Reviewed Results For The Year Ended 28 February 2013
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
Sum-of-the-parts value increased by 30% to R72,67 per share as at 28 February 2013
Recurring headline earnings increased by 27,1% to 392,3 cents per share
Attributable earnings of R1,1bn
Dividend for the year increased by 35,4% to 111 cents per share
PSG is proud to be a New South Africa company, having been established in November 1995.
Today PSG is an investment holding company consisting of underlying investments that operate across industries
which include financial services, banking, private equity, agriculture and education. PSG's market capitalisation
is approximately R11,7bn, with our largest investment being a 28,5% interest in Capitec.
We believe that performance should not be measured in terms of the size of a company, but rather on the return
that an investor receives over time. As we are all PSG shareholders, we prefer to focus on per share wealth
creation. Our objective remains to continuously create wealth for all stakeholders.
When evaluating PSG's performance over the long term, one should focus on the total return index (TRI) as
measurement tool. The TRI is the compound annual growth rate (CAGR) of an investment, and is calculated by taking
cognisance of share price appreciation, dividend and other distributions. This is a sound measure of wealth
creation and a means of benchmarking different companies. PSG's TRI is 51,4%, which is the highest of any
JSE-listed company over the 17-year period since PSG's establishment. PSG was ranked 2nd over 10 years and 17th
over five years in The Sunday Times Top 100 Companies 2012 analysis based on TRI. Capitec achieved the number
one spot over both measurement periods ­ an achievement which we believe is unlikely to be easily repeated.
When evaluating PSG's performance over the short to medium term, we focus on the growth in PSG's sum-of-the-
parts (SOTP) value per share and recurring headline earnings per share. History confirms that PSG's share price
tracks its SOTP value per share. Positive growth in PSG's SOTP value per share thus inevitably leads to share
price appreciation. However, an increase in PSG's SOTP value per share over time will ultimately depend on
sustained growth in the profitability of our underlying investments. PSG consequently introduced the recurring
headline earnings per share concept to provide management and investors with a more realistic and transparent
way of evaluating PSG's performance from an earnings perspective.
PSG had a successful financial year to 28 February 2013, with strong growth in both its SOTP value per share and
recurring headline earnings per share.
The calculation of the SOTP value is simple and requires limited subjectivity as approximately 81% of the
value is calculated using listed share prices, while the unlisted investments are valued using market-related
multiples. At 28 February 2013, the SOTP value per PSG share was R72,67 (29 Feb 2012: R55,92), which equated to
a 40% CAGR over the last three years. At 11 April 2013, the SOTP value was R78,60 per share.
28 Feb 28 Feb 29 Feb 28 Feb
2010 2011 2012 2013 % of
Asset/Liability Rm Rm Rm Rm total
Capitec* 2 367 5 138 5 978 6 128 38,7
Curro Holdings* 1 118 2 607 16,4
PSG Konsult** 948 1 206 1 483 2 237 14,1
Zeder* 742 1 069 1 067 1 412 8,9
PSG Private Equity+ 834 1 242 728 681 4,3
Thembeka Capital+ 570 899 5,7
PSG Corporate (incl. PSG Capital)++ 361 350 338 383 2,4
Other investments (incl. cash)++ 400 548 684 1 505 9,5
Total assets 5 652 9 553 11 966 15 852 100,0
Perpetual pref funding* (541) (1 028) (1 188) (1 163)
Other debt++ (539) (507) (463) (845)
Total SOTP value 4 572 8 018 10 315 13 844
Shares in issue (net of treasury shares) (million) 171,8 171,3 184,5 190,5
SOTP value per share (rand) 26,61 46,81 55,92 72,67
Net asset value per share (rand) 17,66 21,56 26,50 32,62
* Listed on the JSE Ltd ** Over-the-counter + SOTP value ++ Valuation
Year Year Year
ended ended ended
28 Feb 29 Feb 28 Feb
2011 Change 2012 Change 2013
Recurring headline earnings Rm % Rm % Rm
Capitec 223,0 63 362,4 38 499,9
Curro Holdings 1,9 n/a (5,2) n/a 8,1
PSG Konsult 93,9 15 107,9 10 118,8
Zeder 109,4 5 115,4 (8) 106,6
PSG Private Equity 36,5 (12) 32,0 134 75,0
Thembeka Capital 8,5 120 18,7 50 28,0
PSG Corporate (incl. PSG Capital) 21,0 (3) 20,4 (22) 15,9
Other 19,0 2 19,3 60 30,8
Recurring headline earnings
before funding 513,2 31 670,9 32 883,1
Funding (109,1) 23 (134,4) 25 (168,2)
Recurring headline earnings 404,1 33 536,5 33 714,9
Non-recurring items 108,3 (72) 30,6 423 160,1
Headline earnings 512,4 11 567,1 54 875,0
Non-headline items 196,0 (31) 135,9 95 264,8
Attributable earnings 708,4 (1) 703,0 62 1 139,8
Weighted average number of shares in
issue (net of treasury shares) (million) 167,1 173,9 182,2
Earnings per share (cents)
­ Recurring headline 241,9 28 308,6 27 392,3
­ Headline 306,7 6 326,2 47 480,2
­ Attributable 424,1 (5) 404,4 55 625,5
Dividend per share (cents) 67,0 22 82,0 35 111,0
Recurring headline earnings for the year ended 28 February 2013 increased by 27,1% to 392,3 cents per share. The
growth was (again) predominantly as a result of Capitec's remarkable performance, while the majority of the
remaining investments also reported improved earnings.
Headline earnings increased by 47,2% to 480,2 cents per share. The increase in non-recurring headline earnings
was mainly as a result of substantial marked-to-market profits achieved in Thembeka's portfolio of listed
shares in the current financial year.
Attributable earnings increased by 54,7% to 625,5 cents per share mainly as a result of the non-headline profits
achieved on the disposal of PSG's Capitec rights offer shares and Zeder's disposal of a 15,1% interest in
Capevin Holdings.
Operating profit before finance costs and taxation increased by 60,3% to R2bn, mainly as a result of the
aforementioned improved performance from our underlying investments, and the non-headline profit on disposals.
Although we focus less on headline and attributable earnings due to the volatility of the aforementioned, it is
important to note that over a five-year period we reported a cumulative total recurring headline earnings of
R2,3bn, headline earnings of R2,5bn and attributable earnings of R3bn. The fact that both headline and
attributable earnings are substantially more than recurring headline earnings indicates that PSG has added
value having continuously made significant non-recurring profits.
PSG remains proud of its investment in Capitec. Operationally the company continued to perform exceptionally
with a 35% increase in headline earnings per share for the year ended 28 February 2013. Capitec has a CAGR
of 42% in headline earnings per share over the past 10 years. There has been a lot of negative publicity
regarding the unsecured credit market in recent years, and we are well aware that the industry may face
challenges going forward. We, however, are confident that Capitec is well positioned to react to any
challenge which the market may pose. It is fairly easy to compare most of the players in this market, and it
gives us comfort that, as far as we know, 1) Capitec has the most conservative provisioning policy;
2) its sources of funding are the most secure and diverse; 3) Capitec is well capitalised with a capital
adequacy ratio of 41%; 4) its banking model continues to attract a vast number of new and sticky, less risky
clients; and 5) Capitec is becoming less dependent on interest income as it continues to experience a sharp
increase in transaction fee income. But, most important to PSG, 6) Capitec arguably has the best and most
focused management team in the industry today.
During November 2012, Capitec concluded a rights offer in terms of which R2,2bn cash was raised. As the
largest shareholder in Capitec, PSG supported the rights offer to ensure a successful capital raising.
As such, PSG furnished Capitec with an irrevocable undertaking to the value of R724m to take up its share
of the rights offer. PSG obtained funding to enable it to do so and has since sold the majority of its
Capitec rights offer shares to repay the debt raised in respect thereof. As a result, PSG's shareholding in
Capitec has reduced from 32,2% to 28,5%. PSG made a non-headline profit of R393m on the sale of these shares.
Capitec continues to be the group's star performer, contributing 56,6% to recurring headline earnings
before funding, and representing 38,7% of the assets of the group. As an investment company it is the very
fact that we can hold on to our winners that differentiates us from the normal fund management industry.
We remain positive about Capitec, its business and its management and believe that this investment will
continue to be a significant contributor to the future success of PSG for years to come.
Capitec's comprehensive results for the year ended 28 February 2013 are available at
Further detail regarding the latest year-end results of the underlying investments is available on the following
- Curro Holdings:
- PSG Konsult:
- Zeder:
- Thembeka Capital:
The PSG, Zeder and PSG Private Equity ("Private Equity") Executive Committees ("Exco") meet every two weeks, or
whenever required, to discuss the performance of and to provide strategic input to the underlying businesses, to
receive an update of deals in progress and to monitor and manage the capital requirements, gearing and liquidity
of the group. However, twice a year we break away from the detail to collectively revisit and, if necessary,
determine a revised strategy for the group or any of the investee companies where we could add strategic value.
In the past we have communicated very specific strategies, which included Project Unlock Value and Project Growth.
Our latest strategy, as approved by the PSG Board in February 2013, is Project Internal Focus.
PSG has historically been an active deal-making company and today has a sizeable portfolio of 36 investments
with a combined market capitalisation of approximately R80bn, employing in excess of 40 000 people. Some
established businesses, such as Capitec, require limited attention from PSG management. However, companies in
the development phase, such as Curro, Impak, Energy Partners and Chayton, have the potential to deliver
substantial future earnings, but require more active input from PSG's side. Then there are those businesses of
which the strategy is under review and where PSG is playing a role. We believe that PSG's investment portfolio
has vast potential and, with active involvement from PSG's side, maximum value will be extracted.
Project Internal Focus is therefore all about developing strategy within the portfolio and ensuring the successful
implementation thereof. PSG will assist these companies to grow both organically and by means of suitable
acquisition and/or merger opportunities. Ideally PSG wants fewer, but larger investments. Our focus will therefore
primarily be directed at the optimisation, refinement and growth of PSG's existing portfolio instead of new
acquisitions in the year ahead. However, this does not mean (true to our entrepreneurial spirit) that we will
ignore an attractive investment opportunity.
Project Internal Focus in action
Although we have only recently formalised this strategy, we have embarked on it some time ago already.
Increased stakes, increased control
Zeder has historically only taken non-controlling strategic stakes in entities. However, during the past
financial year, Zeder acquired controlling interests in both Agricol and Chayton. In addition, Zeder is
currently in the process of acquiring additional shares in Kaap Agri in order to obtain a more meaningful
interest in that company.
Zeder appointed Antonie Jacobs as Agricol's executive chairman. His primary responsibility is to grow the
business. The operational control of Chayton now resides with Zeder, with Willem Meyer as acting CEO.
Similarly, the Private Equity team acquired control of Impak and brought in a brand new
management team to expand the business.
When an investment does not perform to expectation or does not fit into our defined strategy, it necessitates a
review which may lead to a restructuring or disinvestment. We have no time constraints to exit and will mostly
do so in conjunction with other shareholders.
During the past financial year, we restructured M&S (Top Fix) by selling its loss-making scaffolding
division through a share buyback. Its share price has since increased by more than 170% to 89 cents per share.
We were unable to obtain more substantial influence in Petmin and consequently decided to sell our investment
for R158m (IRR of 16%). Zeder was instrumental in driving the Capevin Holdings/Investments merger and in the
process created significant value for Capevin Holdings shareholders. Zeder subsequently sold the majority of
this investment for a R441m non-headline profit as it became non-core. The IRR of the KWV/Capevin investment
over a seven-year period was 19%.
Changes to management
We have appointed or have been part of the process to appoint successor CEOs at some of our larger investments
during the year under review. Norman Celliers (Zeder), Francois Gouws (PSG Konsult) and Phil Roux (Pioneer
Foods) are all new additions to our group. We welcome them and wish them the best of luck with the tasks at hand.
We would like to thank Willem Theron (PSG Konsult) and André Hanekom (Pioneer Foods) for the way in which they
have built their respective businesses, and for giving the new incumbents a solid platform to grow from.
Curro Holdings
Curro epitomises Project Internal Focus. Since PSG initially acquired its controlling stake in June 2009, we have
spent significant time with management to help Curro reach its full potential. Bernardt van der Linde, who worked
for PSG at the time, has since been employed fulltime as Curro's CFO. In addition, Piet Mouton joined the Curro
Exco since the beginning of this year.
Curro is undoubtedly the most successful venture that Private Equity has invested in over the last couple
of years. Curro's relentless focus on both organic and acquisitive growth is starting to pay off. Since PSG's
involvement, the number of schools has increased from three to 26 and learners from 2 059 to 20 840, and the
business has listed on the JSE Ltd. It has a continued pipeline of new opportunities, and the recent acquisition
of Northern Academy gives Curro access to a low-fee school model which could have a significant impact on the
business in years to come. A plan has been formulated to have 80 schools by 2020!
Our strategy to actively work alongside management proved to be successful in Curro's case. We believe that by
applying the same strategy of being more internally focused at other investments in PSG's portfolio, we are
likely to achieve further success.
Being a New South Africa company, PSG has embraced the principle of creating wealth for the previously
disadvantaged. The 51% black-owned and controlled Thembeka Capital is a prime example of same. Under the
leadership of KK Combi, its intrinsic value has increased from R1 000 in 2006 to R1,9bn today, creating wealth
of more than R900m for its black shareholders.
The board of directors owns approximately 37% in PSG. Steinhoff is our largest corporate shareholder with a 20%
interest. In addition, we are proud to have a loyal shareholder base of individuals who remain invested in PSG
having received exceptional returns.
PSG operates in a number of diverse industries, the performance of which is not always correlated. Although it is
difficult to predict the future, we remain optimistic and believe our strategy will continue to deliver superior
returns for shareholders.
Ordinary shares
PSG's 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 resolved to declare
a final gross dividend of 78 cents (2012: 56 cents) per share, which brings the total dividend for the financial
year ended 28 February 2013 to 111 cents (2012: 82 cents), an increase of 35,4%.
The company will be utilising secondary tax on companies credits amounting to 78 cents per ordinary share and,
as a result, there will be no dividend withholding tax deducted from this dividend for any PSG shareholder.
The number of ordinary shares in issue at the declaration date is 208 081 893, and the income tax number of
the company is 9950080714.
The salient dates of this dividend distribution are:
Last day to trade cum dividend Friday, 3 May 2013
Trading ex dividend commences Monday, 6 May 2013
Record date Friday, 10 May 2013
Date of payment Monday, 13 May 2013
Share certificates may not be dematerialised or rematerialised between Monday, 6 May 2013, and
Friday, 10 May 2013, both days inclusive.
Preference shares
The directors of PSG Financial Services Ltd have declared a dividend of 351,24 cents per share in respect of the
cumulative, non-redeemable, non-participating preference shares for the six months ended 28 February 2013, which
was paid on 25 March 2013. The detailed announcement in respect hereof was disseminated on Securities Exchange
News Services (SENS).
On behalf of the board
Jannie Mouton Wynand Greeff
Chairman Financial Director
15 April 2013
The following summarised financial information has been extracted from the reviewed annual financial statements:
Abridged group income statement
Reviewed Audited
2013 2012
Rm Rm
Revenue from sale of goods 2 001,8
Cost of goods sold (1 682,9)
Gross profit 318,9 -
Investment income (note 4) 418,3 387,9
Net fair value gains and losses on financial instruments (note 4) 1 023,9 533,7
Adjustment to investment contract liabilities (note 4) (1 186,6) (624,1)
Commission and other fee income 1 941,1 1 527,6
Changes in fair value of biological assets 28,7
Other operating income 830,1 226,8
3 055.5 2 051.9
Insurance claims and loss adjustments, net of recoveries (60,0) 0,3
Marketing, administration and other expenses (2 276,6) (1 456,3)
(2 336,6) (1 456,0)
Profit related to associated companies
Share of profits of associated companies 1 036,6 684,1
Loss on impairment of associated companies (104,2) (41,0)
932,4 643,1
Results before finance costs and taxation 1 970,2 1 239,0
Finance costs (206,0) (109,6)
Profit before taxation 1 764,2 1 129,4
Taxation (248,1) (104,1)
Profit for the year 1 516,1 1 025,3
Attributable to:
Owners of the parent 1 139,8 703,1
Non-controlling interest 376,3 322,2
1 516,1 1 025,3
Reconciliation to headline earnings:
Profit for the year attributable to owners of the parent 1 139,8 703,1
Non-headline items (note 2) (264,8) (135,9)
Headline earnings 875,0 567,2
Earnings per share (cents)
- attributable 625,5 404,4
- headline 480,2 326,2
- diluted attributable 620,5 400,3
- diluted headline 476,3 322,9
- recurring headline 392,3 308,6
Number of shares (million)
- in issue (net of treasury shares) 183,6 179,6
- weighted average 182,2 173,9
- diluted weighted average 183,7 175,6
Abridged group statement of comprehensive income
Reviewed Audited
2013 2012
Rm Rm
Profit for the year 1 516,1 1 025,3
Other comprehensive income for the year, net of taxation
Currency translation adjustments 15,6 0,3
Fair value gains on investments (0,1) 0,5
Share of other comprehensive income and equity movements
of associated companies 6,4 42,8
Recycling of share of associated companies' other
comprehensive income on disposal (1,2) (62,9)
Total comprehensive income for the year 1 536,8 1 006,0
Attributable to:
Owners of the parent 1 132,4 683,7
Non-controlling interest 404,4 322,3
1 536,8 1 006,0
Abridged group statement of financial position
Reviewed Audited
2013 2012
Rm Rm
Property, plant and equipment 1 799,7 654,7
Intangible assets 1 666,5 1 114,3
Biological assets 31,3
Investment in ordinary shares of associated companies 5 961,3 5 671,5
Investment in preference shares of/loans granted
to associated companies 312,7 446,1
Financial assets linked to investment contracts 10 272,4 9 144,7
Cash and cash equivalents 65,1 97,2
Other financial assets 10 207,3 9 047,5
Other financial assets 734,0 751,7
Inventory 320,8
Non-current assets held for sale 287,7
Deferred income tax assets 59,5 51,3
Receivables (note 5) 2 243,6 2 491,5
Current income tax assets 14,6 6,5
Cash, money market investments and other cash equivalents 2 153,2 628,5
Total assets 25 857,3 20 960,8
Ordinary shareholders' equity 5 989,7 4 759,9
Non-controlling interests 4 159,8 3 187,7
Total equity 10 149,5 7 947,6
Insurance contracts 378,0 29,9
Financial liabilities under investment contracts (note 4) 10 272,4 9 144,7
Borrowings and other financial liabilities 2 373,4 952,2
Deferred income tax liabilities 243,5 139,9
Payables and provisions (note 5) 2 434,2 2 729,5
Current income tax liabilities 6,3 17,0
Total liabilities 15 707,8 13 013,2
Total equity and liabilities 25 857,3 20 960,8
Net asset value per share (cents) 3 261,6 2 650,1
Net tangible asset value per share (cents) 2 354,1 2 029,7
Abridged group statement of changes in equity
Reviewed Audited
2013 2012
Rm Rm
Ordinary shareholders' equity at beginning of year 4 759,9 3 584,8
Total comprehensive income 1 132,4 683,7
Issue of shares 361,0 576,6
Share-based payment costs - employees 14,2 11,1
Net movement in treasury shares (123,4) (3,4)
Transactions with non-controlling interest 7,6 33,8
Dividend paid (162,0) (126,7)
Ordinary shareholders' equity at end of year 5 989,7 4 759,9
Non-controlling interest at beginning of year 3 187,7 3 025,8
Total comprehensive income 404,4 322,3
Issue of shares 551,5 201,5
Share-based payment costs - employees 3,3 0,7
Acquisition of subsidiaries 202,0 4,8
Transactions with non-controlling interest (32,2) (240,9)
Dividend paid (156,9) (126,5)
Non-controlling interest at end of year 4 159,8 3 187,7
Total equity 10 149,5 7 947,6
Dividend per share (cents)
- interim 33,0 26,0
- final 78,0 56,0
111,0 82,0
Abridged group statement of cash flows
Reviewed Audited
2013 2012
Rm Rm
Cash generated by operations 623,9 576,3
Cash movement in policyholder funds (32,1) (237,4)
Finance costs and taxation paid (467,2) (216,0)
Net cash flow from operating activities 124,6 122,9
Net cash flow from investing activities (12,0) (911,5)
Net cash flow from financing activities 1 183,0 291,9
Net increase/(decrease) in cash and cash equivalents 1 295,6 (496,7)
Exchange gains on cash and cash equivalents 1,5
Cash and cash equivalents at beginning of year 630,6 1 127,3
Cash and cash equivalents at end of year 1 927,7 630,6
Cash and cash equivalents include:
Cash and cash equivalents linked to investment contracts 65,1 97,2
Borrowings (bank overdrafts) (290,6) (95,1)
Notes to the abridged group financial statements
1. Basis of presentation and accounting policies
These abridged group financial statements have been prepared in accordance with the recognition and measurement
principles of International Financial Reporting Standards (IFRS), including IAS 34 ­ Interim Financial Reporting;
the SAICA Financial Reporting Guides, as issued by the Accounting Practices Committee; the Financial Reporting
Pronouncements, as issued by the Financial Reporting Standards Council; the requirements of the South African
Companies Act of 2008, as amended; and the Listings Requirements of the JSE Ltd. The accounting policies applied
in the preparation of these abridged group financial statements are consistent with those used in the prior
financial year, and no new accounting standards, interpretations or amendments to IFRS were relevant to the
group's operations.
Reviewed Audited
2013 2012
2. Non-headline items Rm Rm
Gross amounts
Impairment of investments in associated companies (100,4) (41,0)
Net profit on sale/dilution of investments in associated companies 728,6 174,6
Fair value gain on step-up from associated company to subsidiary 21,2
Impairment of intangible assets (including goodwill) (167,9) (11,5)
Non-headline items of associated companies 23,2 23,7
Other investment activities (6,9) 3,2
Non-controlling interest (110,3) (12,1)
Taxation (122,7) (1,0)
264,8 135,9
3. Business combinations
The group's most significant business combinations entered into during the year under review included:
CA Sales
Effective 1 March 2012, the group acquired an effective 57,7% interest in CA Sales, a business involved in the
distribution of fast moving consumer goods throughout Southern Africa. The cash purchase consideration and
non-controlling interest recognised amounted to R188,9m and R147,6m, respectively, while goodwill of R300,4m was
recognised. Since acquisition, losses of R54m were incurred, mainly due to the winding down of unprofitable
Effective 28 March 2012, the group, through Zeder, acquired the remaining 74,9% interest in Agricol, a
business involved in plant breeding, production, international trade, processing and distribution of seed.
The cash purchase consideration amounted to R150,4m and goodwill of R51,7m was recognised. Profits since
acquisition amounted to R25,6m.
Chayton and Somawhe
Effective 10 April 2012, the group, through Zeder, acquired the entire shareholding in Chayton, a holding
company of farming operations in Zambia. Subsequently, on 31 July 2012, Chayton acquired the entire
shareholding in Somawhe, a further farming operation in Zambia. The combined cash purchase consideration
amounted to R298,2m and goodwill of R87,3m was recognised. These farming operations are in its development
phase and losses since acquisition amounted to R25,3m. At the reporting date, the group, through Zeder,
held 73,4% in Chayton.
Business combinations effected through Curro Holdings
During the year under review, the group, through Curro Holdings, acquired a number of businesses involved
in private education. The combined cash purchase consideration amounted to R322m (of which R28,6m is
deferred) and goodwill of R109,6m was recognised. Profits since these acquisitions amounted to R21,4m.
Western Group Holdings
Effective 6 November 2012, the group, through PSG Konsult, increased it's interest in Western Group Holdings
to 75%. Western Group Holdings is a Namibia based short-term insurer, operating in Namibia and South Africa.
The purchase consideration of the additional 51% interest amounted to R112,2m (of which R53,6m was settled
in cash, with the remainder settled through the issue of PSG Konsult ordinary shares), while
non-controlling interest and goodwill of R22,1m and R66,6m were recognised, respectively. Profits since
acquisition amounted to R4,2m.
4. Linked investment contracts
These represent PSG Asset Management Life (previously PSG Asset Management Administration Services)
clients' assets held under investment contracts, which are linked to a corresponding liability. The impact
on the abridged group income statement from the returns on investment contract policy holder assets and
liabilities, as well as the investment income earned by the ordinary shareholders of the group, were
as follows:
policy Equity
holder holders Total
Rm Rm Rm
28 February 2013 - Reviewed
Investment income 272,0 146,3 418,3
Net fair value gains and losses on financial instruments 937,1 86,8 1 023,9
Adjustment to investment contract liabilities (1 186,6) (1 186,6)
22,5 233,1 255,6
29 February 2012 - Audited
Investment income 224,0 163,9 387,9
Net fair value gains and losses on financial instruments 422,9 110,8 533,7
Adjustment to investment contract liabilities (624,1) (624,1)
22,8 274,7 297,5
5. Receivables, payables and provisions
Included under receivables are PSG Online broker- and clearing accounts of which R1,6bn (2012: R2,3bn)
represents amounts owing by the JSE Ltd for trades conducted during the last few days before year 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. Corporate actions
Apart from the business combinations set out in note 3, the group's most significant corporate actions
included the following:
· Issue of 5,4m ordinary PSG Group shares for R361m cash proceeds.
· PSG Group furnished Capitec with an irrevocable undertaking to the value of R724m to take up
its share of their rights offer. PSG Group obtained funding to enable it to do so and has
since sold the majority of its Capitec rights offer shares to repay the debt raised in
respect thereof. PSG Group's shareholding in Capitec has as a result reduced from 32,2% to
28,5%, with a non-headline profit of R393m being realised.
· Through Zeder, the group disposed of 15,1% of its interest in Capevin Holdings for R799,8m,
and thereby reduced its shareholding to 5,3% (being classified as 'held for sale' at the
reporting date). This resulted in a non-headline profit of R441m.
7. PSG Financial Services Ltd
PSG Financial Services Ltd is a wholly owned subsidiary of the group, except for the 13 419 479 preference
shares which are listed on the JSE Ltd. No separate financial statements are presented in this announcement
for the company as it is the only asset of PSG Group.
8. Segmental reporting
The group is organised into seven reportable segments, namely: Capitec, Zeder, PSG Private Equity,
Thembeka Capital, Curro Holdings, PSG Konsult 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 Holdings 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.
Intersegment income represents income derived from other segments within the group which is recorded at the fair
value of the consideration received or receivable for services rendered in the ordinary course of the group's
activities. The majority of the segmental income comprises intergroup management fees charged in terms of the
respective management agreements.
Headline earnings (segment profit) comprise recurring and non-recurring headline earnings. 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. The result is that investments in which
the group holds less than 20% and which are generally not equity accountable in terms of accounting standards,
are equity accounted for the purpose of calculating the consolidated recurring headline earnings. Non-recurring
headline earnings include one-off gains and losses and marked-to-market fluctuations as well as the resulting
taxation charge on these items. Sum-of-the-parts (SOTP) is the key valuation tool to measure PSG's performance.
In determining SOTP, listed assets and liabilities are valued using quoted market prices, whereas unlisted
assets and liabilities are valued using appropriate valuation methods.
These values will not necessarily correspond with the values per the statement of financial position since
the latter are measured using the relevant accounting standards which include historical cost and equity
accounting methods.
The chief operating decision-maker (the Executive Committee) evaluates the following information to assess the
segments' performance:
Inter- Non- Headline
segment Recurring recurring earnings Sum-of-
Income income headline headline (segment the-parts
Reviewed *** *** earnings earnings profit) value^
Year ended 28 February 2013 Rm Rm Rm Rm Rm Rm
Capitec * 410,1 499,9 499,9 6 127,6
Zeder 755,5 106,6 (23,2) 83,4 1 411,6
PSG Private Equity 1 690,9 75,0 (9,2) 65,8 680,7
Thembeka Capital * 28,0 140,0 168,0 898,8
Curro Holdings 367,3 8,1 8,1 2 606,6
PSG Konsult 1 673,0 118,8 (0,1) 118,7 2 236,8
PSG Corporate 190,7 (61,0) 48,3 56,8 105,1 1 855,1
Net fee income ** 15,6 13,9 29,5 383,2
Cash, unit trust, hedge fund
and share investments 42,9 42,9 1 223,1
BEE investments 32,7 32,7 248,8
Reconciling items
Funding 39,0 (8,2) (168,2) (4,2) (172,4) (2 008,1)
Other (1,6) (1,6) 34,4
Total 5 126,5 (69,2) 714,9 160,1 875,0 13 843,5
Non-headline 264,8
Earnings attributable to non-controlling interest 376,3
Taxation 248,1
Profit before taxation 1 764,2
Reconciliation of segment revenue to IFRS Revenue:
Segment revenue as stated above
Income 5 126,5
Inter-segment income (69,2)
Net fair value gains and losses on financial instruments (1 023,9)
Adjustment to investment contract liabilities 1 186,6
Changes in fair value of biological assets (28,7)
Other operating income (830,1)
IFRS Revenue 4 361,2
Non-recurring headline earnings comprised the following:
Non-recurring items 107,5
Net fair value gains 42,9
Other + 9,7
Inter- Non- Headline
segment Recurring recurring earnings Sum-of-
Income income headline headline (segment the-parts
Audited *** *** earnings earnings profit) value^
Year ended 29 February 2012 Rm Rm Rm Rm Rm Rm
Capitec * 182,4 362,4 362,4 5 978,3
Zeder 56,0 115,4 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 Holdings 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 212,3 (60,4) 41,0 68,6 109,6 1 071,0
Net fee income ** 20,4 20,4 338,3
Cash, unit trust, hedge fund
and share investments 68,6 68,6 507,6
BEE investments 20,6 20,6 225,1
Reconciling items
Funding 14,3 (1,5) (134,4) (29,8) (164,2) (1 650,2)
Other (1,2) 0,4 (0,8) (49,3)
Total 2 113,8 (61,9) 536,6 30,6 567,2 10 315,7
Non-headline 135,9
Earnings attributable to non-controlling interest 322,2
Taxation 104,1
Profit before taxation 1 129,4
Reconciliation of segment revenue to IFRS Revenue:
Segment revenue as stated above
Income 2 113,8
Inter-segment income (61,9)
Net fair value gains and losses on financial instruments (533,7)
Adjustment to investment contract liabilities 624,1
Other operating income (226,8)
IFRS Revenue 1 915,5
Non-recurring headline earnings comprised the following:
Non-recurring items (8,6)
Net fair value gains 41,8
Other (2,6)
* Equity accounted
** Net fee income is after the deduction of salaries, operating expenses and taxation.
*** The total of Income and Intersegment income comprises the total income (including revenue from sale of goods)
per the income statement.
^ SOTP is the key valuation tool to measure the group's performance, but does not necessarily correspond to
net asset value.
+ Includes an underwriting fee from Capitec.
9. Preparation and review by auditors
These abridged group financial statements were compiled under the supervision of the group financial director,
Mr WL Greeff, CA (SA), and were reviewed by PSG Group's external auditor, PricewaterhouseCoopers Inc. A copy
of their unmodified review opinion is available from PSG Group's registered office. Any reference to future
financial performance included in this announcement, has not been reviewed or reported on by the company's
JF Mouton (Chairman)+, PE Burton^, ZL Combi^, J de V du Toit^, MM du Toit^, FJ Gouws+, WL Greeff*,
JA Holtzhausen*, MJ Jooste+ (Alt: AB la Grange), JJ Mouton+, PJ Mouton*, CA Otto^, W Theron+
*Executive +Non-executive ^Independent non-executive
PSG Corporate Services (Pty) Ltd, 1st Floor, Ou Kollege, 35 Kerk Street, Stellenbosch, 7600;
PO Box 7403, Stellenbosch, 7599
Computershare Investor Services (Pty) Ltd, 70 Marshall Street, Johannesburg, 2001; PO Box 61051, Marshalltown, 2107
AUDITOR: PricewaterhouseCoopers Inc.
Date: 15/04/2013 02:48:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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