Making a meaningful contribution
South Africa’s financial services sector has always been governed by a stringent set of codes. Prior to 1 December 2017, the sector was governed by the Financial Sector Charter (the Charter) which came into effect in January 2004.
With effect from 1 December 2017, the Charter was replaced by the Financial Sector Code (the Code) which commits all participants to actively promote a transformed, vibrant and globally competitive financial sector that reflects the demographics of South Africa and which contributes to the establishment of an equitable society by providing accessible financial services to black people (as defined in the B-BBEE Act) and by directing investment into targeted sectors of the economy.
In accordance with Peregrine’s commitment to transformation, the Group has, with the advice of external consultants, embarked on implementing a three-year plan which will see it seek to comply with the elements of the Code, particularly the priority elements. As a result, none of the Group’s entities, other than Peregrine Equities (which is in the process of being rated for the year ended 31 March 2017) have elected to be rated under the Code at this stage.
In addition, in order to comply with the requirements of the B-BBEE Act, the B-BBEE Amendment Act and the subsequent B-BBEE Regulations, in terms of which all JSE listed companies are required to submit an annual compliance report to the B-BBEE Commission, Peregrine Holdings has undertaken a separate verification audit. The annual compliance report for the year ended 31 March 2018 is based on Peregrine Holdings’ B-BBEE certificate, which takes into account that Peregrine Holdings has no employees and is merely a holding company, including the holding company of offshore entities to which B-BBEE is not applicable. Click here for the annual compliance report and B-BBEE certificate.
Please note: The information and statistics in this section of the report reflect Peregrine Group’s South African subsidiaries and, unless otherwise specified, do not include joint ventures or associates.
Peregrine is committed to transformation, and views it as a critical business imperative, not only for the Group’s sustainability, but also as a means to make a meaningful contribution in the larger South African society in which it operates. Peregrine further acknowledges the reputational and operational risk inherent in failing to meet its B-BBEE objectives. To this end the Group has an established Group Transformation Forum (GTF) which meets at least three times a year.
The GTF comprises member representation of the major subsidiaries (by headcount) within Peregrine (as of 1 April 2016 it included Java Capital) and functions as a discussion group as well as an advisory body to the Board. The relevance and importance of the GTF is highlighted by the fact that its agenda is a specific discussion point at a Board level, for all subsidiaries and Java Capital. Members of the GTF include Executive Directors (including the Chief Executive Officer), the Citadel Human Capital Director, a representative from Nala and representatives from other companies within the Group. The GTF’s key objective is to drive and address all elements of the B-BBEE scorecard in the spirit of authentic transformation. With input from the GTF, the Board then assumes responsibility for the dialogue on transformation and diversity between employees and management.
The scope of the GTF’s responsibilities includes:
- Employment Equity;
- Skills Development;
- Preferential Procurement;
- Enterprise Development; and
- Socio-economic Development.
In accordance with the requirements of the Employment Equity Act, Peregrine’s local operations identified the need to establish an Employment Equity Forum (EEF) which sees representation from all occupational categories including designated groups as well as non-designated groups. To ensure that the Group adequately addresses employment equity issues, two forums have been established, one being within the Citadel Group and the other comprising staff from the remaining local operating entities. Representation was determined by individual voting. The EEF acts as a consultative forum and has direct engagement with employees to enable in-depth insight and feedback on employee perceptions and needs. The EEF is further responsible for formulating and implementing the employment equity plans developed for local operations and to ensure additional compliance in terms of the Employment Equity Act.
Currently 41% of South African employees are black as defined per the B-BBEE Act. Recruitment of black candidates is a critical area in the employment equity plan. To achieve this, within Citadel, the Group’s largest local subsidiary, the first two month period in the recruitment process is dedicated to finding suitable employment equity candidates. This strategy will remain our core focus going forward. The table below highlights the percentage of employees that are black by employment category, and offers comparative numbers for 2017:
|Category level||Number of employees*||%**||Number of employees*||%**|
*Total number of employees per category
**Percentage of workforce which is black
Comparing percentages year on year, incremental improvements in the top management and skilled levels have been achieved, with marginal reductions at semi-skilled and disabled levels. Improving these numbers will be a specific focus area for the year ahead. In addition, management within all subsidiaries are cognisant of the drive to improve equity representation within their respective businesses.
Although staff numbers may fluctuate from year to year, the racial and gender representation has remained relatively constant, reflecting the Group’s respect for the promotion of diversity in race and gender. With high retention and tenure of employees creating limited opportunities, rapid transformation remains a challenge. However, marginal, representation of black employees has increased which is indicative of transformation as a key driver and business imperative for the Group.
|Employee headcount by race and gender (%)|
Peregrine further embraces equal opportunity for all employees. Awareness of industry trends and internal policies are continuously reviewed from a legal compliance perspective, to ensure applicability on a national level.
At this time, it must be noted that while Peregrine encourages freedom of association, no employees have undertaken to join a union.
Skills development and training
Employee development is aligned to Peregrine’s business priorities. Available opportunities are given with the aim of enhancing employees’ competence and knowledge in their field of expertise. Peregrine gives all of its employees the opportunity to receive training and development. During the year, R1.5 million was committed to formal training, this is down from R1.9 million in 2017. The decrease in the Group’s training spend was attributable to a special once-off training programme which took place in 2017. To date over 200 staff members have participated in formal training within the Group.
Additionally, Peregrine has an inclusive culture where all employees readily share information and take ownership of developing and skills transfer towards junior or new employees. Focus is placed on internal training and skills transfer to ensure all employees are competent, trained and equipped to function optimally in a highly complex, regulated and technical environment. Costs associated with informal training and internal mentorship programs are not included in the direct spend on training, while travel costs, due to the national footprint and centralised training, are included.
Regulatory and compliance elements remain a specific key focus to ensure the highest level of compliance and professionalism. Clients’ needs together with responsibility to provide professional and optimal service are key the predominant drivers of the training programs.
Targets for development remain a key deliverable for management. These are determined through individual assessments and employee engagements throughout the year. Specific training needs of employees are the responsibility of the department heads. Self-insight, personal and team development remains a focus within the Group, through programs such as holistic thinking style analysis and personality profiling.
Peregrine is committed to developing committed and supportive relationships with B-BBEE service providers. This is further evidenced by the three year plan that Peregrine is effecting to improve transformation and the Group will continue to focus on procurement as a strategic imperative so as to address a broader base of economic interest and growth for black-owned companies.
Certain subsidiaries within the Peregrine Group have Enterprise Development (ED) agreements in place with black-owned companies as set out below. A total of R12.74 million was spent with ED partners during the year (2017: R14.77 million). The aim of ED agreements is to align internal processes such as recruiting and event co-ordination through empowering companies with black ownership. Peregrine continues to focus on developing procurement partners through such agreements, as well as supporting businesses through procurement initiatives. ED continues to be a key focus area, with emphasis on building businesses through direct enterprise development.
Various entities have benefited from enterprise development partnerships. Longstanding relationships such as the one between Legae Securities and Peregrine Securities reflect such a long-term commitment and beneficial cooperative engagement.
Details of the ED spend for 2018 is set out below:
|Legae Securities||9 000 000||2|
|Envisonit Stock Lending Solutions||1 200 00||1|
|Hi-Side Events||807 632||4|
|Vunani Fund Managers||519 785||1|
|DAV Professional Placement Group||262 246||2|
|Giltende Khula (Pty) Ltd||949 387||2|
|Total||12 739 050|
Socio-economic development (SED)
Peregrine understands it has a role to play in advancing local communities through sustainable socio-economic development (SED) and empowerment programs. The Group has a long-term strategy to empower communities and employees through its empowerment vehicle, Nala, and its three underlying trusts.
Within the Group, is Citadel’s Philanthropy Foundation (CPF), a donor-advised fund that enables individuals and corporates to obtain strategic guidance and planning, in managing their charitable donations or allocating SED spend in order to effect sustainable change in disadvantaged communities. As of 1 April 2017, all of the Group’s SED spend had been distributed through the CPF. Besides the low costs associated with it, all donations that go through the CPF are immediately eligible for tax benefits and the foundation also facilitates due diligence processes, all tax incentives and B-BBEE points. For more information on the CPF please Click here.
To date the Group’s SED initiatives have focused predominantly on education-centred projects. Through a number of studies, a clear correlation has been established between education and poverty alleviation. According to a report undertaken by the United Nations Educational, Scientific and Cultural Organisation (UNESCO) in 2014, not only does education have the ability to prevent the perpetuation of poverty between generations, it also has a positive effect on health, economic development and environmental protection. Therefore, it is safe to conclude that sustainable development begins with education. Through the CPF, the Group allocated funds to various initiatives, of which the major beneficiaries are as detailed below:
Thirst for Hope:
Thirst for Hope is an initiative which focuses on feeding scheme development, environmental education, water conservation, food security, sustainable energy solutions and the promotion of healthy living. Additionally, it works on small business development and training in these areas. The initiative is aimed at previously disadvantaged South Africans, and in particular school children and AIDS orphans. Thirst for Hope has identified 300 locations in South Africa, where they would like to implement their programs, including the Diepsloot High School. Thirst for Hope was granted funding to cover initial infrastructure and educational implementation costs at the high school.
The project impacts several stakeholders, mainly the children in Diepsloot High. They will learn about the environment and food security, not only in theory but also in practice. They will be taught by teachers, who themselves have received training, and they will be responsible for the creation and maintenance of their own vegetable gardens, the fruits of which will be used to augment the school’s feeding scheme.
The project also trains community members on the implementation of water conservation infrastructure therefore creating small businesses for these individuals. In return, they help maintain the school’s water conservation equipment at no cost. The parents of the students are also involved in the maintenance of the gardens.
‘Vision is Vital’, is a Vision4Change project that assists underprivileged children who have problems with their vision to get access to quality optometric care. It is widely accepted that good vision is crucial if learners want to get the most from their education. Ikage Primary school in Alexandra township, which provides education to 1 345 students, was identified as a school that would greatly benefit from this project. Vision4Change has been allocated funding to conduct eye assessments, fit glasses, and to be able to run the project and have reserves in two years in order to facilitate the cost of refitting glasses where necessary. This project gives Peregrine an opportunity to get involved in an area within the education sphere that has not historically received a much attention.
GetOn Foundation Trust:
GetOn Foundation Trust’s (GetOn) core purpose is to equip previously disadvantaged individuals with SETA accredited skills training in order to produce skilled and employable persons or new business owners. GetOn assists individuals from areas such as Atteridgeville, Soshanguve, and Mabopane in Tshwane. These areas are badly affected by high unemployment rates. GetOn boasts a very low dropout rate amongst its students and most of the foundation’s trainers are a product of GetOn training. In addition to up-skilling people, Geton also has placement partners to ensure graduates are able to secure employment at the end of their training. Peregrine’s donation to GetOn has given over 40 students training. GetOn is a registered skills development centre with 100% black beneficiaries, and is recognised for its enterprise development programs.
Seeds of Lights – Saturday Program for Girls
Seeds of Light is an NPO that operates in Acornhoek in the Mpumalanga province. The schools in this area are extremely under-resourced and overcrowded. Most of the classes, across all high schools in the region, have more than 60 learners per class. The classrooms are rundown and most of the schools have either no library or highly inadequate libraries. The learners also do not have access to computers or media resource centers.
Unfortunately girls are even more negatively impacted by the state of the province’s education and very few girls from this area are able to achieve the same results as boys, and even fewer go on to attend university. This is predominantly due to the gender bias perpetuated within these communities. Seeds of Light have also found that there are also very few positive female role models in the area to whom the girls can look up to.
To this end, the NPO decided to embark on a Saturday education programme for girls that focuses on improving their Maths and English abilities. The objective of the programme is to produce academically strong female students who will ultimately become better all-round achievers. The girls will also be put forward for any bursary opportunities that become available. Applicants will also have access to coaching and mentoring to help them through the examination and interview processes.
20 academically strong girls, were identified to take part on this program in the 2018 financial year.
The SAME Foundation is a national NPO specialising in the upliftment of communities through strategic projects in the health and education sectors. In the education space, project aspects include needs analysis, teacher upskilling and support, learner academic outcomes, resources and infrastructure. Peregrine has been involved with this Foundation since 2015 and in that time has assisted in three school infrastructure renovations projects, two in Cosmo City and one in Soweto. These projects have impacted hundreds of learners. In the 2018 financial year, the Group provided funding for a fully equipped Maths classroom at Diepdale Secondary School in Soweto that includes an e-learning system, giving the students all of the resources they need in order to follow the curriculum effectively as well as a conducive learning environment. The funds also assisted in educators training costs.
Financial Services Consumer Education Foundation
As a responsible corporate citizen within the financial services sector, a portion of Peregrine’s SED spend is always allocated towards the Financial Services Consumer Education Foundation (FSCEF). The FSCEF is an independent trust and public benefit organisation, established by the Financial Services Board with the sole purpose of promoting and funding financial education programs. The envisioned outcome of the program is improved consumer financial literacy among previously disadvantaged individuals.
Early Childhood Development Centres
Afrika Tikkun (AT), through its Cradle to Career (C2C) 360º Model aims to provide services that meet educational, skills, psychosocial, health and economic needs of young people from previously disadvantaged communities. AT’s C2C 360º Model operates through early childhood development (ECD), child and youth development (CYD), youth skills development and placement (YSDP) and social support programmes delivered through locally based community centres. Peregrine donated funds towards the Alexandra Early Childhood Development Centre, specifically for social & support services (social workers, family support, health services and infrastructure maintenance and upkeep).
Abraham Kriel Childhood Centre
Abraham Kriel is a registered non-profit organisation (NPO). Their focus is to care for, protect and empower children and youth in need of care. Based in Johannesburg, the Centre runs a number of educational programs, both internal and external. The children under the Centre’s care are provided with school stationery, text books, appropriate clothing, as well as day to day needs. Peregrine donated funds towards the Centre’s ECD day to day requirements.
Masicorp is an educational NGO that works for the people of the Masiphumelele Township, home to a community of at least 40,000 people disadvantaged by the historical legacy of apartheid and poverty. Masicorp, together with the community, runs a variety of projects, all of which are focused on education in one way or another. These projects range from ECD to primary and high school Maths, Science and English, university bursaries, adult education and skills training, and entrepreneurial support. They also run a variety of community and school sports programmes. Peregrine donated funding towards Masicorp’s ECD projects that work towards providing quality pre-school education for the 4500 Masiphumelele children aged 1 to 6.
Ditshego is a preschool in the Mooiplaas Informal Settlement in Pretoria that was opened in 2008. The vision of the preschool is to provide vulnerable children with nutritional meals and education in a safe and stable environment. The principal and teachers are supported by the social worker and volunteers. Community projects are also supported from the preschool. Peregrine donated funds towards the preschool’s day to day needs.
University of Stellenbosch Bursary
Many students enter the higher education system with little or no source of funding for their studies. All of them qualify on academic grounds but cannot afford to study without financial support. In the previous financial year, Peregrine awarded two students at Stellenbosch University bursaries which catered for their tuition, accommodation, food and learning material for the entire year.The Group continued its support of one of the students, now in his second year of a BCom Accounting degree.
Mandela Rhodes Foundation
The overarching mission of the Mandela Rhodes Foundation (MRF) is to build exceptional leadership capacity in Africa, by providing excellent educational and training opportunities to individuals with leadership potential; as well as creating a network of well-rounded leaders of talent, effectiveness and integrity across African society. The Foundation addresses this through its scholarship programme which awards assistance to high caliber post graduate students from across Africa, who have the potential to have a meaningful impact in their communities through their chosen careers and future endeavours. In addition, the Foundation offers the students a variety of intensive development workshops and exercises which focus on developing their understanding and skills in leadership, reconciliation, entrepreneurship and education. Peregrine committed to sponsoring one post graduate scholarship over a period of two years.
Friends of Parent and Child
Friends of Parent and Child (FOPAC) is an NPO that operates in the Hartbeespoort area. As part of its offering, FOPAC facilitates bursaries for deserving tertiary students. Peregrine has previously supported six students with full bursaries and has awarded further funding to FOPAC for further assistance in this regard.
In addition to the above mentioned projects, Peregrine has initiatives that cater to its lower income staff in the form of the Dignity Kitty, as well as initiatives that are run by the staff throughout the country via Reach Out.
In order to provide dignity and assistance to employees on lower income and unskilled levels, the Company contributes towards the dignity kitty. The dignity kitty funds are utilised for employees with a tenure of 10 years, to improve their living conditions, as well as cover children’s education and medical expenses.
Reach out projects provide a platform for staff involvement in community outreach. A number of organisations, throughout the country, benefitted from these staff led initiatives, most of which had a focus on education. Some of the beneficiaries included:
- - Diepdale Secondary School and Touch Africa that had a classroom renovated by Peregrine staff and 13 boxes of books donated for distribution in mobile libraries throughout the country;
- - Maitland Cottage Children’s Orthopaedic Hospital benefitted from care bags, toys and educational items from Peregrine’s Cape Town staff;
- - Walmer Outreach Project and Airport Valley Community Centre – Crèche in Port Elizabeth were recipients of the greening project where staff volunteers did a clean-up of the space and planted vegetation to beautify the area;
- - patients at George Provincial Hospital were treated to sandwiches by Peregrine’s George staff; and
- - the top matriculant at Bona Lesedi high school was rewarded with a laptop and the school’s educators, staff and leaners were given tokens of encouragement throughout the year.
To enable insight into the challenges facing the financial services sector at large, as well as strategic priorities, participation in the Association for Saving and Investments South Africa’s (ASISA) Transformation and Skills Development Board Committee has been identified as a priority. Citadel Director of Human Capital, Marina Knox, represents the Peregrine Group on the committee. Peregrine is also represented on the Transformation and Education working group of ASISA.
In line with the Peregrine’s commitment to advance transformation, Nala was established as a sustainable Broad-Based Black Investment Company. Nala has a 20% stake in Peregrine SA Holdings, which shareholding enables Nala to participate in the South African operations of the Group. The Peregrine Educational Trust (35%), the Peregrine Community Development Trust (15%) and the Employee Portfolio Investment Trust (20%) cumulatively, through their 100% shareholding of Nala Empowerment Investment Company Holdings Proprietary Limited, own 70% of Nala, with the remaining 30% of Nala being owned by Peregrine Holdings Limited.
The above-mentioned trusts were established to benefit Peregrine’s black staff, as defined in the B-BBEE Act, to aid in community development and to promote the advancement of disadvantaged individuals through education. In line with this intention, during June 2017, Nala declared its first dividend to its shareholders and a distribution was made to the beneficiaries of the Employee Portfolio Investment Trust.
In addition, Peregrine Equities holds a significant minority stake in Legae Securities, the oldest empowerment stock broker in South Africa. The proposed sale of Peregrine’s stake in the Peregrine Securities business will result in the emergence of a globally-competitive, innovative, black- owned, managed and controlled financial services firm.
At year-end the Peregrine Board included one black male independent Non-Executive Director, Stefaan Sithole, equating to a 12.5% black representation. Stefaan is also a member of the Audit Committee and Chairman of the Social and Ethics Committee.
In terms of the Board Charter and in line with Peregrine's race diversity policy, the aim is to have black people (as defined in the B-BBEE Act, as amended) constituting:
(i) by 31 March 2019, at least 20%; and
(ii) by 31 March 2021, at least 40% of the total number of Directors.
Transformation is not only a key driver and focus area for management at a Group level, but also for management within Peregrine’s local subsidiaries. Monitoring takes place as part of Board and Executive meetings and the scorecards provide specific measurable tools as well as focus areas.