INVESTOR WARNING

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INVESTOR WARNING

• IF YOU
• ARE NEGATIVE ON THE SOUTH AFRICAN HEDGE FUND
  INDUSTRY
• THINK THE PRIVATE WEALTH MANAGEMENT SPACE IS TOO
  COMPETETIVE
• DO NOT LIKE A GROUP RETAINING CAPITAL FOR
  PROPRIETARY INVESTMENT
• THEN
• STAY CLEAR AWAY FROM PEREGRINE !

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30 MINUTE PROGRAM

• GROUP SNAPSH0T
• A QUICK (BUT IMPORTANT) HISTORY
• BACK TO THE INVESTOR WARNING AND REVISITING
  STRATEGIC OBJECTIVES
• GROUP EARNINGS PROFILE AT A GLANCE
• BUILDING A BASE CASE FOR PEREGRINES EARNINGS
  (WITH SENSITIVITES)
• SOME INTERESTING COMPARISONS

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GROUP SNAPSHOT

• The Peregrine group is a leading provider of
  wealth and asset management solutions. The group
  also houses one of the countrys leading
  derivative, equity and prime-broking operations.
  
• Assets under management of R 30 billion.
• Quant R 14 billion
• Citadel R 12 billion
• Hedge funds R 4,5 billion
• Prime broking platform R 5 billion
• Oct 06 - 8th biggest broker by value, 5th by
  volume and 2nd by deals settled.
• Market capitalisation (net of treasury shares) _at_
  R11.25 of R2.2 billion.
• Trailing 12 month PE ratio of 8.5 times earnings

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GROUP HISTORY
Founded in 1996 Derivative structuring and
broking house Listed 10 June 1998 Staff
compliment of 40 Historic profit R7,7 m
Issued shares 200m, Historic EPS 4,3
cents Date Price Market Cap Historic
PE Forward PE 10 June 98 R2.50 R 500 m 58 X 11
X First trade R13.05 R 2 600 m 303 X 59 X Aug
98 (ATCH) R28.00 R 5 600 m 650 X 127 X July
03 (ATCL) R1.30 R 280 m 4.7 X ATCH all
time closing high ALTC all time closing low
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NEW VISION

• Building Peregrine to lastBut how ?
• Lots of the wrong businesses
• Lots of the wrong shareholders
• Lots of the wrong people
• with
• completely the wrong mentality

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DUAL STRATEGY

• BUSINESS LEVEL
• Exit businesses and people with the wrong
  mentality
• Entrench a long-term focus on wealth and
  alternative investment management
• SHAREHOLDER LEVEL
• Exit shareholders with the wrong mentality
• Entrench long-term wealth creation for those
  willing to buy into vision

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ON AND OFF THE PEREGRINE BUS

• Treasury solutions 2001
• Asset finance 2002
• Treasury partners 2002
• Riscura 2003
• Agio 2003
• Prosperity 2003
• Peregrine Finance 2003
• Peresys 2003
• Mercury (now Peregrine Securities) 2001
• Citadel 2002
• PINC (now PIM) 2002

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Peregrines 2003 results

• Strong rand, subdued markets and effects of group
  re-positioning
• All 4 divisions down from previous year
• Profit from operations down 47
• Headline EPS down 51
• Operational cashflow down to only R90 million
• Cashflow of only R 90 million ?????????????

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Our share price
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Strategic Objectives (2003)

• Entrench a clear future strategy for the group as
  a South African based specialised wealth and
  asset management business.
• Achieve brand recognition as leaders in
  private-client wealth management and in
  alternative investments, particularly hedge-fund
  investment.
• Ensure that every business within the group is
  able to break-even on a monthly basis as a worst
  case scenario and
• Meaningfully augment ownership by the management
  of the businesses.

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30 MINUTE PROGRAM

• GROUP SNAPSH0T
• A QUICK (BUT IMPORTANT) HISTORY
• BACK TO THE INVESTOR WARNING AND REVISITING
  STRATEGIC OBJECTIVES

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Back to the INVESTOR WARNING

• Dominant player in the SA hedge fund industry
• Single strategy funds Capital and PIM R3,4bn
• Fund of Hedge Funds Caveo R1,0bn
• Prime broking Peregrine Prime R5,0bn
• Predominant focus on High Net Worth Individuals
  (HNWI)
• Citadel R12,0bn
• Proprietary investments on balance sheet R 500
  m to R 700 m

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30 MINUTE PROGRAM

• GROUP SNAPSH0T
• A QUICK (BUT IMPORTANT) HISTORY
• BACK TO THE INVESTOR WARNING AND REVISITING
  STRATEGIC OBJECTIVES
• GROUP EARNINGS PROFILE AT A GLANCE

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GROUP PROFILE Contribution to March 06

• WEALTH MANAGEMENT R 73,4 m 23
• Citadel
• ASSET MANAGEMENT R 109,4 m 34
• Hedge Funds
• Peregrine Capital
• Peregrine Investment Managers (PIM)
• Caveo FOHF (JV with IS)
• PeregrineQuant
• TRANSACTIONAL R 82,3 m 26
• Broking Structuring
• PROPRIETARY CAPITAL R 54,9 m 17
• Investment returns (net of group costs)
  R320,0 m 100

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GROUP PROFILE Contribution to Sept 06

• WEALTH MANAGEMENT R 62,9 m 32
• Citadel
• ASSET MANAGEMENT R 26,0 m 13
• Hedge Funds
• Peregrine Capital
• Peregrine Investment Managers (PIM)
• Caveo FOHF (JV with IS)
• PeregrineQuant
• TRANSACTIONAL R 75,2 m 38
• Broking Structuring
• PROPRIETARY CAPITAL R 32,5 m 17
• Investment returns (net of group costs)
  R196.6 m 100

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30 MINUTE PROGRAM

• GROUP SNAPSH0T
• A QUICK (BUT IMPORTANT) HISTORY
• BACK TO THE INVESTOR WARNING AND REVISITING
  STRATEGIC OBJECTIVES
• GROUP EARNINGS PROFILE AT A GLANCE
• BUILDING A BASE CASE FOR PEREGRINES EARNINGS
  (WITH SENSITIVITIES)

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WEALTH MANAGEMENT
CITADEL

• Focussed on HNWI wealth management
• Clients with R 2 million plus to invest
• Average current top-up client size R 5,0
  million
• Average new client size R 8,0 million
• Total assets under management of R 12 billion
• New inflows of R 125 million per month
• Client retention of 96
• Annuity outflows of almost R800 million

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WEALTH MANAGEMENT
CITADEL - PROFITABILITY

• Annuity profit of over R60 m per annum
  (without performance fees)
• PLUS 20 performance fee above lifetime
  benchmark per client
• Benchmark is inflation after accounting for all
  costs and taxes
• High watermark catch up from late 2001/ early
  2002
• Performances fees currently averaging R 7
  million per month
• More than 2/3rds of the client base now paying
  performance fees
• Strong gearing to weaker currency over time

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WEALTH MANAGEMENT
CITADEL PERFORMANCE FEE RUN RATE

• At current level of AUM of R 12 billion
• if all clients at benchmark run-rate of R 24
  million per 1 real
• 2/3rds of AUM at benchmark run-rate of R16
  million per 1 real
• 2/3rds of AUM at benchmark 5 real R 80
  million fees per annum
• 2/3rds of AUM at benchmark 10 real R 160
  million fees per annum

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ASSET MANAGEMENT
PeregrineQuant

• Institutional asset manager with quantitative
  focus
• Over R14 billion in AUM
• Good annuity cashflow contributor R10 m plus
• Exciting new platform for alpha managers

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OUR INTEGRATED HEDGE FUND STRATEGY

• FUND OF HEDGE FUNDS / MULTISTRAT
• Caveo R 1,0 bn
• Citadel Multistrat R 1,4 bn
• Aurum JV R 2,3 bn
• SINGLE STRATEGY FUNDS
• Peregrine Capital R 2,5 bn
• Peregrine Investment Managers (PIM) R 0,9 bn
• PRIME BROKER
• Peregrine Prime R 5,0 bn

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ASSET MANAGEMENT
CAVEO

• Combining Peregrines hedge fund experience and
  reputation
• with Investment Solutions distribution, manager
  access and systems
• R1 billion AUM in under 12 months
• Potential to manage several billion
• Capacity with quality managers is the real issue
  
• Conflict of interest resolved by non-Peregrine
  products

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ASSET MANAGEMENT
PEREGRINE CAPITAL

• Fundamental equity hedge fund management company
• Over R2.5 Billion in AUM
• Comfortable at current AUM , but closed to new
  flows
• Hedge fund 41 p.a. gross compounding since
  July 98
• Performance fund 61 p.a. gross compounding
  since July 98
• 50/50 economic deal with management stability
  in team
• Profit from annual fees of only R 16 million BUT

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ASSET MANAGEMENT
PEREGRINE CAPITAL PERFORMANCE FEES AT AUM of R
2,5 BN
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TRANSACTIONAL
BROKING AND STRUCTURING

• Peregrine Securities
• Equity Broking
• Peregrine Prime R 5 billion on platform
• Peregrine Equities 5th biggest broker by
  volume
• Derivative Broking top 3 broker each year
• Derivative Quantitative Research rated 1st or
  2nd in SA
• Structuring

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Base Case Earnings for Peregrine (note
assumptions)

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Balance sheet

• No long term debt
• In excess of R 400 million net in cash / near
  cash investments
• Approximately R50 million in private equity
• Approximately R 200 million cash in working
  capital
• Generating cash at a rate of over R 30 million
  per month (pre tax)
• Active balance sheet investment of R 500 million
  increasing to R 700 million.
• Predominantly hedge funds with up to 15 - 20
  private equity and special opportunities.

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FINALLY, SOME INTERESTING COMPARISONS

• Man Group Plc (www.mangroupplc.com)
• Largest hedge fund manager listed on the LSE.
• Man Group Plc is a
• leading global provider of alternative
  investment products and solutions. (and)
• One of the worlds largest futures brokers.
• Assets under management _at_ 30 Sep 06 56,8
  billion
• Market Capitalisation - 17,8 billion
• Market cap AUM 31 !!
• (PGR excl. PQ assets - 13)
• (including PQ assets - 7)
• Historic PE 14,5 times

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ANOTHER INTERESTING COMPARISON

• Julius Baer (www.juliusbaer.com)
• Julius Baer is the largest pure-play wealth
  manager in Switzerland.
• It acquired the specialist hedge fund manager
  GAM from UBS in December 2005.
• GAMs AUM currently exceed 63 billion.
• Julius Baers historic PE 41 times

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