the aforegoing, a Peregrine shareholder may revoke theproxy appointment by (i) cancelling it in writing, or making alater inconsistent appointment of a proxy; and (ii) delivering acopy of the revocation instrument to the proxy, and to thecompany. The revocation of a proxy appointment constitutesa complete and final cancellation of the proxy’s authority toact on behalf of the Peregrine shareholder as at the later ofthe date stated in the revocation instrument, if any; or the dateon which the revocation instrument was delivered in the requiredmanner.

10. The chairman of the Annual General Meeting may reject oraccept any form of proxy which is completed and/or receivedother than in compliance with these notes.

11. Any alteration to this form of proxy, other than a deletion ofalternatives, must be initialled by the signatory/ies.

12. Documentary evidence establishing the authority of a personsigning this form of proxy in a representative capacity must beattached to this form of proxy unless previously recorded bythe company.

13. Where there are joint holders of Peregrine shares;13.1 any one holder may sign this form of proxy; and13.2 the vote of the senior (for that purpose seniority will be

determined by the order in which the names ofshareholders appear in the register of members) whotenders a vote (whether in person or by proxy) will beaccepted to the exclusion of the vote(s) of the other jointholder(s) of Peregrine shares.

14. This form of proxy may be used at any adjournment orpostponement of the Annual General Meeting, including anypostponement due to a lack of quorum, unless withdrawn bythe Peregrine shareholder.

15. The aforegoing notes contain a summary of the relevantprovisions of section 58 of the Companies Act, as required interms of that section.

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