BUSINESS SEGMENTS REVIEW

BUSINESS SEGMENTS REVIEW CITADEL Citadel 2017 2016 Revenue R822 million R788 million Headline earnings R174 million R183 million Assets under management R44.6 billion R44.9 billion Advice is the cornerstone of the Citadel offering, not only on where to invest, but, more importantly, how and why. As a leading private client wealth management business, with 24 years experience and 432 employees, Citadel s key differentiator in an increasingly crowded market is the Group s unwavering client-centric approach. Supporting this promise of deep client understanding, solid values and personal attention is the quality of Citadel s human capital. It is thanks to Citadel s professional staff that the company ensures a hands-on approach to client engagement, in both good and challenging times. The previous financial year was one of expansion and growth for the Citadel talent pool, with the consolidation of two strong business acquisitions into the Citadel Group. In April 2016, after two years as a wholly-owned subsidiary of Citadel Holdings Proprietary Limited, The Wealth Corporation Proprietary Limited officially merged into the Citadel brand by changing its name to Citadel Wealth Proprietary Limited. Parallel to this process the integration of Consolidated Financial Planning Proprietary Limited led to its renaming as Citadel Financial Planning Proprietary Limited. BayHill Capital Proprietary Limited ( BayHill Capital ), 100% held by Citadel Holdings for the current reporting year, was launched as a specialist private client share portfolio company in January 2016. BayHill Capital changed ownership in April 2017 with Citadel Holdings retaining a 49% stake and the remaining 51% being sold to African Financial Group Wealth Proprietary Limited ( AFG ). For Citadel as a whole this event was an auspicious start to the year, marking a Broad-Based Black Economic Empowerment (B-BBEE) deal between Citadel Holdings and AFG, a voluntary transformation transaction, the likes of which has not been seen before in the financial services industry. Since 1994 there has been a significant increase in net emerging wealth in South Africa, yet there is no market offering that sees this wealth being reinvested back into building the emerging market segment. To address this, BayHill Capital s suite of transformational portfolios is aimed both at earning good returns for investors, as well as driving economic transformation using emerging capital. BayHill Capital portfolios also offer companies the potential to achieve the ownership scorecard targets of the B-BBEE Act. Citadel s client-focused approach to investing and growing wealth sustainably is embedded in the Group s philosophy. There are no fixed, matrices which advisors subscribe to, instead the approach is underpinned by understanding what each and every bespoke client wants their money to achieve. As a result, Citadel traditional business boasts a client retention rate of 97%. Solutions offered by Citadel are global in nature and include financial planning, asset and investment management, estate planning and structuring, risk planning, private client securities, foreign exchange and treasury, offshore structuring, philanthropy, corporate solutions and retirement planning for both high net worth and mass affluent individuals and families. After a year of acquisitions and organic growth, the period ended March 2017 was one of integration and brand repositioning for the business. This approach was underlined by a solid company performance, achieved within an often uncertain South African setting. Over the period revenue increased by 4% to R822 million (2016: R788 million) for the year ended 31 March 2017. Assets under management and advice dipped slightly to R44.6 billion (2016: R44.9 billion) on the back of a challenging business environment, as well as the strengthening of the Rand against the US Dollar at year-end adversely impacting assets under management closing balances. This was achieved against a global economic backdrop that served up mixed results and continues to battle with uncertainty. While investor confidence showed improvement in the likes of the United States, and with the Eurozone continuing to post growth and reduce unemployment to single digits, the South African market remains challenging, making the Citadel Group s performance all the more commendable. During the past year Citadel published frequent views on South Africa s deteriorating credit metrics, the inevitability of a ratings downgrade and the rationale for Citadel s underweight allocation to South African bonds. With markets and emotions bound to be tested during such trying times, the importance of strong basics were again highlighted. Citadel stands firmly by the four pillars of its investment philosophy, focusing on asset allocation, valuation, managing risk and preparing for an uncertain future, while seeking out opportunities as they arise. Citadel believes this approach will stand our clients in good stead over the years to come. Looking forward In the near- to mid-term, Citadel will continue looking for opportunities to participate in industry consolidation; actively looking to build the business through IFA acquisition and joint ventures which will provide client rock pools. In addition, Citadel will look to grow its footprint through the establishment of regional offices, leverage off the existing integrated infrastructure, expand its investment solutions, continue to enhance its technology offering, and grow its business through heightened brand awareness. All of this will shift Citadel closer to realising its ultimate vision of being the best wealth management company in South Africa. Complementing this focus, given the structural changes which have taken place at Citadel Group level over the past years, there will be a marketing drive to further build brand awareness and promote the message of its improved product and service offering. Citadel will also commence with the production of a new television commercial, which will be broadcast in August 2017. As 2017 unfolds, the business will be challenging clients and staff to reach their remarkable. It is a journey Citadel will be following as a whole as it looks to leverage off a new dynamism and increased expertise. PAGE 1

PEREGRINE SECURITIES Peregrine Securities 2017 2016 Revenue R804 million R888 million Headline earnings R115 million R108 million Peregrine Securities houses the Peregrine Group s equity broking, derivative broking and prime broking entities. Through its operating subsidiaries, the business is one of the largest stock-broking operations in South Africa, and is a top JSE equity and derivative member by volume and deals processed. The client base includes local and foreign hedge funds, investment banks, institutional fund managers, life assurers, private wealth managers and high net worth individuals. Niche focus on electronic execution, derivatives and prime broking services. The business model is underpinned by a foundation in technology and electronic trading, offering best execution services and infrastructure, as well as trading products across asset classes. Provides access to South African, African and International markets including the following asset classes: Equities, Equity derivatives, Currencies, Bonds and Commodity derivatives. The offering is augmented by an electronic multi-asset prime broking execution and reporting platform, seamless trading products, securities lending and robust market connectivity. Top rated Derivative and Quantitative Research, with bespoke consulting and product solutions to clients. Specialist experience in South African trading intricacies and high volume trading associated with hedge funds and active traders. This provides the client base with access to a highly trained team focused on robust volume trading and high touch client service, as well as access to established relationships with industry participants including administrators, financial institutions, regulators and investors. The financial performance for the year was challenging as a result of the tough financial market environment. Despite these challenging times, headline earnings (including a newly established offshore entity) grew by 6% from R108 million in 2016 to R115 million in 2017. In the coming year, the business intends to prioritise the following: focus on niche areas of expertise, while continuing to service, grow and diversify the existing client base; navigate the changing regulatory and compliance environment, and dynamically adapt the business model where required; improve processes, technology innovation and product rollout across chosen business segments; consolidate market position and grow earnings where possible within a higher barrier to entry environment; manage the cost base and associated operational complexities of the business; retain and develop the existing human capital within the business units; and augment the overall client experience through innovation, service, technology and brand positioning. PAGE 2

STENHAM Stenham Asset Management 2017 2016 Revenue R261 million R313 million Headline earnings R22 million R36 million Assets under management R48,8 billion R50,5 billion Stenham Trustees 2017 2016 Revenue R209 million R309 million Headline earnings R28 million R49 million Property Portfolio 2017 2016 Headline earnings R25 million R73 million Stenham is an international financial services group based in the UK and Guernsey and has been active in investment management for over 25 years. The Stenham Group provides a range of alternative asset management investment solutions and fiduciary services, operating in a number of jurisdictions primarily the Channel Islands and United Kingdom, with assets under management of R48,8 billion (2015: R50,5 billion). The Stenham Group provides alternative asset management investment solutions, operating through two independent divisions: Stenham Asset Management, primarily an asset management business and Stenham Trustees, which provides trust and corporate administration services. During the year, further repurchase transactions took place in Stenham, the Group s UK based asset management subsidiary. As a result, Peregrine s share in Stenham increased from 85.08% to 88.81% and subsequent to year end increased to 100%. Peregrine s share of Stenham s headline earnings reflected a decrease of 48% to R74 million (2016: R144 million). For Peregrine, the strengthening of the Rand against the British Pound Sterling (Sterling) had negative impact. Stenham Asset Management Stenham Asset Management provides market leading investment solutions to institutions, charities, private banks and family offices, including both discretionary portfolios and funds. The business aims to deliver consistent capital growth, implemented through a strategy of diversification to control the level of risk in a client s portfolio. Excluding the once off costs of settling a claim which arose in prior periods, Stenham Asset Management performed reasonably against a backdrop of muted global market returns. Revenues in Sterling terms have decreased primarily due to decreased performance fees. Total assets under management and advice amounted to $3.6 billion (March 2016: $3.4 billion), with net outflows amounting to $44 million during the period under review. Operating costs have decreased significantly due to cost savings initiatives. Stenham Trustees Stenham Trustees, operating from Alderney and Guernsey, advises international clients on the establishment of a comprehensive range of onshore and offshore structures which it also administers. Stenham Trustees performed satisfactorily in an ever increasing regulatory cost environment. These results now incorporate the results of the newly established Bellerive 50% joint venture, into which a portion of the trust business was transferred with effect from 1 April 2017. Property portfolio The Stenham property portfolio was significantly impacted by the material drop in the market value of Stenham s investment in Stenprop Limited which acquired the Stenham Property business in exchange for Stenprop Limited shares with effect from 1 October 2014. Earnings were however enhanced by significant gains made on the sale of certain properties that were retained by Stenham with the intention being to realise the remaining properties over time as well as the receipt of the dividends received from the holding in Stenprop Limited. Stenham remains strongly cash-flow generative, with no long-term debt and cash available to augment future growth. PAGE 3

PEREGRINE CAPITAL Peregrine Capital 2017 2016 Revenue R217 million R202 million Headline earnings R51 million R49 million Assets under management R6,5 billion R5,9 billion Assets under advisory mandates R1,7 billion R1,4 billion Peregrine Capital is a long-established asset management company dedicated to only managing hedge funds, which have delivered exceptional results since inception. The funds managed by Peregrine Capital are underpinned by a common investment philosophy and style, with four different investment strategies, namely High Growth, Dynamic Alpha, Pure Hedge and Flexible Yield. The investment team is made up of highly qualified and experienced investment professionals with complementary knowledge and market skills, but similar investment DNA. In the complex landscape of investing, whether in bull or bear markets, the Peregrine Capital suite of hedge funds provide investors with the means to reduce portfolio risk, increase returns and diversify their investments. This is achieved by disciplined and thorough research procedures, which are underpinned by sound bottom up fundamental company research. This is augmented by Peregrine Capital s long term corporate relationships. Hedge funds in South Africa were regulated under the Collective Investment Schemes Control Act 45 of 2002 ( CISCA ). During the 2017 financial year, Peregrine Capital successfully transitioned all its unregulated hedge funds into Qualified Investor Hedge Funds under CISCA. The asset base, including assets under advisory mandates, grew by 13% to R8,23 billion, predominantly as a result of investment performance, and to a lesser extent investor flows. The higher revenues experienced in 2017 are as a result of the increased assets under management. The net returns for the year were: Peregrine Capital High Growth H4 QI Hedge Fund 12.6% Peregrine Capital Dynamic Alpha H4 QI Hedge Fund 15.6% Peregrine Capital Pure Hedge H4 QI Hedge Fund 13.4% Peregrine Capital Flexible Yield H4 QI Hedge Fund 23.9% The JSE All Share Index returned 2.53% for the same period on a total return basis. The US growth outlook is optimistic driven by government spending, while the outlook in Europe and Japan remains muted. Global short rates in EU / Japan / UK are likely to remain low for an extended period driven by low growth and low inflation. Regular terrorist attacks, Brexit and President Donald Trump s policies have resulted in an increase in geopolitical risk and the potential for future volatility. Emerging markets could see some growth improvement due to higher commodity prices, however many African countries are exposed to significantly lower oil and other commodity prices, which will have an effect on their growth and currency outlook. The removal of Pravin Gordhan as Finance Minister contributed to S&P and Fitch downgrading South Africa s foreign currency rating to junk. It is likely that this change will also result in higher government expenditure, higher tax rates, and a reduction in SA s structural growth prospects. Feedback from corporates reflects a difficult consumer environment. Political changes are likely to dampen consumer and business confidence, which will further depress any potential recovery. Accordingly, the funds remain conservatively positioned, with liquidity becoming more important in light of the macroeconomic uncertainty. Peregrine Capital continues to follow its bottom-up investment process, which has historically produced well priced investment opportunities, regardless of market or economic conditions over the medium term. PAGE 4

JAVA CAPITAL Java Capital 2017 2016 Headline earnings R39 million R27 million Java Capital is a leading independent corporate finance, Merger & Acquisitions (M&A) and equity capital markets business, providing advisory and equity capital raising services to listed and privately held companies, institutions and entrepreneurs. Java Capital has an excellent reputation and is a well-regarded brand off which it generates strong deal flows. Java Capital provides a complete range of financial, commercial, tax and legal advisory and transaction execution services. It is licensed as a sponsor of companies listed on the JSE and as a designated advisor on the JSE s AltX exchange. With effect from 1 July 2014, the Peregrine Group acquired a 50% shareholding in Java Capital. Over the reporting period Java Capital experienced strong deal flow in both its general corporate finance/m&a and in its equity markets divisions. During this period the business: raised circa R25.5 billion (2016: R23 billion) of equity capital (principally in the listed property sector); and executed on some 83 (2016: 115) M&A and or corporate finance transactions. In the DealMakers rankings (for the 12 month period ended 31 December 2016) Java Capital was ranked: M&A Advisor of the Year 1st place for M&A Sponsors (by deal flow); 1st place for General Corporate Finance Sponsor (by deal flow); 2nd place for M&A Investment Advisors (by deal flow); 3rd place for M&A Sponsors (by deal value); and 4th place for General Corporate Finance Sponsor (by deal value). In addition to this, Global Finance recently announced its Best Investment Banks 2017 awards in which Java Capital was selected as Best Equity Bank and also Best Boutique Investment Bank in Africa 2017. Java Capital s general corporate finance and equity capital markets pipeline remains strong. The business remains focused on providing the South African corporate finance markets generally, and more specifically the listed property sector with an integrated, highly solution-orientated professional corporate finance, tax, equity capital markets and transaction support service. Java Capital continues to explore opportunities to expand its brand into different areas, leveraging where appropriate off the other businesses within the Peregrine Group. PAGE 5