Sustainability is the concept of building long term value for all stake holders in the business, beyond the need to meet short term profitability targets. Sustainability reporting traditionally measures the commitment of a company to corporate citizenship and includes the measurement of a company’s non-financial performance and its contribution to economic, social and environmental issues affecting stakeholders of the company and the communities in which the company operates.

Over the past few years the group has focused on building businesses which are market leaders in the areas of wealth and asset management, thereby creating a platform for sustainable financial performance and long term growth.

The group proudly nurtures an entrepreneurial and innovative culture. Our challenge is to couple this spirit of entrepreneurship with the responsibility and discipline that is required to ensure sustainability. In this regard, we have taken care in ensuring that business growth is matched with an ongoing investment in meeting the governance, risk and compliance structures necessary to protect investors, clients and other stakeholders.

Whilst the group does not formally monitor or measure its non-financial performance in all areas, this does not lessen our commitment to corporate citizenship. We have, as part of the focus of building profitable businesses concentrated on areas that are most material to the business, those which best tie into the group’s business strategy and those where we can best allocate resources to make a lasting impact. Over the past year these have included the roll out of the group’s BEE initiatives, ongoing investment in staff and their working environment and investment in various CSI initiatives.

The group will seek each year to broaden and improve its approach to managing sustainable development. As a financial services company operating mainly in South Africa, we continue to believe that we are able to make a meaningful positive impact, proportional to our own economic and financial success, through responsible and targeted social investment and transformation. For the immediate future, we will continue to focus our efforts in these areas.

Economic performance

Despite a decline in earnings and headline earnings per share, the group’s performance in difficult market conditions was underpinned by acceptable cash generation.

With the inclusion of the results of the Stenham group, wealth created decreased by 27% for the year. Distributions to the various stakeholders in the business are as set out below:

Value added statement for the year ended 31 March

¹ Taxes and levies for the year ended 31 March 2009 represent preliminary numbers.
² Deferred taxation is classified as a distribution to government as part of taxes and levies.
³ Minority interests are classified under shareholders.

Transformation

Peregrine continues to support and strive toward meaningful and sustainable transformation. Transformation and broad based black economic empowerment are critical in creating a sustainable business in South Africa. The group’s transformation strategy is aligned and guided by the Codes of Good Practice on broad based black economic empowerment (Codes) as specified by the Department of Trade and Industry.

The group has developed its transformation strategy across all seven elements of the empowerment scorecard as defined by the Codes. A formal measurement framework allows measurement of its progress, both in terms of legislated, as well as its own internal targets. In this regard scorecards have been developed for each subsidiary and for the group as a whole, and individual strategies have been defined for each business, in consultation with management and in response to areas for development as highlighted by that subsidiary’s scorecard.

The group’s long term strategy will strive to improve the group’s scoreboard. It is recognised, however, that formal measurement criteria and outcomes will need to be balanced with the unique requirements and business imperatives of each of the group’s businesses in order to facilitate effective and meaningful change on both a social and commercial level.

Transformation is overseen by the group’s transformation forum. Membership includes staff from all business units, races, sexes and occupational levels across the group. The forum’s role is to focus on all aspects of transformation, providing guidance to the board and management in making decisions on strategy and the implementation thereof in so far as they affect both the Peregrine group and its staff. The transformation forum provides a platform for consolidating the group’s various initiatives into a longer term strategy integrated with broader business strategies.

The forum challenges initiatives, acts as a sounding board for the business on perceptions, expectations and the experiences of staff in all subsidiaries and allows management to evaluate the internal climate relating to transformation and diversity.

A summary of the group’s progress on transformation is set out below.

Ownership

14% of the group’s issued share capital is held by a BEE consortium led by Vunani Capital (Pty) Ltd and Phatsima Finance (Pty) Ltd. The consortium also includes a women’s grouping and three trusts, established by Peregrine, each of which were allocated a portion of the BEE transaction shares.

The objectives of the trusts are as follows:

• The staff trust has made share allocations to and for the benefit of members of management and staff of the Peregrine group (but excluding its directors), who qualify in terms of BEE legislation;

• The community development trust will apply the benefits flowing from the ownership of shares to the upliftment of natural (principally black) persons in the advancement of broad-based BEE and transformation;

• The educational trust will apply the benefits flowing from the ownership of shares to the upliftment of natural (principally black) persons in the advancement of broad-based BEE and transformation, through education.

In addition to BEE ownership at a Peregrine Holdings level, 20% of the shares in PeregrineQuant (Pty) Ltd are owned by a consortium of empowerment partners.

Management and control

The board comprises 25% black representation and 13% black female representation.

As an ongoing initiative the group seeks to employ black professionals within the ranks of senior management. The group recognises the challenge in finding experienced professionals in the specialist areas in which it operates. Investment in skills development and training at a professional level, both financially and through appropriate mentorship programmes has been identified as a key area of focus. As far as possible the educational trust will direct resources to skills development within the areas of the financial services sector in which Peregrine operates.



Employment equity and skills development

The group has developed a group employment equity plan incorporating employment equity and transformation targets. The plan sets out targets to 2014. The group continues to align our employment equity and skills development plans with the targets presented by the Codes. This will ensure the alignment and application of transformation principles on all levels of staffing, employment equity and skills development. Progress against these targets is monitored annually. Strategies developed at an individual business level have been aligned with the core principles of the employment equity plan and with the group’s recruiting strategies in order to ensure the achievement of group targets.

Relationships with recruitment agencies with a high BEE rating have been developed. The database of appropriate agencies is used in all recruitment processes. Within its recruitment strategies, the group favours the appointment, empowerment and advancement of previously disadvantaged individuals. At year end black staff comprised 37% of total staff with black female representation increasing to 26% of total staff. During 2008, 50% of new staff appointments were black and 33% black females.

Skills development

Skills development remains a crucial component of the group’s transformation strategy. Whilst the strict requirements of the code within this category look to internal skills development, the skills requirement of the group, as well as the financial services sector generally is highly specialised and it remains a challenge to find industry and company specific SETA learnership programmes The strategic intent of the group’s skills development programme has thus been broadened to address development at all levels: internally, through investment in the development of employees and externally, through the group’s bursary programme, which aims to provide the group and financial services sector with skilled and educated young black professionals over the longer term. Within its bursary programme the group currently supports 10 tertiary and 3 school students. The majority of the tertiary students are in their second year of study toward degrees that would be relevant to employment within the sector. The programme has been in place for 2 years; during the course of the ensuing year we intend furthering our involvement with the students through part-time employment with the ultimate aim of finding candidates who will be suitable for employment within the group. In addition, education and the development thereof is a core component of the group’s social investment (CSI) programme as a result of which the group invests in initiatives that develop learners, teachers and school leavers, as more fully described in the section on CSI.

Five black staff members within Citadel are part of an internal graduate programme. The programme, which incorporates an intensive technical or academic focus as well as daily mentoring and supervision, is business specific and focuses on the development of core competencies for the business selected. It is anticipated that such programmes will prove to be a successful intervention for sustainable skills development and effective career pathing; the individuals involved being developed are not only active participants in the programme but are able to utilise the programme to build long term careers within the group.

Despite the small numbers and the problems experienced the group remains committed to developing a sustainable learnership and internal graduate programme.

Other initiatives that are currently in place include:

• ABET training which is currently taking place, in order to up-skill staff to the point where they are equipped to partake in a registered learnership program. Two black staff are receiving individualized training to develop reading and writing skills;

• Informal mentoring is taking place throughout all of the subsidiaries. During the course of the coming year, a system to formalise and report these interventions more effectively will be implemented. The group is a learning organisation where everyone is supported and challenged to continuously broaden their experience, competence and exposure. The group’s open door policy promotes this culture;

• Book summaries are available to all, thus allowing staff to access and read any topic from self-development or soft skills to highly technical industry specific material.

Procurement policies

Peregrine is dedicated to furthering black economic empowerment through the use of predominately black owned (shareholding) and black staffed suppliers. Implementation of preferential procurement has been difficult as there is no common reporting standard for BEE suppliers. The group’s advisors have assisted with the development of a procurement policy and where practical and possible, the group’s network of suppliers reflects its intention to support BEE objectives. The project has resulted in a better view and understanding of our current position as well as identified possibilities to support black entrepreneurs and SME’s. This is an ongoing are of focus where improvement is possible.

Enterprise development

As part of its proprietary investment activities, the group has acquired an equity stake in and has provided debt financing to the Leswikeng and Phatsima group of companies, a broad based BEE initiative. Leswikeng and Phatsima acknowledge that, although black economic empowerment should be driven primarily by entrepreneurs, the benefits must be shared with the community at large. Leswikeng and Phatsima have a wide range of interests spanning the construction, mining, aeronautical, information technology and financial sectors. Executives of the Peregrine group are involved in providing ongoing operational support to the company.

Social investment

The Peregrine group recognises its responsibility towards assisting in the upliftment of the people of our country and is dedicated to making a meaningful long-term contribution to the well-being of South Africa. The group is committed to spend an annual amount of approximately 1% of after tax profit on various CSI initiatives. As the expenditure committed in any year is based on the prior period’s profitability, the actual spend for the current year amounted to approximately 10% of after tax profits (excluding Stenham).

The group has chosen several projects where it feels it can make a meaningful impact guided by the principles of sustainability and real long term investment. Peregrine’s primary focus is on education, but investment is also made in projects within the areas of youth development, sport and the environment.



With the growth of the group’s profitability, there is an increasing financial commitment to invest in CSI. Over the past two years the group has cemented relationships with a number of organisations that resonate with the group’s CSI objectives and with whom the group feels confident building long term partnerships. The decision to build long term relationships with our CSI partners provides security and stability to the projects. It further fosters a sense of participation, inclusion and connection between the group and the projects. On the other hand, the ongoing support of projects is not guaranteed. Organizations present to the CSI committee at the start of each year and in order to ensure that project deliverables are met the CSI team conduct site visits and maintain continuous communication and feedback with our CSI partners. This process and the close relations with our partners give us the comfort that our involvement and financial contribution truly reach the disadvantaged communities for which it is intended. Over time, the community development trust, established as part of the group’s BEE transaction will provide a greater opportunity to expand the social investment programme.

Peregrine House

Peregrine has, through its initial sponsorship of the Soccer Youth Academy, over several years developed a relationship with the Forwardzone Sports Agency, in developing the skills of talented young soccer players from previously disadvantaged communities.

During 2008, Peregrine partnered with Forwardzone in founding Peregrine House, a residence in Johannesburg which became the home for twelve young boys, selected from impoverished communities around the country, each of whom display talent in soccer. The residence provided a safe and secure environment where all aspects of the players’ lives, including education, nutrition, health and sports activities were managed so as to equip the players with the life skills necessary for success both on and off the soccer field. Over the course of the year under review, the players attended a structured life skills program incorporating computer education and financial wellness and exposing the boys to business leaders through a “lessons in leadership’ series. Peregrine staff developed the financial wellness component of the series which focuses on key financial topics aimed to teach the players to understand the management and psychology of money.

In January 2009, a decision was made to relocate the boys to a sports orientated boarding school in Pretoria where they can interact in a more mainstream environment. Peregrine continues to support and monitor their progress.

MaAfrikaTikkun

Peregrine has been a keen supporter of MaAfrika Tikkun since 2003. MaAfrika Tikkun is a dynamic multi-cultural NGO whose vision it is to be one of the leading community service providers in South Africa focusing on key areas of national and social concern. As a developmental organisation rather than a charity, MaAfrika Tikkun aims to build sustainability into its projects, initially assisting communities to get on their feet but ultimately empowering them to undertake and manage activities to uplift themselves

One of the first communities to benefit from this partnership was Diepsloot, through the “Wings of Life” project and more recently Mfuleni, a poverty stricken township in the Western Cape. Wings of Life is a community outreach project comprising of three organisations which have networked together to provide the Diepsloot Community, north of Johannesburg, with a comprehensive range of services aimed at alleviating the impact of extreme poverty, HIV/AIDS and poor infrastructure. As a second project, Peregrine was sponsor to a joint venture with the Unicity of Cape Town, MaAfrika Tikkun and the Department of Water Affairs and Environment in the construction of a community centre in Mfuleni.

Over the course of the last year, Peregrine partnered with MaAfrika Tikkun in the building of a youth centre at The Wings of Life site in Diepsloot. The centre houses a library, computer training facilities and multimedia centre intended to provide learners in the area with a safe environment to study, coupled with access to career guidance and support counselors. Peregrine provides the ongoing support to maintain staff and operate the computer centre.

Study Trust

Study Trust is an organisation that provides opportunities for school learners and tertiary students who do not have financial support to educate themselves further. Study Trust‘s 90% pass rate amongst its students is attributable to its intensive selection process and hands-on mentoring approach.

The Peregrine group selected Study Trust to manage the group’s bursary programme. Our focus is to find exceptional students who would like to further their education in a field relevant to the group and the financial services sector generally. Ultimately we hope to be in a position to provide employment to some of the students that have benefited from the group’s bursary programme. Peregrine is currently supporting ten tertiary students nationally.

Gold Peer Education Development Agency

The Gold Peer Education Development Agency (GOLD) was formed to proactively respond to the increasing incidence of HIV infections amongst youth. GOLD is a non-profit organisation playing a key role in the transformation of under-served communities in Sub-Saharan Africa through the roll out of a long term adolescent peer education model.

The GOLD model is based on positive peer pressure; it is about equipping young people to impact their peers and ultimately to transform a community, one person at a time through its teenagers.

Through a site visit during the course of last year, Peregrine experienced first hand the hope and vision that the GOLD model restores to individuals in equipping them with the skills to face the daily challenges that they face in their lives. The program that we support provides training to a group of youth leaders in the Western Cape and Kwazulu Natal, equipping the participants with skills in the areas of training and facilitation, counseling, project management, Aids, community development and leadership. By enacting personal change in the youth leaders, the leaders act as change agents through informal and formal contact with peers. Peer groups and micro communities in participating schools are influenced to make healthy and positive decisions in their own lives so impacting the broader communities with which they interact.

Last year 121 secondary schools implemented the model in KwaZulu-Natal, Mpumalanga and the Western Cape.

ORT South Africa

ORT is the largest non-governmental international Jewish education network, providing technology (maths and science) education and training on five continents.

ORT South Africa was established in 1936 and has been part of community development projects in a number of disadvantaged areas.

Due to the well recorded lack of school leavers with appropriate maths and science qualifications, Peregrine partnered with ORT SA in a programme, based in Soweto, which provides over 80 teachers with practical tools to enhance their teaching skills in this area. The ultimate outcome of the "teach the teachers" project is to encourage learners to pass these subjects on higher grade so as to increase their chances of tertiary admissions.

Bona Lesedi

Five years ago Peregrine adopted Bona Lesedi, a project in Diepsloot that caters for physically handicapped children with learning disabilities. Since our involvement we have helped to transform the school into a colourful village, assisted the school in becoming self funding and generally provided the support to boost the morale of volunteers.

Our focus going forward is to assist Bona Lesedi in becoming a more sustainable organisation.

Annual outreach days

Each office in the Peregrine Group enjoys an annual outreach day where staff members take the day off work to invest their time and hearts in a community of their choice.

Last year the Sandton office took 120 children from Diepsloot to the Johannesburg Zoo, the Pretoria office distributed blankets, food and clothing to poor communities, staff members in Cape Town did renovations at three schools in the area, and the Durban office visited an old age home.

Human resources

As with any financial services company, Peregrine recognises that its staff are its most valuable asset and the loss of key staff a significant risk to the group. As such, the creation of an environment that meets the long-term goals and aspirations of staff is key to the success of the group and inherent in the group’s strategic business initiatives. Peregrine aspires to employ people who align themselves financially, morally and emotionally with the group.

Due to the different size of the group’s businesses and the different areas in which the businesses operate, Peregrine allows a great deal of flexibility to each of the businesses in deciding how best to achieve these goals.

With particular reference to the issues of staff well-being, outside of legislative requirements and staff remuneration, some of the initiatives undertaken within the group include:

• a women’s focus group formed to understand and address gender issues and the role and challenges facing women within the group;

• an internal wellness programme including HIV/AIDS training, on-site testing of eyesight, blood pressure, cholesterol and diabetes, psychological counseling and access to a dietician and weight watchers programme;

• a financial wellness programme whereby staff are offered the services of internal experts at no cost in order for them to better understand and plan for their financial independence, and

• an internal CSI programme directed towards providing dignity and support to certain previously disadvantaged employees through the provision of ongoing financial support to meet housing, transport and medical requirements.

Environmental

The group operates in a sector that has limited direct environmental impact although it has the ability to make an environmental contribution through usage and procurement policies and indirectly through its investment decisions.

During the course of the year under review, the group established a green forum with representation in each of its various office locations throughout SA. To date, the forum has managed the implementation of a number of energy saving and recycling initiatives.

In addition, the green forum has recently completed a process of measuring the group’s and each of the subsidiary’s carbon footprints using the first SA carbon calculator developed by Food and Trees for Africa. The carbon footprint is based on four criteria: air and motor travel and paper and electricity usage. The intention is to use the measurement to reduce the group’s carbon emissions, through a combination of tree planting and reduction in usage in each of the relevant areas. The measurements will be used to set consumption targets and to measure progress against these targets.