INTRODUCTION

Sasfin is acutely aware of the role of business in society. It has therefore embraced business ethics within integrated sustainability reporting by adopting the “triple bottom line” sustainability reporting relating to the environment, society and the economy. Many of the issues arising from the adoption of the sustainability reporting structure has been incorporated into the FSC. As a responsible corporate citizen, a regulated institution and a signatory to the FSC, Sasfin is committed to implementing the requisite practices and policies throughout the organisation in a meaningful and appropriate way for the long-term benefit of the Group, its various stakeholder groupings, the environment and the community in which it exists.

The South African banking and financial services sector is dominated by a few very large entities. Although Sasfin's scale of operations is considerably smaller than most of its peers, it has nevertheless achieved much and is proud of what it has achieved in the context of corporate social investment and sustainability. It has a long history of positive interaction with the wider community which has always positively reflected the moral conscience of the Group.

The Group is committed to creating and developing and creating social capital through informal networks, accumulated knowhow and trust that make Sasfin effective. This is the product of many interrelated policies and practices.

SHAREHOLDERS

Sasfin has historically adopted a policy of transparency in relation to both formal and informal shareholder communication, as well as interfacing with potential shareholders, analysts and the media. Sasfin consistently strives to improve its annual report and make it more user-friendly and meaningful. Sasfin complies with the enhanced public disclosure standards required in terms of Regulation 43 of the Banking Regulations. These regulations incorporate the objectives of Pillar 3 of Basel II which encourages market discipline by ensuring that all market participants are provided with extensive information on risk profiles and capital positions. It discloses material and relevant information to the public on a quarterly, semi-annual and annual basis. However, Sasfin does not limit its shareholder communication to its formal reporting obligations. Sasfin has an investor relations programme. It also has in place a regular programme of media intervention, where it seeks to develop closer relationships with media members and to assist them in understanding and appreciating the nuances of the Group. Within the parameters of the applicable regulations, the Group's Chief Executive Officer regularly responds to approaches from shareholders, the media, financial analysts and other interested parties for information about the Group and its operations.

The Group continues to work on improving its segmental reporting and on creating an accurate picture of its sources of

business, capital and cost allocations amongst business units and the viability of each business unit within the context of the overall Group. This should help to further explain the Group's performance to investors.

Sasfin also adheres to the Promotion of Access to Information Act (2 of 2000) and maintains a comprehensive manual to give effect to these responsibilities.

CLIENTS

Sasfin, as a banking and financial services group, attracts a diverse range of clients across its business units. Sasfin services both companies and individuals through its specialist banking and financial service activities. Sasfin's core trade finance facilities have been offered to clients for more than a quarter of a century and its stock broking and portfolio management activities for more than a century. Sasfin recognises the diversity of its target markets and the different requirements of its client bases, while at the same time employing strategies to enhance its cross-sell ratio and to retain and attract new clients. Sasfin's client base reflects the demographics of South Africa, particularly with regard to credit extension within the SME sector.

Historically, Sasfin has focused on the SME market in terms of its core lending activities and on the high net worth individual market in terms of its wealth management activities. It sees a virtual circle between the two, with HNWI's providing a steady and reliable source of funding for the bank's lending activities. This circle has expanded and broadened significantly over the past year.

Sasfin considers itself a specialist in its target markets, which are growth areas in which Sasfin will continue to participate. Sasfin is committed to facilitating the growth of the SME sector which is an essential component of the South African economy and which must flourish if South Africa is to achieve the growth targets required to reduce unemployment and alleviate poverty. Sasfin is proud to focus on this vital sector, which is not adequately catered for by the big banks.

Sasfin has consistently been able to broaden its range of products and services and thereby embrace the wider needs of its markets. Sasfin has regular client interactions, including a monthly Asset Management Forum at which investment issues are profiled, a businesspersons' networking club (held approximately every six weeks), client lunches and cocktail functions, client visits undertaken by senior management and regular client newsletters. These interactions are designed not only to raise awareness of Sasfin in the community, but also serve to educate clients and improve the overall standard of business in the wider community.

Sasfin works on various targeted educational initiatives and sponsors a television programme, on CNBC Africa – known as African Entrepreneur which is aimed at educating the public at large throughout the continent on commercial and financial matters. It also sponsors a grow your business course offered by the Wits Business School and a Junior Achievement schools entrepreneurship programme.

Sasfin understands that its clients largely measure it in terms of its service levels. Its size structure and approach allow it to offer a personal service-unique in many ways- and to develop a deep understanding of its clients' financial needs. Sasfin subscribes to the Code of Banking Practice and submits to the jurisdiction of the Ombudsman for Banking Services.

STAFF DEVELOPMENT AND TRANSFORMATION

Employee development, well-being and transformation are critical success factors for the Group. Sasfin recognises that its human resources and intellectual capital are its most valuable resources and it has implemented policies and practices focused on enhancing the standard of its human resources, improving capacity and recognising and rewarding achievement.

Employee development does not of course exist in a vacuum. Sasfin is aware of the historic imbalances which still exist in South African society. Sasfin has created a transformation committee to deal specifically with legislation which has been put in place since 1994 and which deals with redressing past imbalances, particularly the Broad Based Black Economic Empowerment Act, the Employment Equity Act and the Skills Development Act. This committee, operates under the chairmanship of one of Sasfin's non-executive directors, Dolly Mokgatle. The board will continue to formulate, monitor and review all aspects of the Group's broad based BEE policies and ensure that the Group aligns its employment and broader transformation policies with the FSC's targets and enhances cultural diversity and gender sensitivity. Sasfin's level of compliance as measured against the FSC scorecard improved further in the year under review and now reflects a score of 89,36%. Further details appear in the compliance report.

Various incentive and reward programmes, including the Group's Share Option Scheme, are in use at Sasfin aimed at rewarding excellent performance. Allocations in terms of this scheme are dealt with in note 39 of the Notes to the Consolidated Financial Statements in this Annual Report.

Sasfin has applied considerable resources to training. Internal training courses have been developed and are offered to staff. External training is also offered and encouraged. These are both work function specific and focused on self development. Sasfin's dedicated training facility, equipped with the latest technology and training aids, continues to be well utilised.

Sasfin acknowledges the huge impact that HIV/AIDS has had and will continue to have on the South African economy, on its social structure and on its workforce, and is committed to contributing towards combating this scourge. Thankfully Sasfin has had only very few HIV/AIDS cases amongst its staff. The Group has formulated and implemented an HIV/AIDS policy under the auspices of its HR department. It offers counselling to staff that are exposed to HIV/AIDS sufferers within their family units and supports many HIV/AIDS related charitable and other concerns through its Corporate Social Investment programmes. Sasfin has also taken a proactive stance and has implemented AIDS awareness courses for staff including the provision of voluntary testing. It is anticipated, that due to the relatively high educational level of most of Sasfin's staff, and the well documented correlation between HIV/AIDS and low educational levels, that the prevalence of the scourge on Sasfin's staff will be markedly lower than that prevailing in the general South African population. Sasfin has also successfully run a number of “Wellness Days” during which, the importance of overall good health has been emphasised and employees have been afforded the opportunity of free confidential health assessments.

EMPOWERMENT

Sasfin is committed to the FSC and its principles of broad based transformation.

The General Manager, Compliance, together with the HR Manager and the transformation committee, are tasked on behalf of the board with ensuring compliance in terms of work-force restructuring, procurement and other operational areas. The Group has submitted its annual report to the FSC council which has been able to provide all stakeholders with the assurance that our scorings model accurately reflects the Groups progress in this field. The FSC still conflicts in a number of areas with the Codes of Good Practice published by the Department of Trade and Industry and a process of alignment, driven by relevant stakeholders, is currently underway. This process, over which we have no control, has taken much longer than was initially anticipated Once this exercise has been completed Sasfin will be able to fine tune its policies where necessary. The Transformation Committee monitors the achievement of target objectives on a regular basis, and the Sasfin board reviews progress at its quarterly meetings.

Sasfin will continue to identify and support appropriate black empowerment initiatives and opportunities in all areas of its business activities.

GOVERNMENT AND REGULATORS

Sasfin strives to be a moral and law abiding corporate citizen. It supports democracy but does not contribute to any specific political party. Sasfin's personnel are free to determine their own political party affiliations.

Sasfin puts considerable effort into building constructive and transparent relationships with its regulators, the primary relationship being with the Registrar of Banks and his department of banking supervision at the SARB. In addition, Sasfin is regulated by the exchange control department at the SARB, the JSE, the Securities Regulation Panel, the Financial Intelligence Centre and the Financial Services Board of South Africa.

Sasfin complies with the listing requirements of the JSE and ensures compliance on an ongoing basis as required from time to time by changes to those requirements.

SOCIAL RESPONSIBILITY

For South Africa to succeed as a winning nation, it must foster the development of entrepreneurial businesses. This has become a neglected market segment particularly following the liquidity squeeze which has affected the entire sector. Sasfin is one of the few South African banks geared to providing the personalised service that this market needs and in so doing, plays a meaningful role in the development of the South African economy and the broadening of opportunities for new business people, many of whom were previously marginalised from the mainstream economy.

The Group gives back to the community by supporting worthy institutions that are efficiently controlled and ensuring that the funds reach those in need.

Sasfin supports a number of programmes aimed at the upliftment of the disadvantaged, as well as other worthwhile social causes. Sasfin's contribution in the field of Corporate Social Investment substantially exceeds the target set by the FSC.

THE ENVIRONMENT

Sasfin is committed to the sustainable use of the world's scarce resources. In adhering to both global and national environmental protection standards and initiatives Sasfin has embarked on the roll out of an environmental protection initiative which provides a platform to address various key issues pertaining to environmental conservation, the prevention of environmental degradation and sustainable development. Sasfin has committed itself to reducing its impact on the environment, particularly in respect of water consumption, energy consumption, waste disposal and carbon emission.

Flowing from the IFC transaction, Sasfin has incorporated the IFC's sustainability, environmental and labour standards into its policies and it intends amending its articles of association to entrench these standards into its business.

In its endeavour to manage its environmental impact, Sasfin adheres to relevant legislative requirements, codes and standards, recycle paper glass and plastic products, employ energy and water saving devices, actively manage its waste products and maintain a safe and healthy environment for its employees and clients. Sasfin's new premises have been specifically designed with the objective of minimising energy use and reducing the environmental impact of its operations.

Sasfin also engages with its clients ensuring that they are not in breach of any environmental or social laws and that the businesses that Sasfin finance takes place in a controlled environment that places as little strain on its surroundings as possible.

Sasfin has a policy of withholding financial assistance from any organisation that it considers to be engaged in socially, morally or environmentally reprehensible activities.