Unaudited interim results for the six months ended 31 August 2012
 
 
PSG Group Limited
 
(Incorporated in the Republic of South Africa)
 
Registration number: 1970/008484/06
 
JSE share code: PSG
 
ISIN number: ZAE000013017
 
(PSG Group or PSG or the company or the group)
 
 
PSG Financial Services Limited
 
(Incorporated in the Republic of South Africa)
 
Registration number: 1919/000478/06
 
JSE share code: PGFP
 
ISIN number: ZAE000096079
 
(PSG Financial Services)
 
 
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2012
 
 
Sum-of-the-parts value per share increased by 21,7% to R68,05 as at 31 August 2012
 
Recurring headline earnings per share increased by 19,9% to 162,5 cents
 
Interim dividend per share increased by 26,9% to 33 cents
 
 
 
 
 
OVERVIEW
 
PSG Group is an investment holding company consisting of 42 underlying investments that operate across
 
industries which include financial services, banking, private equity, agriculture and education. PSGs market
 
capitalisation is approximately R12,9bn, with its largest investment being a 32,2% interest in Capitec Bank.
 
 
SUM OF THE PARTS (SOTP)
 
A key valuation tool to measure PSGs performance by is the growth in its SOTP value per share. The calculation is
 
simple and requires limited subjectivity as 81% of the SOTP value is calculated using quoted market prices,
 
while the unlisted investments are valued using market-related multiples. At 31 August 2012, the SOTP value per
 
PSG share was R68,05, which was 21,7% higher than that as at 29 February 2012. At 28 September 2012, the SOTP value
 
was R71,08 per share.
 
 
 
%
 
of
 
Feb Feb Feb Aug total
 
2010 2011 2012 2012 assets
 
 
Asset/Liability Rm Rm Rm Rm
 
 
Capitec Bank* 2 367 5 138 5 978 6 535 43,5%
 
 
PSG Konsult ** 948 1 206 1 483 1 598 10,6%
 
 
Curro Holdings * 1 118 2 387 15,9%
 
 
Zeder Investments * 742 1 069 1 067 1 192 7,9%
 
 
PSG Private Equity # 834 1 242 728 879 5,9%
 
 
Thembeka Capital # 570 789 5,3%
 
 
PSG Corporate
 
 
(incl. PSG Capital) ## 361 350 338 338 2,2%
 
 
Other investments, incl.
 
 
cash ## 400 548 684 1 307 8,7%
 
 
Total Assets 5 652 9 553 11 966 15 025 100,0%
 
 
Perpetual pref funding * (541) (1 028) (1 188) (1 229)
 
 
Other debt ## (539) (507) (463) (823)
 
 
Total SOTP Value 4 572 8 018 10 315 12 973
 
 
 
Shares in issue (net of treasury
 
 
shares) (m) 171,8 171,3 184,5 190,6
 
 
SOTP value per share (Rand) 26,61 46,81 55,92 68,05
 
 
 
 
* Listed on the JSE Ltd
 
 
** Over-the-counter
 
 
# SOTP value
 
 
## Valuation
 
 
RESULTS
 
 
 
A continued increase in PSG's SOTP value over the long term will depend on sustained growth in the profitability
 
of our underlying investments. PSG continues to use the recurring headline earnings method to provide management
 
and investors with a more realistic and transparent way of evaluating PSG's earnings performance. Consolidated
 
recurring headline earnings represent the sum of PSG's effective interest in that of each strategic investment.
 
The result is that investments in which PSG or an underlying company holds less than 20% and are generally not
 
equity accountable in terms of accounting standards, are included in the calculation of our consolidated recurring
 
headline earnings. Marked-to-market fluctuations and one-off items are excluded.
 
 
 
Year ended Six months ended
 
 
29 Feb 31 Aug Change 31 Aug
 
 
2012 2011 2012
 
 
Recurring headline earnings Rm Rm % Rm
 
 
 
Capitec Bank 362,4 167,9 35% 226,3
 
 
PSG Konsult 107,9 42,5 22% 51,8
 
 
Curro Holdings (5,2) (5,1) n/a (2,0)
 
 
Zeder Investments 115,4 53,8 (34%) 35,3
 
 
PSG Private Equity 32,0 16,9 108% 35,2
 
 
Thembeka Capital 18,7 5,8 (5%) 5,5
 
 
Other 39,7 18,4 30% 23,8
 
 
Recurring headline earnings before funding 670,9 300,2 25% 375,9
 
 
Funding (134,4) (70,5) n/a (82,1)
 
 
Recurring headline earnings 536,5 229,7 28% 293,8
 
 
Non-recurring items 30,6 (54,7) n/a 86,1
 
 
Headline earnings 567,1 175,0 117% 379,9
 
 
Non-headline items 135,9 (26,9) n/a (64,8)
 
 
Attributable earnings 703,0 148,1 113% 315,1
 
 
 
Weighted average number of shares in issue
 
(net of treasury shares) (m) 173,9 169,5 7% 180,8
 
 
 
Earnings per share (cents)
 
 
- Recurring headline 308,6 135,5 20% 162,5
 
 
- Headline 326,2 103,3 103% 210,2
 
 
- Attributable 404,4 87,4 99% 174,3
 
 
 
Dividend per share (cents) 82,0 26,0 27% 33,0
 
 
 
 
 
Recurring headline earnings per share increased by 19,9% to 162,5 cents for the six months ended 31 August 2012.
 
Capitec continued its stellar performance, while both PSG Konsult and PSG Private Equity delivered improved results.
 
Zeder on the other hand saw a decline in recurring headline earnings.Curro continued to sacrifice profitability while
 
building capacity for future growth.
 
 
 
Headline earnings per share increased by 103,5% to 210,2 cents per share, and attributable earnings by 99,4% to
 
174,3 cents per share. This was mainly as a result of marked-to-market profits achieved in PSG's and Thembeka's
 
investment portfolios of listed shares, net of a further marked-to-market loss incurred on PSG's interest rate hedge.
 
 
 
MATERIAL CORPORATE ACTIONS, FUNDING AND INVESTING
 
 
 
- Raised R361,2m in cash through the issue of 5,4m PSG ordinary shares at an average price of R67,42 per share.
 
 
- Raised R330m in cash through the issue of an unlisted five-year redeemable preference share with a fixed rate of
 
8,63% nacm.
 
 
- Curro raised R346m in cash by means of a rights issue and R128m by means of a specific issue of shares for cash
 
to Thembeka.PSG exercised its rights for a further investment of R219,7m.
 
 
- PSG acquired an effective 57,7% interest in CA Sales (a Botswana-based distributor of fast-moving consumer goods)
 
for R202m.
 
 
- Zeder acquired a controlling interest in Chayton, a company that acquires, develops and operates commercial grain
 
production hubs in sub-Saharan Africa, mainly Zambia, for R276,9m.
 
 
- In addition, Zeder acquired the remaining 74,9% of the share capital in Agricol, a seed company operating primarily
 
in the Republic of South Africa, for R150,4m.
 
 
- PSG Konsult raised R187,7m in cash by means of a rights issue at R1,75 per share during September 2012.
 
 
- On 26 September 2012, Capitec announced a rights issue of R2,25bn in anticipation of the growth prospects in
 
the market in which it operates and of the new Basel III capital requirements. PSG has undertaken to follow
 
its rights amounting to R724,5m.
 
 
 
 
CAPITEC BANK (32.2%)
 
 
Capitec continued to add more than 90 000 new clients per month. Their active client base totalled 4,2m at the end of
 
August 2012. The banks footprint was expanded by opening 27 new branches during the past six months, with another
 
28 new branches planned for the remainder of the financial year.
 
 
The banks focus remains to acquire more transacting clients, to reduce the cost of credit and to maintain stringent
 
credit criteria.
 
 
Capitecs headline earnings increased by 43% to R700m for the period under review. This was mainly as a result
 
of the increase in loan revenue to R3,6bn and net transaction fee income to R583m, along with an improvement in the
 
cost-to-income ratio to 42%.
 
 
Capitec now offers loans with a term of anywhere between one and 84 months, and a maximum amount of R230 000 per client.
 
Loans with terms exceeding 12 months contributed 80% of sales compared to 66% for the six months ended August 2011.
 
Higher income clients, with monthly income in excess of R15 000, have progressively accounted for an increased portion
 
of unsecured credit granted. These clients carry a lower risk. Capitecs own analyses of the credit market also
 
indicate that increased affordability, together with growth in disposable income means that the growth in unsecured
 
lending has not necessarily resulted in borrowers becoming over-indebted.
 
 
The proceeds of the aforementioned rights issue will be utilised to fund the anticipated growth in Capitecs loan book,
 
as well as the expansion of its branch network by between 50 and 75 branches per annum for the next three years.
 
 
Capitecs comprehensive results for the six months ended 31 August 2012 are available at www.capitecbank.co.za.
 
 
PSG KONSULT (71,3%)
 
 
PSG Konsult reported positive results for the six months ended 31 August 2012. Recurring headline earnings increased by
 
20,0% to R72,6m, and headline earnings by 21,8% to R77m. Funds under administration increased by 3,6% to R144,2bn since
 
year-end. Short-term premiums administered decreased by R250m to R1 300m on an annualised basis, mainly due to the sale
 
of the third-party short-term administration book of business.
 
 
Effective 1 March 2012, PSG Konsult acquired an interest in Western National, a short-term insurance company.
 
Negotiations have been concluded to further increase PSG Konsults interest, which is subject to regulatory approval.
 
 
PSG Konsult will use the R187,7m in cash raised with the aforementioned rights issue for capital adequacy requirements
 
and to fund acquisitions such as Western National.
 
 
PSG Online has won the 2012 Business Day Investors Monthly Stockbroker of the Year award for the second consecutive year.
 
We are proud of this achievement.
 
 
At 31 August 2012, PSG Konsult had 228 offices with 621 financial planners, portfolio managers, stockbrokers and asset
 
managers. Its professional associates (accountants and attorneys) totalled 375.
 
 
PSG Konsults comprehensive results for the six months ended 31 August 2012 are available at www.psgkonsult.co.za.
 
 
CURRO HOLDINGS (57,5%)
 
 
Curro develops, acquires and manages private schools for children from the age of three months up to grade 12. The
 
group currently consists of 22 (31 December 2011:12) schools with 12 497 (31 December 2011: 5 557) learners. When
 
PSG initially invested in 2009, Curro had three schools with 1 678 learners.
 
 
Curro reported a headline loss of R3,1m (30 June 2011: R7,7m loss) for the six-month period ended 30 June 2012,
 
as it continued to aggressively build capacity for the future. We anticipate that Curro will report a headline profit
 
going forward.
 
 
Curro moved to the main board of the JSE following its R474m capital raising in July 2012. The additional capital,
 
coupled with debt funding, has been invested to create capacity at existing campuses, to build five new campuses and
 
to settle the outstanding consideration in respect of acquisitions made during the past six months.
 
 
The new learner enrolments for 2013 are exceeding expectations, further confirming the growth potential in the
 
sector. PSG continues to support Curros aggressive organic and acquisitive growth plan.
 
 
Curros comprehensive results for the six months ended 30 June 2012 are available at www.curro.co.za.
 
 
ZEDER INVESTMENTS (42,4%)
 
Zeder is an investor in the agribusiness, food and beverage sectors. Its investment portfolio now amounts to R3,6bn
 
of which Agri Voedsel Beleggings (Pioneer) and Capevin Holdings (Distell) represent 56,3% (29 February 2012: 62,4%).
 
During the period under review, Zeder invested a further R439m, of which R427m related to the abovementioned
 
acquisition of controlling interests in Chayton and Agricol.
 
 
Zeders SOTP value per share increased by 5,1% to R3,31 since 29 February 2012. Its recurring headline earnings
 
decreased by 35,1% to 8,5 cents per share, mainly due to a lower earnings contribution from Pioneer Foods, initial
 
losses incurred by Chayton, a start-up business in its development phase, and a net interest expense as opposed to
 
net interest income in the prior year as a result of the debt raised to fund the acquisitions of mainly Agricol
 
and Chayton.
 
 
Zeder was instrumental in the recent JSE listing of Capevin Holdings, following its merger with and delisting of
 
Capevin Investments. This created R264m in value for Capevin Holdings shareholders and R105m for Zeder shareholders
 
in the period under review.
 
 
Zeders comprehensive results for the six months ended 31 August 2012 are available at www.zeder.co.za.
 
 
PSG PRIVATE EQUITY (100%)
 
 
PSG Private Equitys recurring headline earnings for the period increased by 89% to R35,2m. This improvement is
 
due to strong earnings growth from a number of its investments (notably in the financial services, manufacturing and
 
personnel services industries), as well as no further losses being recognised from Erbacon.
 
 
Corporate actions at PSG Private Equity included:
 
 
- A further investment of R8,9m in African Unity Insurance to increase its shareholding from 43,2% to 49,9%.
 
 
- A further investment of R24m in Impak, a provider of long distance learning, to increase its shareholding
 
from 50% to 89%.
 
 
- Increased its shareholding in M&S (previously Top Fix) from 28% to 38% through the sale of
 
M&Ss loss-making scaffolding division. The remaining businesses (personnel placements and safety surveillance)
 
are expected to continue to perform profitably.
 
 
- Erbacon has been recapitalised by means of a debt restructuring agreement with its major shareholders in terms of
 
which PSG Private Equitys shareholder loan of R15m was converted to equity, while its shareholding diluted from
 
27% to 11%.
 
 
THEMBEKA CAPITAL (49%)
 
 
Thembeka Capital is a black-owned and controlled investment company. Its investment portfolio of R2,1bn consists
 
primarily of interests in PSG Group, Capitec Bank, Curro, Pioneer Foods, MTN Zakhele, Kaap Agri and Overberg Agri.
 
 
Thembekas intrinsic value per share (after CGT) was R99,56 as at 31 August 2012, an increase of 34% since
 
29 February 2012.
 
 
Corporate actions at Thembeka included:
 
 
- Acquired a 4,4% interest in Pioneer Foods as the lead BEE partner in the Pioneer BEE deal for R514m.
 
Thembekas cash contribution to this transaction was R52m, with the balance being funded by a third party.
 
 
- Invested R128m to acquire a 9% interest in Curro.
 
 
Thembeka is uniquely positioned as a niche black investor with cash on its balance sheet and solid assets in its
 
portfolio. This will allow it to capitalise on further opportunities within the BEE and private equity investment market.
 
 
PSG CAPITAL (100%)
 
 
PSG Capital is the corporate finance arm of PSG Group and provides a complete range of corporate finance and advisory
 
services to a broad spectrum of clients. PSG Capital is a JSE-registered sponsor and designated advisor. They advise
 
on mergers and acquisitions, fairness opinions and valuations, capital raisings and listings, JSE and regulatory
 
advisory, private equity, BEE, management and leveraged transactions, corporate recovery and restructuring, and also
 
provides debt and strategic advice. PSG Capital is the sponsor and designated advisor to 32 JSE-listed companies,
 
and has an extensive list of unlisted clients. PSG Capitals services are available at www.psgcapital.com.
 
 
PSG CORPORATE (100%)
 
 
PSG Corporate is a profit centre. It acts as PSG Group treasurer, allocates capital and determines and monitors the
 
groups gearing.
 
 
PROSPECTS
 
 
Our focus remains on the creation of wealth for our shareholders by increasing both PSGs SOTP value and recurring
 
headline earnings per share. We remain committed to providing superior investment returns.
 
 
DIVIDENDS
 
 
Ordinary shares
 
 
PSG Groups policy remains to pay up to 100% of free cash flow as an ordinary dividend, of which one third is payable
 
as an interim and the balance as a final dividend at year-end. The directors have consequently resolved to declare
 
an interim dividend of 33 cents (2011: 26 cents) per share.
 
 
Dividend income is subject to a local dividend withholding tax at a rate of 15%, unless the shareholder is exempt from
 
dividend withholding tax or is entitled to a reduced rate in terms of the applicable double-tax agreement. The company,
 
however, holds STC credits which will be applied in reducing the liability for dividend withholding tax. The STC credits
 
utilised as part of this declaration amount to R68 667 026, and represent 33 cents per share. The portion of the
 
dividend subject to dividend withholding tax is therefore nil cents per share and there will thus be no withholding.
 
Accordingly, the net dividend that will be paid is 33 cents per share. The amount of STC credits available for future
 
utilisation following this interim dividend approximates R160m. PSG Groups total number of issued ordinary shares
 
at the date of this declaration is 208 081 896. The companys income tax reference number is 9950080714.
 
 
The following are the salient dates for the payment of the interim dividend:
 
 
Last day to trade cum dividend Friday, 26 October 2012
 
Trading ex dividend commences Monday, 29 October 2012
 
Record date Friday, 2 November 2012
 
Day of payment Monday, 5 November 2012
 
 
Share certificates may not be dematerialised or rematerialised between Monday, 29 October 2012, and Friday, 2 November 2012,
 
both days inclusive.
 
 
Preference shares
 
 
The directors of PSG Financial Services have declared a dividend of 366,79 cents per share in respect of the
 
cumulative, non-redeemable, non-participating preference shares for the six months ended 31 August 2012, which was
 
paid on 25 September 2012. The detailed announcement in respect hereof was disseminated on SENS.
 
 
On behalf of the board
 
 
 
Jannie Mouton Wynand Greeff
 
Chairman Financial director
 
 
8 October 2012
 
Stellenbosch
 
 
Directors:
 
JF Mouton (chairman)+, PE Burton^, ZL Combi^, J de V du Toit^, MM du Toit^, WL Greeff*, JA Holtzhausen*,
 
MJ Jooste+ (Alt:AB la Grange), JJ Mouton+, PJ Mouton*, CA Otto^, W Theron+
 
 
* Executive
 
+ Non-executive
 
^ Independent non-executive
 
 
Secretary:
 
PSG Corporate Services (Pty) Ltd
 
 
Registered office:
 
1st Floor, Ou Kollege, 35 Kerk Street, Stellenbosch, 7600; PO Box 7403, Stellenbosch, 7599
 
 
Transfer secretaries:
 
Computershare Investor Services (Pty) Ltd
 
70 Marshall Street, Johannesburg, 2001; PO Box 61051, Marshalltown, 2107
 
 
Sponsor:
 
PSG Capital
 
 
Auditor:
 
PricewaterhouseCoopers Inc.
 
 
 
 
 
 
 
CONDENSED GROUP INCOME STATEMENT
 
Unaudited Unaudited Audited
 
31 Aug 31 Aug 29 Feb
 
2012 2011 2012
 
Rm Rm Rm
 
 
 
Revenue 665,4
 
Cost of sales (578,7)
 
Gross profit 86,7 - -
 
Income
 
Investment income (note 4) 190,5 162,7 387,9
 
Net fair value gains and losses on financial instruments (note 4) 397,9 116,6 533,7
 
Fair value adjustment to investment contract liabilities (note 4) (463,9) (265,0) (624,1)
 
Commission and other fee income 894,1 757,9 1 527,6
 
Other operating income 69,0 20,2 226,8
 
Total income 1 087,6 792,4 2 051,9
 
 
 
Expenses
 
Insurance claims and loss adjustments 0,3 (0,5) 0,3
 
Operating expenses (989,8) (698,6) (1 456,3)
 
Total expenses (989,5) (699,1) (1 456,0)
 
 
 
Associated companies
 
Share of profits of associated companies 442,6 249,0 684,1
 
Loss on impairment of associated companies (56,8) (41,0)
 
Total profit related to associated companies 385,8 249,0 643,1
 
 
 
Results of operating activities 570,6 342,3 1 239,0
 
Finance costs (98,3) (59,5) (109,6)
 
Profit before taxation 472,3 282,8 1 129,4
 
Taxation (43,4) (30,5) (104,1)
 
Profit for the period 428,9 252,3 1 025,3
 
 
Attributable to:
 
Owners of the parent 315,1 148,1 703,0
 
Non-controlling interest 113,8 104,2 322,3
 
428,9 252,3 1 025,3
 
 
 
Attributable to equity holders of the company 315,1 148,1 703,0
 
Non-headline items (note 2) 64,8 26,9 (135,9)
 
Headline earnings 379,9 175,0 567,1
 
 
 
Earnings per share (cents)
 
- recurring headline 162,5 135,5 308,6
 
- headline 210,2 103,3 326,2
 
- attributable 174,3 87,4 404,4
 
- diluted headline 208,3 102,2 322,9
 
- diluted attributable 172,7 86,4 400,3
 
 
 
 
Dividend per share (cents)
 
- interim 33,0 26,0 26,0
 
- final 56,0
 
33,0 26,0 82,0
 
 
 
Number of shares (million)
 
- in issue 208,1 198,4 202,7
 
- in issue (net of treasury shares) 185,8 175,2 179,6
 
- weighted average 180,8 169,5 173,9
 
- diluted weighted average 182,4 171,3 175,6
 
 
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
 
Unaudited Unaudited Audited
 
31 Aug 31 Aug 29 Feb
 
2012 2011 2012
 
Rm Rm Rm
 
 
 
Profit for the period 428,9 252,3 1 025,3
 
Currency translation adjustments and fair value gains 0,3 0,9
 
Share of other comprehensive income and equity movements of associated companies (6,2) (7,8) (18,5)
 
Other (0,5) (2,9)
 
Total comprehensive income for the period 422,5 241,6 1 007,7
 
 
 
Attributable to:
 
Owners of the parent 308,8 143,3 685,4
 
Non-controlling interest 113,7 98,3 322,3
 
422,5 241,6 1 007,7
 
 
 
 
 
 
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
 
 
Unaudited Unaudited Audited
 
31 Aug 31 Aug 29 Feb
 
2012 2011 2012
 
Rm Rm Rm
 
 
Assets
 
Property, plant and equipment 1 553,7 507,8 654,7
 
Biological assets 73,3
 
Intangible assets 1 670,3 1 111,4 1 114,3
 
Investments in associated companies 6 230,0 5 446,2 6 117,6
 
Financial assets linked to investment contracts (note 4) 9 641,4 8 915,9 9 144,7
 
Cash and cash equivalents linked to investment contracts 31,3 83,8 97,2
 
Other financial assets linked to investment contracts 9 610,1 8 832,1 9 047,5
 
Other financial assets 760,7 612,8 751,7
 
Deferred income tax 85,6 64,3 51,3
 
Inventories 250,6
 
Receivables (note 5) 627,8 188,1 2 491,5
 
Current income tax assets 10,3 4,1 6,5
 
Cash and cash equivalents 1 307,9 698,0 628,5
 
Non-current assets classified as held for sale 7,4 31,0
 
 
Total assets 22 219,0 17 579,6 20 960,8
 
 
 
Equity
 
Ordinary shareholders' equity 5 307,5 4 020,5 4 760,0
 
Non-controlling interests 3 691,9 3 117,8 3 187,6
 
Total equity 8 999,4 7 138,3 7 947,6
 
 
Liabilities
 
Insurance contracts 30,0 30,3 29,9
 
Financial liabilities under investment contracts (note 4) 9 641,4 8 915,9 9 144,7
 
Other financial liabilities 2 271,5 845,0 952,2
 
Deferred income tax 236,0 133,5 139,9
 
Payables and provisions (note 5) 1 012,3 496,7 2 729,5
 
Current income tax liabilities 24,0 19,9 17,0
 
Non-current liabilities classified as held for sale 4,4
 
Total liabilities 13 219,6 10 441,3 13 013,2
 
 
Total equity and liabilities 22 219,0 17 579,6 20 960,8
 
 
 
Net asset value per share (cents) 2 857 2 295 2 650
 
Net tangible asset value per share (cents) 1 958 1 660 2 030
 
 
 
 
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
 
 
Unaudited Unaudited Audited
 
31 Aug 31 Aug 29 Feb
 
2012 2011 2012
 
Rm Rm Rm
 
 
Ordinary shareholders' equity at beginning of period 4 760,0 3 584,8 3 584,8
 
Shares issued 360,7 376,0 576,6
 
Net movement in treasury shares 13,2 16,7 (3,4)
 
Share-based payment costs 9,5 1,6 9,5
 
Transactions with non-controlling interests (43,7) (22,0) 33,8
 
Total comprehensive income for the period 308,8 143,3 685,4
 
Dividends paid (101,0) (79,9) (126,7)
 
 
Ordinary shareholders' equity at end of period 5 307,5 4 020,5 4 760,0
 
 
Non-controlling interests 3 691,9 3 117,8 3 187,6
 
 
Beginning of period 3 187,6 3 025,8 3 025,8
 
Shares issued 403,1 71,0 201,5
 
Transactions with non-controlling interests 76,7 0,4 (240,3)
 
Acquisition of subsidiaries 4,8
 
Share-based payment costs 1,3
 
Total comprehensive income 113,7 98,3 322,3
 
Dividends and capital distributions paid (90,5) (77,7) (126,5)
 
 
Total equity at end of period 8 999,4 7 138,3 7 947,6
 
 
 
 
CONDENSED GROUP STATEMENT OF CASH FLOWS
 
 
Unaudited Unaudited Audited
 
31 Aug 31 Aug 29 Feb
 
 
2012 2011 2012
 
 
Rm Rm Rm
 
 
 
 
Cash generated by operations 156,4 114,4 576,3
 
Cash movement in policyholder funds (65,9) (152,9) (237,4)
 
Finance costs & taxation paid (149,7) (96,0) (216,0)
 
Net cash flow from operating activities (59,2) (134,5) 122,9
 
Net cash flow from investment activities (1 031,6) (489,2) (911,5)
 
Net cash flow from financing activities 1 558,2 278,2 291,9
 
 
Net increase/(decrease) in cash and cash equivalents 467,4 (345,5) (496,7)
 
 
Cash and cash equivalents at
 
beginning of period 630,6 1 127,3 1 127,3
 
 
Cash and cash equivalents at
 
end of period * 1 098,0 781,8 630,6
 
 
 
* Include the following:
 
Bank overdrafts and CFD financing (241,1) (95,1)
 
Clients' cash linked to investment contracts 31,2 83,8 97,2
 
 
 
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
 
 
1. Basis of presentation and accounting policies
 
 
The condensed interim group financial statements have been prepared in accordance with IAS 34 Interim Financial
 
Reporting and should be read in conjunction with the annual financial statements for the year ended 29 February 2012,
 
which have been prepared in accordance with International Financial Reporting Standards ("IFRS"); including the
 
AC 500 standards; the requirements of the South African Companies Act of 2008, as amended, and the Listings
 
Requirements of the JSE Limited. The accounting policies applied in the preparation of these condensed interim
 
group financial statements are consistent with those used in the previous financial year. No new standards,
 
interpretations or amendments, which are relevant to the group's operations, became effective during the period.
 
 
 
Results of operating activities, as presented in the condensed group income statement, include share of profits
 
of associated companies as a significant part of PSG Group's business activity is performed through associated
 
companies.The comparatives have been presented on a consistent basis.
 
 
 
2. Non-headline items
 
Unaudited Unaudited Audited
 
31 Aug 31 Aug 29 Feb
 
 
2012 2011 2012
 
 
Rm Rm Rm
 
 
Net of taxation and non-controlling interests
 
 
Impairment of investments in associated companies (56,8) (20,2) (36,3)
 
Net profit on sale/dilution of investments in subsidiaries 1,7 0,2
 
Net (loss)/profit on sale/dilution of investments in
 
associated companies (10,1) 3,0 176,5
 
Profit/(loss) on sale of available-for-sale assets 0,3 (1,0)
 
Impairment of intangible assets (incl. goodwill) (22,1) (4,3)
 
Non-headline items of associated companies 9,5 (9,9) 0,7
 
Fair value gain resulting from step-up acquisition
 
from associate to subsidiary 9,3
 
Other investment activities 3,4 0,2 0,1
 
 
(64,8) (26,9) 135,9
 
 
 
3. Business combinations
 
 
The group's significant business combinations during the year under review were:
 
 
3.1 Effective 1 March 2012 the group acquired an effective 57,7% interest in CA Sales Holdings (Pty) Ltd
 
(a Botswana-based distributor of fast-moving consumer goods) at a purchase consideration of R 202m.
 
CA Sales Holdings (Pty) Ltd acquired a 100% interest in the CA Sales Group resulting in goodwill of R300,4m.
 
 
3.2 Effective 28 March 2012 the group, through Zeder Investments, acquired the remaining 74,9% of the share capital
 
in Agricol Holdings for a cash consideration of R150,4m. Goodwill of R51,7m arose on the acquisition.
 
 
3.3 Effective 1 April 2012 the group, through Curro Holdings, acquired 100% of the share capital of both Woodhill
 
College and Meridian College at a purchase consideration of R203,4m. Goodwill of R91,4m arose on the acquisition.
 
 
3.4 Effective 31 July 2012 the group, through Zeder Investments' subsidiary Chayton, acquired 100% of the share
 
capital of Somawhe, a company operating in Zambia. The consideration payable is estimated at R204,1m, equating
 
to the net identifiable asset value of Somawhe. Negotiations regarding the consideration will be finalised during
 
the second half of the financial year.
 
 
4. Linked investment contracts
 
 
These represent PSG Asset Management Administration Services (previously PSG FutureWealth) clients' assets held
 
under investment contracts, which are linked to a corresponding liability. The condensed group income statement
 
impact of the returns on investment contract policy holder assets and liabilities, as well as the investment income
 
earned by the ordinary shareholders of PSG Group Ltd and its subsidiaries, were as follows:
 
 
 
Investment Equity Total
 
contract holders
 
policy
 
holders
 
31 August 2012 Rm Rm Rm
 
 
Investment income 133,3 57,2 190,5
 
Net fair value gains and losses on financial instruments 336,4 61,5 397,9
 
Fair value adjustment to investment contract liabilities (463,9) (463,9)
 
Net investment return before taxation 5,8 118,7 124,5
 
 
 
Investment Equity Total
 
contract holders
 
policy
 
holders
 
31 August 2011 Rm Rm Rm
 
 
Investment income 107,0 55,7 162,7
 
Net fair value gains and losses on financial instruments 163,9 (47,3) 116,6
 
Fair value adjustment to investment contract liabilities (265,0) (265,0)
 
Net investment return before taxation 5,9 8,4 14,3
 
 
 
Investment Equity Total
 
contract holders
 
policy
 
holders
 
29 February 2012 Rm Rm Rm
 
 
Investment income 224,0 163,9 387,9
 
Net fair value gains and losses on financial instruments 422,9 110,8 533,7
 
Fair value adjustment to investment contract liabilities (624,1) (624,1)
 
Net investment return before taxation 22,8 274,7 297,5
 
 
 
5. Broker- and clearing accounts
 
 
Included under receivables are PSG Online broker- and clearing accounts of which R88,2m represents amounts owing
 
by the JSE for trades in the last few days before period end. These balances fluctuate on a daily basis depending
 
on the activity in the markets.
 
 
 
The control account for the settlement of these transactions is included under trade and other payables, with the
 
settlement to the clients taking place within 3 days after the transaction date.
 
 
 
 
6. Segmental reporting
 
 
 
The group is organised into seven reportable segments, namely: Capitec, Zeder, PSG Private Equity (previously Paladin),
 
Thembeka Capital, Curro, PSG Konsult (including PSG Asset Management, following its amalgamation) and PSG Corporate.
 
These segments represent the major investments of the group. The services offered by PSG Konsult consist of financial
 
advice, stock broking and fund management, while Curro offers private education services. The other segments offer
 
financing,banking, investing and corporate finance services. All segments predominantly operate in the Republic of
 
South Africa.
 
 
Income and intersegment income comprise total income per the condensed group income statement.
 
 
Headline earnings comprise recurring and non-recurring headline earnings. Consolidated recurring headline earnings are
 
calculated on a proportional basis, and include the proportional headline earnings of underlying investments, excluding
 
marked-to-market adjustments and one-off items.
 
 
Non-
 
Inter- Recurring recurring Sum-of-
 
segment headline headline Headline the-parts
 
Income income earnings earnings earnings value
 
Six months ended 31 August 2012 Rm Rm Rm Rm Rm Rm
 
 
Capitec * (8,6) 226,3 226,3 6 535,0
 
Zeder 125,2 35,3 (11,0) 24,3 1 192,0
 
PSG Private Equity 21,1 35,1 35,1 879,0
 
Thembeka Capital * 5,5 76,1 81,6 789,0
 
Curro 160,6 (2,0) (2,0) 2 387,0
 
PSG Konsult 762,6 51,8 3,1 54,9 1 598,0
 
PSG Corporate 40,1 (29,1) 13,8 54,6 68,4 1 645,0
 
Net fee income ** 1,9 (1,7) 0,2 338,0
 
Unit trust, hedge fund and share
 
investments 56,3 56,3 1 070,2
 
BEE investments 11,9 11,9 236,8
 
Funding 19,7 (4,0) (71,4) (36,7) (108,1) (2 052,0)
 
Other (0,6) (0,6)
 
Total 1 120,7 (33,1) 293,8 86,1 379,9 12 973,0
 
 
 
Non-headline (64,8)
 
Earnings attributable to non-controlling interest 113,8
 
Taxation 43,4
 
 
Profit before taxation 472,3
 
 
 
Non-
 
Inter- Recurring recurring Sum-of-
 
segment headline headline Headline the-parts
 
Income income earnings earnings earnings value
 
Six months ended 31 August 2011 Rm Rm Rm Rm Rm Rm
 
 
 
Capitec * 4,5 167,9 167,9 6 090,0
 
Zeder 21,7 53,8 (17,5) 36,3 1 013,0
 
PSG Private Equity 15,4 16,9 2,3 19,2 841,0
 
Thembeka Capital * 5,8 0,7 6,5
 
Curro 79,3 (5,1) (5,1) 580,0
 
PSG Konsult 694,2 42,5 1,4 43,9 1 177,0
 
PSG Corporate 6,1 (34,4) 17,9 (1,1) 16,8 1 228,0
 
Net fee income ** 7,8 0,3 8,1 350,0
 
Unit trust, hedge fund and share
 
investments (1,4) (1,4) 663,4
 
BEE investments 10,1 10,1 214,6
 
Funding 6,9 (1,3) (70,5) (40,5) (111,0) (1 494,0)
 
Other 0,5 0,5
 
Total 828,1 (35,7) 229,7 (54,7) 175,0 9 435,0
 
 
 
Non-headline (26,9)
 
Earnings attributable to non-controlling interest 104,2
 
Taxation 30,5
 
 
Profit before taxation 282,8
 
 
 
Non-
 
Inter- Recurring recurring Sum-of-
 
segment headline headline Headline the-parts
 
Income income earnings earnings earnings value
 
Year ended 29 February 2012 Rm Rm Rm Rm Rm Rm
 
 
Capitec * 182,4 362,4 362,4 5 978,3
 
Zeder 55,9 115,4 11,6 127,0 1 067,0
 
PSG Private Equity 17,2 32,0 (32,4) (0,4) 727,7
 
Thembeka Capital * 18,7 4,4 23,1 570,3
 
Curro 170,3 (5,2) (5,2) 1 118,0
 
PSG Konsult 1 461,3 107,9 7,8 115,7 1 482,9
 
PSG Corporate 212,4 (60,4) 41,0 68,6 109,6 1 071,0
 
Net fee income ** 20,4 20,4 338,3
 
Unit trust, hedge fund and share
 
investments 68,6 68,6 507,6
 
BEE investments 20,6 20,6 225,1
 
Funding 14,3 (1,5) (134,4) (29,8) (164,2) (1 650,2)
 
Other (1,3) 0,4 (0,9) (49,3)
 
Total 2 113,8 (61,9) 536,5 30,6 567,1 10 315,7
 
 
 
Non-headline 135,9
 
Earnings attributable to non-controlling interest 322,3
 
Taxation 104,1
 
 
Profit before taxation 1 129,4
 
 
 
 
* Equity accounted
 
** Net fee income is after the deduction of salaries, operating expenses and taxation.
 
 
7. Commitments and contingent liabilities Unaudited Unaudited Audited
 
31 Aug 31 Aug 29 Feb
 
2012 2011 2012
 
Rm Rm Rm
 
 
 
Operating lease commitments 277,7 81,2 70,8
 
Other capital commitments 319,8 109,0
 
597,5 81,2 179,8
 
 
 
8. Restatement of prior year figures
 
 
 
The net cash flows from investments in equity securities (other than those that are linked to investment contracts) have
 
been reclassified from cash flows from operating activities in prior reporting periods to cash flows from investment
 
activities.
 
 
PSG believes that this is the more appropriate way to view such investments from a cash flow perspective and has
 
consequently resolved to restate the figures in the statement of cash flows for the period ended 31 August 2011.
 
The effect of the reclassification was as follows:
 
 
 
Reported Reclassi- Restated
 
previously fication
 
Rm Rm Rm
 
 
Net cash flow from operating activities (316,3) 181,8 (134,5)
 
Net cash flow from investment activities (307,4) (181,8) (489,2)
 
 
9. PSG Financial Services
 
 
 
The company is a wholly owned subsidiary of PSG Group, except for the 13 419 479 preference shares which are
 
listed on the JSE Limited. No separate financial statements are presented for the company as it is the only asset of
 
PSG Group.
 
 
 
 
UNAUDITED CONDENSED GROUP FINANCIAL STATEMENTS
 
 
These unaudited condensed group financial statements were compiled under the supervision of PSG Group's financial director,
 
Mr W L Greeff, who is a Chartered Accountant (SA).
 
 
 
Date: 08/10/2012 02:17:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
 
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