Unaudited Results For The Six Months Ended 31 August 2018
 
 
PSG Group Limited
 
Incorporated in the Republic of South Africa
 
Registration number: 1970/008484/06
 
JSE Ltd (“JSE”) share code: PSG
 
ISIN code: 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 code: ZAE000096079
 
(“PSG Financial Services”)
 
 
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2018
 
 
• Recurring earnings up 22% to R5.03 per share
 
• Sum-of-the-parts value of R262.80 per share as at 12 October 2018
 
• Interim dividend up 10% to R1.52 per share
 
 
OVERVIEW
 
 
PSG Group is an investment holding company consisting of underlying investments that
 
operate across a diverse range of industries, which include banking, financial services,
 
education and food and related business, as well as early-stage investments in select growth
 
sectors. PSG’s market capitalisation (net of treasury shares) is approximately R47bn.
 
 
PERFORMANCE
 
 
The two key benchmarks used by PSG to measure performance are sum-of-the-parts (“SOTP”) value
 
and recurring earnings per share, as long-term growth in PSG’s SOTP value and share price should
 
depend on, inter alia, sustained growth in the recurring earnings per share of our underlying
 
investments.
 
 
SOTP
 
 
The calculation of PSG’s SOTP value is simple and requires limited subjectivity as more than
 
90% of the value is calculated using JSE-listed share prices, while other investments are
 
included at market-related valuations. At 31 August 2018, the SOTP value per PSG share was
 
R272.94 (28 February 2018: R255.17), representing a 7% increase. At 12 October 2018, it was
 
R262.80 per share. The five-year compound annual growth rate (“CAGR”) of PSG’s SOTP value per
 
share and share price at 31 August 2018 was 28% and 27%, respectively.
 
 
28 Feb 28 Feb 31 Aug 12 Oct
 
2017 2018 2018 2018 Share Five-year
 
Asset/(liability) Rm Rm Rm Rm of total CAGR^^
 
 
Capitec* 25 727 29 540 35 582 35 116 59% 40%
 
PSG Konsult* 6 084 7 048 7 858 7 882 13% 23%
 
Curro* (incl. Stadio until
 
unbundling in Oct 2017) 11 180 7 987 7 303 6 116 10% 10%
 
Zeder* 5 398 4 823 3 727 3 510 6% 4%
 
PSG Alpha 1 909 5 201 4 961 4 829 8% 26%
 
Stadio* (since
 
unbundling from Curro
 
in Oct 2017) 2 379 1 548 1 410
 
Other investments** 1 909 2 822 3 413 3 419
 
Dipeo** 812 535 255 68 1%
 
Other assets 3 586 2 603 2 143 2 075 3%
 
Cash^ 1 513 1 000 531 510
 
Pref investments and
 
loans receivable^ 2 002 1 558 1 563 1 529
 
Other^ 71 45 49 36
 
 
Total assets 54 696 57 737 61 829 59 596 100%
 
Perpetual pref funding* (1 350) (1 278) (1 289) (1 259)
 
Other debt^ (949) (949) (1 020) (1 029)
 
Total SOTP value 52 397 55 510 59 520 57 308
 
 
Shares in issue (net of
 
treasury shares) (m) 217.5 217.5 218.1 218.1
 
 
SOTP value per share (R) 240.87 255.17 272.94 262.80 28%
 
 
Share price (R) 251.43 217.50 225.04 216.27 27%
 
 
* Listed on the JSE ** SOTP value
 
^ Carrying value ^^ Based on share price/SOTP value per share
 
 
Note: PSG’s live SOTP containing further information is available at www.psggroup.co.za
 
 
Capitec remains PSG’s largest investment comprising 58% of its total SOTP assets as at
 
31 August 2018 (28 February 2018: 51%), and is the major contributor to PSG’s recurring earnings.
 
 
RECURRING EARNINGS
 
 
PSG’s recurring earnings per share increased by 22% to R5.03 (31 August 2017: R4.12) following
 
commendable performance from the majority of PSG’s core investments during the period under
 
review.
 
 
Year
 
Six months ended ended
 
31 Aug 31 Aug 28 Feb
 
2017 Change 2018 2018
 
Rm % Rm Rm
 
 
Capitec 628 756 1 369
 
PSG Konsult 147 174 348
 
Curro (incl. Stadio until unbundling
 
in Oct 2017) 61 77 110
 
Zeder 27 73 205
 
PSG Alpha (incl. Stadio since unbundling
 
in Oct 2017) 66 76 172
 
Dipeo (34) (31) (56)
 
PSG Corporate (18) (25) (7)
 
Other (mainly pref div income) 68 82 136
 
Recurring earnings before funding 945 25 1 182 2 277
 
Funding (net of interest income) (57) (96) (135)
 
Recurring earnings 888 22 1 086 2 142
 
Non-recurring items (107) 10 (186)
 
Headline earnings 781 40 1 096 1 956
 
Non-headline items 52 19 (42)
 
Attributable earnings 833 34 1 115 1 914
 
 
Non-recurring items comprise:
 
- Unrealised fair value losses on Dipeo’s
 
investment portfolio (98) (145) (131)
 
- Other* (9) 155 (55)
 
(107) 10 (186)
 
 
Weighted average number of shares in issue
 
(net of treasury shares) (m) 215.4 216.1 215.5
 
 
Earnings per share (R)
 
- Recurring 4.12 22 5.03 9.94
 
- Headline 3.63 40 5.07 9.08
 
- Attributable 3.86 34 5.16 8.88
 
 
Dividend per share 1.38 10 1.52 4.15
 
 
* PSG’s headline and attributable earnings per share increased by 40% and 34%, respectively,
 
mainly due to the aforementioned increase in recurring earnings, as well as a fair value gain
 
recognised by Zeder on its investment in Joy Wing Mau (previously known as Golden Wing Mau),
 
which is in process of being disposed of.
 
 
CAPITEC (30.7%)
 
 
Capitec is a South African retail bank focused on delivering simplified and affordable banking
 
solutions.
 
 
It reported a 20% increase in headline earnings per share for the period under review.
 
 
Capitec is listed on the JSE and its comprehensive results are available at www.capitecbank.co.za.
 
 
PSG KONSULT (61.4%)
 
 
PSG Konsult is a financial services company, focused on providing wealth management, asset
 
management and insurance solutions to clients.
 
 
It reported an 18% increase in recurring earnings per share for the period under review.
 
 
PSG Konsult is listed on the JSE and the Namibian Stock Exchange, and its comprehensive results
 
are available at www.psg.co.za.
 
 
CURRO (55.4%)
 
 
Curro is the largest provider of private school education in Southern Africa.
 
 
Its schools-only business (i.e. excluding Stadio’s results prior to its unbundling in
 
October 2017) reported a 22% increase in headline earnings per share for its six months
 
ended 30 June 2018.
 
 
Curro is listed on the JSE and its comprehensive results are available at www.curro.co.za.
 
 
ZEDER (43.8%)
 
 
Zeder is an investor in the broad agribusiness industry. Its largest investment is a 27%
 
interest in Pioneer Foods, comprising 49% of Zeder’s total SOTP assets.
 
 
It reported a 158% increase in recurring earnings per share for the period under review.
 
 
Both Zeder and Pioneer Foods are listed on the JSE and their respective comprehensive
 
results are available at www.zeder.co.za and www.pioneerfoods.co.za.
 
 
PSG ALPHA (98.1%)
 
 
PSG Alpha serves as incubator to identify and help build the businesses of tomorrow. Given
 
its nature, this portfolio is likely to yield volatile earnings, while providing optionality.
 
Its major investments include shareholdings in Stadio (44.1%), CA Sales (47.7%), Evergreen (50%)
 
and Energy Partners (54.1%).
 
 
PSG Alpha reported a 24% decline in recurring earnings per share for the period under review
 
following further investments in initially low earnings-yielding start-up businesses such as
 
Stadio and Evergreen.
 
 
DIPEO (49%)
 
 
Dipeo, a BEE investment holding company, is 51%-owned by the Dipeo BEE Education Trust of
 
which all beneficiaries are black individuals. The trust will use its share of the value
 
created in Dipeo to fund black students’ education.
 
 
Dipeo’s most significant investments include shareholdings in Curro (5.2%), Stadio (3.4%),
 
Pioneer Foods (4.3%), Quantum Foods (4.2%), Kaap Agri (20%) and Energy Partners (15.7%).
 
The investments in Pioneer Foods, Quantum Foods and Energy Partners remain subject to BEE
 
lock-in periods.
 
 
Dipeo’s SOTP value decreased to R521m as at 31 August 2018 (28 February 2018: R1 091m)
 
due to the decline in Pioneer Foods’ share price.
 
 
PROSPECTS
 
 
Despite obvious challenges, PSG remains positive about South Africa and the opportunities
 
it presents. We believe PSG’s investment portfolio is suitably positioned to continue
 
yielding above-average returns.
 
 
DIVIDENDS
 
 
Ordinary shares
 
 
PSG’s policy remains to pay up to 100% of available free cash flow as an ordinary dividend,
 
of which approximately one third is payable as an interim and the balance as a final
 
dividend at year-end. The directors have resolved to declare an interim gross dividend of
 
152 cents (2017: 138 cents) per share from income reserves for the six months ended
 
31 August 2018. PSG’s interim dividend increased by a lower percentage than its recurring
 
earnings per share due to continuous investment in early-stage non-dividend paying
 
investments.
 
 
The interim dividend amount, net of South African dividends tax of 20%, is 121.6 cents per
 
share for those shareholders that are not exempt from dividends tax. The number of ordinary
 
shares in issue at the declaration date is 231 976 198, and the income tax number of the
 
company is 9950080714.
 
 
The salient dates for this dividend distribution are:
 
 
Last day to trade cum dividend Tuesday, 6 November 2018
 
Trading ex-dividend commences Wednesday, 7 November 2018
 
Record date Friday, 9 November 2018
 
Payment date Monday, 12 November 2018
 
 
Share certificates may not be dematerialised or rematerialised between Wednesday,
 
7 November 2018, and Friday, 9 November 2018, both days inclusive.
 
 
Preference shares
 
 
The directors of PSG Financial Services declared a gross dividend of 421.67 cents per share
 
in respect of the cumulative, non-redeemable, non-participating preference shares for the
 
six months ended 31 August 2018, which was paid on Tuesday, 25 September 2018. The related
 
detailed announcement was disseminated on the JSE’s Stock Exchange News Service.
 
 
WEBCAST AND CONFERENCE CALL
 
 
PSG Group will be hosting a webcast and a conference call at 15h00 (South African time) on
 
Wednesday, 17 October 2018, to present the results to shareholders and the market.
 
 
To register for the webcast and/or the conference call, please follow the link(s) below.
 
 
Webcast details:
 
- View and listen mode, with a Q&A facility via online request
 
- Link: www.diamondpass.net/psg181017
 
 
Conference call details:
 
- Listen-only mode, with a Q&A facility via telephone
 
- Link: www.diamondpass.net/5403101
 
 
UNAUDITED SUMMARY INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
 
Unaudited Audited
 
Aug-18 Aug-17 Feb-18
 
6 months 6 months 12 months
 
Summary consolidated income statement Rm Rm Rm
 
 
Revenue from sale of goods 6 656 7 013 13 956
 
Cost of goods sold (5 354) (5 894) (11 934)
 
Gross profit from sale of goods 1 302 1 119 2 022
 
 
Income
 
Changes in fair value of biological assets 31 39 195
 
Investment income (note 7) 1 007 984 2 059
 
Fair value gains and losses (note 7) 3 206 1 479 1 758
 
Fair value adjustment to investment contract
 
liabilities (note 7) (1 787) (1 194) (1 670)
 
Fair value adjustment to third-party liabilities arising
 
on consolidation of mutual funds (note 7) (2 010) (1 256) (1 873)
 
Commission, school, net insurance and other fee income 3 625 2 999 6 799
 
Other operating income 131 198 277
 
4 203 3 249 7 545
 
 
Expenses
 
Insurance claims and loss adjustments, net of recoveries (302) (336) (629)
 
Marketing, administration and other expenses (4 207) (3 499) (7 283)
 
(4 509) (3 835) (7 912)
 
 
Net income from associates and joint ventures
 
Share of profits of associates and joint ventures 1 141 901 1 926
 
Loss on impairment of associates (8)
 
Net loss on sale/dilution of interest in associates (10) (20) (14)
 
1 131 881 1 904
 
 
Profit before finance costs and taxation 2 127 1 414 3 559
 
Finance costs (335) (256) (516)
 
Profit before taxation 1 792 1 158 3 043
 
Taxation (268) (137) (616)
 
Profit for the period 1 524 1 021 2 427
 
 
Attributable to:
 
Owners of the parent 1 115 833 1 914
 
Non-controlling interests 409 188 513
 
1 524 1 021 2 427
 
 
Unaudited Audited
 
Change Aug-18 Aug-17 Feb-18
 
Earnings per share and number of shares in issue % 6 months 6 months 12 months
 
 
Earnings per share (R)
 
- Recurring 22 5.03 4.12 9.94
 
- Headline (note 3) 40 5.07 3.63 9.08
 
- Attributable 34 5.16 3.86 8.88
 
- Diluted headline 41 4.99 3.55 8.90
 
- Diluted attributable 34 5.07 3.78 8.70
 
 
Number of shares (m)
 
- In issue 232.0 231.4 231.4
 
- In issue (net of treasury shares) 217.0 215.4 215.9
 
- Weighted average 216.1 215.4 215.5
 
- Diluted weighted average 217.6 218.3 217.9
 
 
Unaudited Audited
 
Aug-18 Aug-17 Feb-18
 
6 months 6 months 12 months
 
Summary consolidated statement of comprehensive income Rm Rm Rm
 
 
Profit for the period 1 524 1 021 2 427
 
Other comprehensive profit/(loss) for the period,
 
net of taxation 88 (24) (92)
 
Items that may be subsequently reclassified to
 
profit or loss
 
Currency translation adjustments 128 (13) (106)
 
Cash flow hedges 5 (3) (13)
 
Share of other comprehensive (losses)/income and
 
equity movements of associates (41) (21) 7
 
Items that may not be subsequently reclassified to
 
profit or loss
 
(Losses)/gains from changes in financial and demographic
 
assumptions of post-employment benefit obligations (4) 13 20
 
Total comprehensive income for the period 1 612 997 2 335
 
 
Attributable to:
 
Owners of the parent 1 153 795 1 847
 
Non-controlling interests 459 202 488
 
1 612 997 2 335
 
 
Unaudited Audited
 
Aug-18 Aug-17 Feb-18
 
Summary consolidated statement of financial position Rm Rm Rm
 
 
Assets
 
Property, plant and equipment^ 10 388 8 330 9 310
 
Intangible assets^ 4 526 3 307 3 825
 
Biological assets 494 468 558
 
Investment in ordinary shares of associates and
 
joint ventures 15 062 13 917 14 318
 
Investment in preference shares of/loans granted to
 
associates and joint ventures 183 247 149
 
Deferred income tax assets 340 220 245
 
Financial assets linked to investment contracts (note 7) 26 219 24 768 24 279
 
Cash and cash equivalents 6 55 1
 
Other financial assets 26 213 24 713 24 278
 
Other financial assets (note 7) 33 191 28 246 29 147
 
Inventory 1 824 1 565 1 723
 
Trade and other receivables (note 8) 4 997 4 473 4 492
 
Current income tax assets 77 80 90
 
Cash and cash equivalents 1 916 2 182 2 278
 
Non-current assets held for sale (note 15) 1 202 34 7
 
Total assets 100 419 87 837 90 421
 
 
Equity
 
Ordinary shareholders’ equity 17 609 16 392 17 143
 
Non-controlling interests 12 067 10 943 11 729
 
Total equity 29 676 27 335 28 872
 
 
Liabilities
 
Insurance contracts 489 525 543
 
Financial liabilities under investment contracts (note 7) 26 219 24 768 24 279
 
Borrowings 8 442 6 236 7 332
 
Other financial liabilities 89 104 113
 
Third-party liabilities arising on consolidation of
 
mutual funds (note 7) 29 056 23 645 23 600
 
Deferred income tax liabilities 1 196 823 997
 
Trade and other payables and employee benefit
 
liabilities (note 8) 5 148 4 336 4 630
 
Current income tax liabilities 97 65 55
 
Non-current liabilities held for sale 7
 
Total liabilities 70 743 60 502 61 549
 
 
Total equity and liabilities 100 419 87 837 90 421
 
 
Net asset value per share (R) 81.15 76.09 79.39
 
Net tangible asset value per share (R) 60.29 60.89 61.67
 
 
^ Reclassified as set out in note 16.
 
 
Unaudited Audited
 
Aug-18 Aug-17 Feb-18
 
Summary consolidated statement of changes Change 6 months 6 months 12 months
 
in equity % Rm Rm Rm
 
 
Ordinary shareholders’ equity at beginning of
 
the period 16 934 15 900 15 900
 
Previously reported 17 143
 
Adjustment due to the initial application
 
of IFRS 9 (note 1) (209)
 
Total comprehensive income 1 153 795 1 847
 
Issue of shares 123 1 1
 
Share-based payment costs - employees 36 33 66
 
Net movement in treasury shares 101 30
 
Transactions with non-controlling interests (140) 203 135
 
Dividends paid (598) (540) (836)
 
Ordinary shareholders’ equity at end of the period 17 609 16 392 17 143
 
 
Non-controlling interests at beginning of the period 11 714 10 900 10 900
 
Previously reported 11 729
 
Adjustment due to the initial application
 
of IFRS 9 (note 1) (15)
 
Total comprehensive income 459 202 488
 
Issue of shares 194 345 1 399
 
Share-based payment costs - employees 19 15 32
 
Subsidiaries acquired (note 6.1) 24 47
 
Transactions with non-controlling interests (42) (243) (723)
 
Dividends paid (301) (276) (414)
 
Non-controlling interests at end of the period 12 067 10 943 11 729
 
 
Total equity 29 676 27 335 28 872
 
 
Dividend per share (R)
 
- Interim 10 1.52 1.38 1.38
 
- Final 2.77
 
1.52 1.38 4.15
 
 
Unaudited Audited
 
Aug-18 Aug-17 Feb-18
 
6 months 6 months 12 months
 
Summary consolidated statement of cash flows Rm Rm Rm
 
 
Net cash flow from operating activities
 
Cash (utilised by)/generated from operations (note 5)*^ (184) (514) 272
 
Interest income* 880 803 1 615
 
Dividend income* 539 544 1 202
 
Finance costs (330) (208) (463)
 
Taxation paid* (197) (197) (532)
 
Net cash flow from operating activities before cash
 
movement in policyholder funds 708 428 2 094
 
Cash movement in policyholder funds* 5 41 (13)
 
Net cash flow from operating activities 713 469 2 081
 
 
Net cash flow from investing activities (889) (448) (2 937)
 
Cash flow from businesses/subsidiaries acquired (note 6.1) (619) (147) (428)
 
Cash flow from first-time consolidation of mutual
 
fund (note 6.2) 10
 
Cash flow from businesses sold 3 27 27
 
Cash flow from deconsolidation of mutual fund (note 6.3) (17)
 
Acquisition of ordinary shares in associates and
 
joint ventures (290) (171) (598)
 
Acquisition of property, plant and equipment (623) (621) (1 641)
 
Other investing activities 647 464 (297)
 
 
Net cash flow from financing activities* (667) (261) 784
 
Dividends paid to group shareholders (598) (540) (836)
 
Dividends paid to non-controlling interests (301) (276) (414)
 
Borrowings drawn^ 598 689 3 406
 
Borrowings repaid (418) (221) (1 787)
 
Other financing activities 52 87 415
 
 
Net decrease in cash and cash equivalents (843) (240) (72)
 
Exchange gains on cash and cash equivalents 21 8 9
 
Cash and cash equivalents at beginning of the period 993 1 056 1 056
 
Cash and cash equivalents at end of the period** 171 824 993
 
 
Cash and cash equivalents consists of:
 
Cash and cash equivalents per the statement of
 
financial position 1 916 2 182 2 278
 
Cash and cash equivalents attributable to
 
equity holders 1 607 1 939 1 924
 
Other clients’ cash and cash equivalents 309 243 354
 
Cash and cash equivalents linked to investment contracts 6 55 1
 
Cash and cash equivalents included in non-current assets
 
held for sale per the statement of financial position 3
 
Bank overdrafts attributable to equity holders
 
(included in borrowings) (1 754) (1 413) (1 286)
 
171 824 993
 
 
* These line items are impacted by linked investment contracts, consolidated mutual funds and
 
other client-related balances as detailed in note 7.
 
** Available cash held at a PSG Group-level is invested in the PSG Money Market Fund. As a
 
result of the group’s consolidation of the PSG Money Market Fund, the cash invested therein
 
is derecognised and all of the fund’s underlying highly liquid debt securities (included in
 
“other financial assets” in the summary consolidated statement of financial position) are
 
recognised. Third parties’ cash invested in the PSG Money Market Fund are recognised as a
 
payable and included under “third-party liabilities arising on consolidation of mutual
 
funds”. Available cash held at a PSG Group-level and invested in the PSG Money Market Fund
 
amounted to R0.5bn (31 August 2017: R1.2bn; 28 February 2018: R1bn) at the reporting date.
 
^ Reclassified as set out in note 16.
 
 
Notes to the summary interim consolidated financial statements
 
 
1. Basis of presentation and accounting policies
 
 
These summary interim consolidated financial statements have been prepared in accordance with
 
the recognition and measurement principles of International Financial Reporting Standards
 
(“IFRS”) as issued by the International Accounting Standards Board, 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, 71 of 2008,
 
as amended; and the JSE Listings Requirements.
 
 
The accounting policies applied in the preparation of these summary interim consolidated
 
financial statements are consistent in all material respects with those used in the prior
 
year’s consolidated annual financial statements. The group also adopted the various revisions
 
to IFRS which are effective for its financial year ending 28 February 2019. Apart from the
 
adoption of IFRS 9 Financial Instruments, these revisions have not resulted in material changes
 
to the group’s reported results and disclosures in these summary interim consolidated financial
 
statements.
 
 
IFRS 9, adopted by the group effective 1 March 2018, is a new standard which replaced IAS 39
 
Financial Instruments: Recognition and Measurement. The standard, inter alia, replaced the
 
multiple classification and measurement models in IAS 39 with a single model that has only
 
two categories: amortised cost and fair value. Furthermore, the standard replaced the
 
incurred credit loss impairment model in IAS 39 with an expected credit loss impairment model.
 
 
The group applied IFRS 9 retrospectively without restating comparative figures and therefore
 
the group’s equity as at 1 March 2018 was adjusted for the differences in the carrying amounts
 
of financial instruments as measured in terms of IFRS 9 and IAS 39, respectively. The resultant
 
impact was an adjustment against ordinary shareholders’ equity and non-controlling interests
 
of R209m and R15m, respectively. The group was most significantly impacted by Capitec’s
 
application of the expected credit loss impairment model on its loan book. The change to
 
Capitec’s equity was R648m, with the resultant impact on PSG Group’s equity being R199m in
 
respect of its 30.7% investment in Capitec.
 
 
In preparing these summary interim consolidated financial statements, the significant
 
judgements made by management in applying the group’s accounting policies and the key sources
 
of estimation uncertainty were the same as those that applied to the group’s annual financial
 
statements for the year ended 28 February 2018.
 
 
2. Preparation
 
 
These summary interim consolidated financial statements were compiled under the supervision of
 
the group chief financial officer, Mr WL Greeff, CA(SA), and were not reviewed or audited by
 
PSG Group’s external auditor, PricewaterhouseCoopers Inc. Any reference to future financial
 
performance included in this announcement, has not been reviewed or reported on by the
 
company’s auditor.
 
 
Unaudited Audited
 
Aug-18 Aug-17 Feb-18
 
6 months 6 months 12 months
 
Rm Rm Rm
 
 
3. Headline earnings
 
 
Profit for the period attributable to owners of
 
the parent 1 115 833 1 914
 
Non-headline items
 
Gross amounts 8 (88) 30
 
Loss on impairment of associates 8
 
Net loss on sale/dilution of interest in associates 10 20 14
 
Profit on sale of businesses (80) (85)
 
Fair value gain on step-up from associate to
 
subsidiary (2) (11)
 
Net loss on sale/impairment of intangible assets
 
(including goodwill) 52 7 153
 
Net (profit)/loss on sale/impairment of property,
 
plant and equipment (1) 2 1
 
Non-headline items of associates (51) (33) (31)
 
Bargain purchase gain (4) (18)
 
Reversal of impairment of non-current assets
 
held for sale (1)
 
Non-controlling interests (27) 36 (137)
 
Taxation 149
 
Headline earnings 1 096 781 1 956
 
 
Headline earnings per share (R) 5.07 3.63 9.08
 
 
4. PSG Financial Services
 
 
PSG Financial Services is a wholly-owned subsidiary of PSG Group, except for the 17 415 770
 
(31 August 2017: 17 415 770; 28 February 2018: 17 415 770) perpetual preference shares which
 
are listed on the JSE. These preference shares are included in non-controlling interests in the
 
summary consolidated statement of financial position. No separate financial statements are
 
presented in this announcement for PSG Financial Services as it is the only directly held asset
 
of PSG Group.
 
 
Unaudited Audited
 
Aug-18 Aug-17 Feb-18
 
6 months 6 months 12 months
 
Rm Rm Rm
 
 
5. Cash (utilised by)/generated from operations
 
 
Profit before taxation 1 792 1 158 3 043
 
Share of profits of associates and joint ventures (1 141) (901) (1 926)
 
Depreciation and amortisation 282 247 503
 
Investment income (1 007) (984) (2 059)
 
Finance costs 335 256 516
 
Working capital changes and other non-cash items^ (445) (290) 195
 
Cash (utilised by)/generated from operations^ (184) (514) 272
 
 
^ Reclassified as set out in note 16.
 
 
6. Businesses/subsidiaries acquired, first-time consolidation of mutual fund and deconsolidation
 
of mutual fund
 
 
6.1 Businesses/subsidiaries acquired
 
 
Businesses/subsidiaries acquired by the group during the period under review included:
 
 
Cooper College (Pty) Ltd and related entities (“Cooper”)
 
During April 2018, the group, through Curro Holdings Ltd (“Curro”), acquired an effective
 
interest of 97% in Cooper for a cash consideration of R210m. Cooper operates a private school
 
in Randburg, South Africa, being complementary to Curro’s existing operations. Goodwill of R84m
 
arose in respect of, inter alia, the workforce, expected synergies, economies of scale and the
 
business’s growth potential.
 
 
MBS Education Investments (Pty) Ltd and Milpark Education (Pty) Ltd (“Milpark”)
 
During March 2018, the group, through Stadio Holdings Ltd (“Stadio”), being a subsidiary of
 
PSG Alpha Investments (Pty) Ltd (“PSG Alpha”), acquired an effective interest of 87.2% in
 
Milpark for a cash consideration of R211m (of which R4m was deferred and subsequently paid) and
 
the issue of Stadio shares worth R51m. Milpark is involved in the private higher education sector
 
in South Africa, offering complementary services to Stadio’s existing operations. Goodwill of
 
R222m arose in respect of, inter alia, the workforce, expected synergies, economies of scale and
 
the business’s growth potential.
 
 
Interactive Tutor (Pty) Ltd (“Media Works”)
 
During May 2018, the group, through FutureLearn Holdings (Pty) Ltd, being a subsidiary of
 
PSG Alpha, acquired all the issued share capital of Media Works for a cash consideration of R109m,
 
of which R15m was deferred and remains outstanding. Media Works provides adult education and
 
training services in South Africa. Goodwill of R88m arose in respect of, inter alia, the
 
workforce, expected synergies, economies of scale and the business’s growth potential.
 
 
Baobab Primary School operations and properties (“Baobab”)
 
During July 2018, the group, through Curro, acquired the business operations and properties of
 
Baobab for a cash consideration of P65m (R84m). Baobab operates a private school in Gaborone,
 
Botswana, being complementary to Curro’s existing operations. Goodwill of R19m arose in respect
 
of, inter alia, the workforce, expected synergies, economies of scale and the business’s growth
 
potential.
 
 
The amounts of identifiable net assets of businesses/subsidiaries acquired, as well as goodwill
 
and non-controlling interests recognised from business combinations during the period under
 
review, can be summarised as follows:
 
 
Unaudited
 
Media
 
Cooper Milpark Works Baobab Other Total
 
Rm Rm Rm Rm Rm Rm
 
 
Identifiable net
 
assets acquired 134 46 24 65 111 380
 
Goodwill recognised 84 222 88 19 79 492
 
Non-controlling interests
 
recognised (8) (6) (3) (7) (24)
 
Derecognition of
 
investment in associate (13) (13)
 
Total consideration 210 262 109 84 170 835
 
Ordinary shares issued
 
by a subsidiary (51) (8) (59)
 
Deferred/contingent
 
consideration (4) (15) (60) (79)
 
Cash consideration paid 210 207 94 84 102 697
 
 
Cash consideration paid (210) (207) (94) (84) (102) (697)
 
Cash and cash equivalents
 
acquired 2 34 17 9 16 78
 
Cash flow from
 
businesses/subsidiaries
 
acquired (208) (173) (77) (75) (86) (619)
 
 
Transaction costs relating to the business combinations were immaterial and expensed in the
 
summary consolidated income statement.
 
 
The aforementioned business combinations have been provisionally accounted for and do not
 
contain any contingent consideration or indemnification asset arrangements, unless otherwise
 
stated. Non-controlling interests were measured with reference to their proportionate share of
 
the identifiable net assets acquired. Had the aforementioned businesses combinations been
 
accounted for with effect from 1 March 2018 instead of their respective acquisition dates, the
 
summary consolidated income statement would have reflected additional revenue of R313m and
 
profit for the period of R1m.
 
 
Receivables of R120m are included in the identifiable net assets acquired, which are all
 
considered to be recoverable. The fair value of these receivables approximates its carrying
 
value.
 
 
6.2 First-time consolidation of mutual fund
 
 
During the period under review, the group commenced consolidation of the PSG Wealth Global
 
Preservation Feeder Fund as a result of PSG Asset Management managing same and following an
 
increase in policyholder funds (i.e. financial assets linked to investment contracts) invested
 
in this mutual fund. The consolidation of this mutual fund resulted in an additional R679m of
 
“other financial assets” and R689m of “third-party liabilities arising on consolidation of
 
mutual funds” being recognised in the statement of financial position. Furthermore, cash and
 
cash equivalents of R10m held by the mutual fund was recognised upon consolidation.
 
 
6.3 Deconsolidation of mutual fund
 
 
During the period under review, the group deconsolidated the PSG Multi-Management Foreign
 
Flexible Fund of Funds following its merger with the PSG Wealth Global Flexible Feeder Fund and
 
the resultant decrease in the effective interest held therein. The deconsolidation of this mutual
 
fund resulted in the derecognition of R27m of “other financial assets”, R186m of “trade and
 
other receivables”, R228m of “third-party liabilities arising on consolidation of mutual funds”
 
and R2m of “trade and other payables” from the statement of financial position. Furthermore,
 
cash and cash equivalents of R17m held by the mutual fund was derecognised upon deconsolidation.
 
 
7. Linked investment contracts, consolidated mutual funds and other client-related balances
 
 
Linked investment contracts are represented by PSG Life Ltd (an existing subsidiary of
 
PSG Konsult Ltd (“PSG Konsult”)) clients’ assets held under investment contracts, which are
 
linked to a corresponding liability. Accordingly, the value of policy benefits payable is
 
directly linked to the fair value of the supporting assets and therefore the group is not
 
exposed to the financial risks associated with these assets and liabilities.
 
 
As a result of the group’s consolidation of mutual funds which it controls in accordance with
 
IFRS 10, the group’s investments in these mutual funds have been derecognised and all the
 
funds’ underlying assets have been recognised. Third parties’ funds invested in the respective
 
mutual funds are recognised as a payable and included under “third-party liabilities arising
 
on consolidation of mutual funds”.
 
 
The summary consolidated income statement impact recognised from the assets and liabilities
 
pertaining to the linked investment contracts, consolidated mutual funds and other client-
 
related balances are split from the corresponding summary consolidated income statement line
 
items attributable to the equity holders of the group below:
 
 
Client-
 
related Equity
 
balances holders Total
 
Rm Rm Rm
 
 
Six months ended 31 August 2018 (unaudited)
 
 
Investment income 765 242 1 007
 
Fair value gains and losses 3 058 148 3 206
 
Fair value adjustment to investment contract liabilities (1 787) (1 787)
 
Fair value adjustment to third-party liabilities arising
 
on consolidation of mutual funds (2 010) (2 010)
 
Various other line items (26) (26)
 
-
 
 
Six months ended 31 August 2017 (unaudited)
 
 
Investment income 758 226 984
 
Fair value gains and losses 1 738 (259) 1 479
 
Fair value adjustment to investment contract liabilities (1 194) (1 194)
 
Fair value adjustment to third-party liabilities arising
 
on consolidation of mutual funds (1 256) (1 256)
 
Various other line items (46) (46)
 
-
 
 
Year ended 28 February 2018 (audited)
 
 
Investment income 1 601 458 2 059
 
Fair value gains and losses 2 037 (279) 1 758
 
Fair value adjustment to investment contract liabilities (1 670) (1 670)
 
Fair value adjustment to third-party liabilities arising
 
on consolidation of mutual funds (1 873) (1 873)
 
Various other line items (95) (95)
 
-
 
 
The summary consolidated statement of cash flows impact recognised from the assets and
 
liabilities pertaining to the linked investment contracts, consolidated mutual funds and other
 
client-related balances are split from the corresponding summary consolidated statement of cash
 
flows line items attributable to the equity holders of the group below:
 
 
Unaudited
 
Aug-18 Aug-17
 
6 months 6 months
 
Client- Client-
 
related Equity related Equity
 
balances holders Total balances holders Total
 
Rm Rm Rm Rm Rm Rm
 
 
Cash (utilised by)/
 
generated from
 
operations^ (755) 571 (184) (610) 96 (514)
 
Interest income 593 287 880 496 307 803
 
Dividend income 106 433 539 174 370 544
 
Finance costs (330) (330) (208) (208)
 
Taxation paid 19 (216) (197) (6) (191) (197)
 
Cash movement in
 
policyholder funds 5 5 41 41
 
Net cash flow from
 
operating activities^ (32) 745 713 95 374 469
 
Net cash flow from
 
investing activities (8) (881) (889) (448) (448)
 
Net cash flow from
 
financing activities^ (667) (667) 100 (361) (261)
 
Net (decrease)/increase
 
in cash and cash
 
equivalents (40) (803) (843) 195 (435) (240)
 
Exchange gains on cash
 
and cash equivalents 21 21 8 8
 
Cash and cash
 
equivalents at beginning
 
of the period 355 638 993 103 953 1 056
 
Cash and cash equivalents
 
at end of the period 315 (144) 171 298 526 824
 
 
^ Reclassified as set out in note 16.
 
 
Audited
 
Feb-18
 
12 months
 
Client-
 
related Equity
 
balances holders Total
 
Rm Rm Rm
 
 
Cash (utilised by)/generated from operations (1 240) 1 512 272
 
Interest income 1 013 602 1 615
 
Dividend income 421 781 1 202
 
Finance costs (463) (463)
 
Taxation paid (29) (503) (532)
 
Cash movement in policyholder funds (13) (13)
 
Net cash flow from operating activities 152 1 929 2 081
 
Net cash flow from investing activities (2 937) (2 937)
 
Net cash flow from financing activities 100 684 784
 
Net increase/(decrease) in cash and cash equivalents 252 (324) (72)
 
Exchange gains on cash and cash equivalents 9 9
 
Cash and cash equivalents at beginning of the year 103 953 1 056
 
Cash and cash equivalents at end of the year 355 638 993
 
 
8. Trade and other receivables and payables
 
 
Included under trade and other receivables are PSG Online broker and clearing accounts of which
 
R1.4bn (31 August 2017: R1.3bn; 28 February 2018: R1.4bn) represents amounts owing by the JSE
 
for trades conducted during the last few days before the reporting date. 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 clients taking place within three days after the transaction
 
date. All such balances have subsequently been settled accordingly.
 
 
9. Corporate actions
 
 
Apart from the transactions set out in note 6 and the corporate action detailed in the
 
commentary section of this announcement, the group, through PSG Alpha, invested a further R275m
 
in Evergreen Retirement Holdings (Pty) Ltd (“Evergreen”) during the period under review for a
 
total investment of R675m to date. Evergreen is one of South Africa’s leading providers of
 
retirement lifestyle living.
 
 
10. Financial instruments
 
 
10.1 Financial risk factors
 
 
The group’s activities expose it to a variety of financial risks: market risk (including
 
currency risk, fair value risk, fair value interest rate risk and price risk), credit risk and
 
liquidity risk.
 
 
These summary interim consolidated financial statements do not include all financial risk
 
management information and disclosures set out in the consolidated annual financial statements,
 
and therefore they should be read in conjunction with the group’s consolidated annual financial
 
statements for the year ended 28 February 2018. Risk management continues to be carried out by
 
each entity within the group under policies approved by the respective boards of directors.
 
 
10.2 Fair value estimation
 
 
The group, through PSG Life Ltd, issues linked investment contracts where the value of the
 
policy benefits (i.e. liability) is directly linked to the fair value of the supporting assets,
 
and as such does not expose the group to the market risk relating to fair value movements in
 
the supporting assets.
 
 
The information below analyses financial assets and liabilities, which are carried at fair
 
value, by level of hierarchy as required by IFRS 13. The different levels in the hierarchy are
 
defined below:
 
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
 
- Level 2: input other than quoted prices included within level 1 that is observable for the
 
asset or liability, either directly (that is, as prices) or indirectly (that is,
 
derived from prices).
 
- Level 3: input for the asset or liability that is not based on observable market data (that
 
is, unobservable input).
 
 
The carrying value of financial assets and liabilities carried at amortised cost approximates
 
their fair value, while those measured at fair value can be summarised as follows:
 
 
Level 1 Level 2 Level 3 Total
 
Rm Rm Rm Rm
 
 
31 August 2018 (unaudited)
 
 
Assets
 
Derivative financial assets 67 67
 
Equity securities 3 112 381 29 3 522
 
Debt securities 869 1 890 2 759
 
Unit-linked investments 3 48 195 525 48 723
 
Investment in investment contracts 17 17
 
Non-current assets held for sale 1 182 1 182
 
Closing balance 3 984 50 550 1 736 56 270
 
 
Liabilities
 
Derivative financial liabilities 44 39 83
 
Investment contracts 25 595 504 26 099
 
Trade and other payables 114 114
 
Third-party liabilities arising on
 
consolidation of mutual funds 29 056 29 056
 
Closing balance - 54 695 657 55 352
 
 
31 August 2017 (unaudited)
 
 
Assets
 
Derivative financial assets 45 45
 
Equity securities 2 876 592 51 3 519
 
Debt securities 805 2 986 3 791
 
Unit-linked investments 39 904 947 40 851
 
Investment in investment contracts 16 16
 
Closing balance 3 681 43 543 998 48 222
 
 
Liabilities
 
Derivative financial liabilities 58 42 100
 
Investment contracts 23 680 935 24 615
 
Trade and other payables 43 43
 
Third-party liabilities arising on
 
consolidation of mutual funds 23 645 23 645
 
Closing balance - 47 383 1 020 48 403
 
 
28 February 2018 (audited)
 
 
Assets
 
Derivative financial assets 43 43
 
Equity securities 2 330 1 312 679 4 321
 
Debt securities 922 1 501 2 423
 
Unit-linked investments 41 481 719 42 200
 
Investment in investment contracts 15 15
 
Closing balance 3 252 44 352 1 398 49 002
 
 
Liabilities
 
Derivative financial liabilities 70 39 109
 
Investment contracts 23 421 698 24 119
 
Trade and other payables 45 45
 
Third-party liabilities arising on
 
consolidation of mutual funds 23 600 23 600
 
Closing balance - 47 091 782 47 873
 
 
The following table presents changes in level 3 financial instruments during the respective
 
periods:
 
 
Unaudited Audited
 
Aug-18 Aug-17 Feb-18
 
Assets Liabilities Assets Liabilities Assets Liabilities
 
Rm Rm Rm Rm Rm Rm
 
 
Opening balance 1 398 782 1 161 1 251 1 161 1 251
 
Additions 125 292 256 277 1 188 542
 
Disposals (354) (447) (441) (528) (915) (1 029)
 
Fair value
 
adjustments 520 30 22 20 31 18
 
Other movements 47 (67)
 
Closing balance 1 736 657 998 1 020 1 398 782
 
 
Unit-linked investments represent the largest portion of the level 3 financial assets and
 
relate to units held in hedge funds that are priced monthly. The prices are obtained from the
 
asset managers of the particular hedge funds. These are held to match investment contract
 
liabilities, and as such any change in measurement would result in a similar adjustment to
 
investment contract liabilities, which in turn represent the largest portion of level 3
 
financial liabilities.
 
 
Derivative financial assets, equity securities, debt securities, unit-linked investments and
 
investment in investment contracts are all included in “other financial assets” in the summary
 
consolidated statement of financial position, while “other financial liabilities” comprises
 
mainly derivative financial liabilities.
 
 
There have been no significant transfers between level 1, 2 or 3 during the period under
 
review, nor were there any significant changes to the valuation techniques and inputs used to
 
determine fair values. Valuation techniques and main inputs used to determine fair value for
 
financial instruments classified as level 2 can be summarised as follows:
 
 
Instrument Valuation technique Main inputs
 
 
Derivative financial assets Exit price on recognised Not applicable
 
and liabilities over-the-counter platforms
 
Debt securities Valuation model that uses the Bond interest rate curves,
 
market inputs (yield of issuer credit ratings and
 
benchmark bonds) liquidity spreads
 
Unit-linked investments Quoted exit price provided Not applicable - daily
 
by the fund manager prices are publicly
 
available
 
Investment in investment Prices are obtained from the Not applicable - prices
 
contracts insurer of the particular provided by registered
 
investment contract long-term insurers
 
Investment contracts Current unit price of underlying Not applicable
 
unitised financial asset that
 
is linked to the liability,
 
multiplied by the number of
 
units held
 
Third-party liabilities arising on Quoted exit price provided by Not applicable - daily
 
consolidation of mutual funds the fund manager prices are publicly
 
available
 
 
11. Segment report
 
 
The group’s classification into seven reportable segments, namely: Capitec, PSG Konsult, Curro,
 
Zeder, PSG Alpha, Dipeo and PSG Corporate, remains unchanged. These segments represent the major
 
investments of the group. The services offered by PSG Konsult consist of financial advice, stock
 
broking, asset management and insurance, while Curro offers private education services. The other
 
segments offer financing, banking, investing and advisory services. All segments operate
 
predominantly in the Republic of South Africa. However, the group has exposure to operations
 
outside the Republic of South Africa through, inter alia, Curro, Zeder’s investments in Pioneer
 
Food Group Ltd, Capespan Group Ltd (“Capespan”), Zaad Holdings Ltd and Agrivision Africa, and
 
PSG Alpha’s investments in Stadio and CA Sales Holdings Ltd.
 
 
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. Intersegment income mainly comprises intergroup
 
management fees charged in terms of the respective management agreements, intergroup advisory
 
fees and interest income.
 
 
Recurring earnings are calculated on a proportional basis, and include the proportional earnings
 
of underlying investments, excluding marked-to-market adjustments and once-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 earnings. Non-recurring earnings include once-off gains and losses and
 
marked-to-market fluctuations, as well as the resulting taxation charge on these items.
 
 
SOTP is a key valuation tool used 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 summary consolidated statement of financial position since
 
the latter are measured using the relevant accounting standards which include historical cost
 
and the equity method of accounting.
 
 
The chief operating decision-maker (the PSG Group Executive Committee) evaluates the following
 
information to assess the segments’ performance:
 
 
Inter- Recurring
 
segment earnings Non-
 
Six months ended Income income (segment recurring Headline SOTP
 
31 August 2018 ** ** profit) earnings earnings value^^
 
(unaudited) Rm Rm Rm Rm Rm Rm
 
 
Capitec* 756 756 35 582
 
PSG Konsult 2 298 174 174 7 858
 
Curro 1 272 77 77 7 303
 
Zeder 3 971 73 153 226 3 727
 
PSG Alpha 3 584 76 (14) 62 4 961
 
Dipeo (352) (31) (145) (176) 255
 
PSG Corporate 56 (7) (25) (25)
 
Funding 43 (6) (96) 16 (80) (2 309)
 
Other 82 82 2 143
 
Total 10 872 (13) 1 086 10 1 096 59 520
 
Non-headline items 19
 
Earnings attributable to
 
non-controlling interests 409
 
Taxation 268
 
Profit before taxation 1 792
 
 
Inter- Recurring
 
segment earnings Non-
 
Six months ended Income income (segment recurring Headline SOTP
 
31 August 2017 ** ** profit) earnings earnings value^^
 
(unaudited) Rm Rm Rm Rm Rm Rm
 
 
Capitec* 628 628 31 954
 
PSG Konsult 2 098 147 147 7 210
 
Curro 1 113 61 61 8 877
 
Zeder 4 627 27 4 31 4 607
 
PSG Alpha 2 591 66 2 68 2 510
 
Dipeo (255) (34) (98) (132) 546
 
PSG Corporate 35 (7) (18) (18)
 
Funding 93 (33) (57) (15) (72) (2 308)
 
Other 68 68 3 393
 
Total 10 302 (40) 888 (107) 781 56 789
 
Non-headline items 52
 
Earnings attributable to
 
non-controlling interests 188
 
Taxation 137
 
Profit before taxation 1 158
 
 
Inter- Recurring
 
segment earnings Non-
 
Year ended Income income (segment recurring Headline SOTP
 
28 February 2018 ** ** profit) earnings earnings value^^
 
(audited) Rm Rm Rm Rm Rm Rm
 
 
Capitec* 1 369 1 369 29 540
 
PSG Konsult 4 188 348 348 7 048
 
Curro 2 145 110 (1) 109 7 987
 
Zeder 8 903 205 (21) 184 4 823
 
PSG Alpha 6 311 172 (22) 150 5 201
 
Dipeo (304) (56) (131) (187) 535
 
PSG Corporate 196 (47) (7) (7)
 
Funding 155 (46) (135) (11) (146) (2 227)
 
Other 136 136 2 603
 
Total 21 594 (93) 2 142 (186) 1 956 55 510
 
Non-headline items (42)
 
Earnings attributable to
 
non-controlling interests 513
 
Taxation 616
 
Profit before taxation 3 043
 
 
Unaudited Audited
 
Aug-18 Aug-17 Feb-18
 
6 months 6 months 12 months
 
Rm Rm Rm
 
 
Reconciliation of segment revenue to IFRS revenue:
 
Segment revenue as stated above:
 
Income 10 872 10 302 21 594
 
Intersegment income (13) (40) (93)
 
Less:
 
Changes in fair value of biological assets (31) (39) (195)
 
Fair value gains and losses (3 206) (1 479) (1 758)
 
Fair value adjustment to investment contract liabilities 1 787 1 194 1 670
 
Fair value adjustment to third-party liabilities arising
 
on consolidation of mutual funds 2 010 1 256 1 873
 
Other operating income (131) (198) (277)
 
IFRS revenue^ 11 288 10 996 22 814
 
 
Non-recurring earnings comprised the following:
 
Non-recurring items from investments (6) (92) (175)
 
Other gains/(losses) 16 (15) (11)
 
10 (107) (186)
 
 
* Equity method of accounting applied.
 
** The total of “income” and “intersegment income” comprises the total of “revenue from sale
 
of goods” and “income” per the summary consolidated income statement.
 
^ IFRS revenue comprises “revenue from sale of goods”, “investment income” and “commission,
 
school, net insurance and other fee income” as per the summary consolidated income
 
statement.
 
^^ SOTP is a key valuation tool used to measure the group’s performance, but does not
 
necessarily correspond to net asset value.
 
 
12. Capital commitments, contingencies and suretyships
 
 
The group’s most significant capital commitments comprise Curro’s construction of six new
 
campuses to the value of R400m and the expansion of existing campuses to the value of R700m.
 
 
Apart from the aforementioned, capital commitments, contingencies and suretyships similar to
 
those disclosed in the group’s annual financial statements for the year ended 28 February 2018
 
remained in effect during the period under review.
 
 
13. Related-party transactions
 
 
Related-party transactions similar to those disclosed in the group’s annual financial
 
statements for the year ended 28 February 2018 took place during the period under review.
 
 
14. Events subsequent to the reporting date
 
 
No material event, apart from those already disclosed elsewhere in this announcement, occurred
 
between the reporting date and the date of approval of these summary interim consolidated
 
financial statements.
 
 
15. Non-current assets held for sale
 
 
Non-current assets held for sale as at 31 August 2018 relates mainly to the disposal of
 
Capespan’s, a subsidiary of Zeder, 9.2% interest in Joy Wing Mau. Joy Wing Mau is based in China
 
and focuses on fruit production, packing, storage, wholesale, export, import and distribution to
 
retailers. The disposal became effective subsequent to the reporting date and is in process of
 
being implemented.
 
 
16. Reclassification of prior period figures
 
 
Computer software previously incorrectly classified by Curro, a subsidiary, as “property, plant
 
and equipment” has been reclassified to “intangible assets”. This reclassification had no impact
 
on previously reported equity, liabilities, profitability or cash flows; however, it had the
 
following impact on the summary consolidated statement of financial position at 31 August 2017:
 
 
Previously Now
 
reported reported Change
 
Statement of financial position Rm Rm Rm
 
 
Property, plant and equipment 8 363 8 330 (33)
 
Intangible assets 3 274 3 307 33
 
-
 
 
Borrowings raised by PSG Konsult, a subsidiary, have been reclassified from “net cash flow
 
from operating activities” to “net cash flow from financing activities” to reflect the nature
 
thereof more accurately. This reclassification had no impact on previously reported assets,
 
equity, liabilities or profitability; however, it had the following impact on the summary
 
consolidated statement of cash flows for the period ended 31 August 2017:
 
 
Previously Now
 
reported reported Change
 
Statement of cash flows Rm Rm Rm
 
 
Net cash flow from operating activities
 
Cash utilised by operations (414) (514) (100)
 
Net cash flow from financing activities
 
Borrowings drawn 589 689 100
 
-
 
 
On behalf of the board
 
 
Jannie Mouton Piet Mouton Wynand Greeff
 
Chairman Chief Executive Officer Chief Financial Officer
 
 
Stellenbosch
 
16 October 2018
 
 
DIRECTORS:
 
JF Mouton (Chairman)**, PE Burton^^, ZL Combi^, FJ Gouws**, WL Greeff (CFO)*,
 
JA Holtzhausen*, B Mathews^, JJ Mouton**, PJ Mouton (CEO)*, CA Otto^
 
* Executive ** Non-executive ^ Independent non-executive ^^ Lead independent
 
 
COMPANY SECRETARY AND REGISTERED OFFICE:
 
PSG Corporate Services (Pty) Ltd, 1st Floor Ou Kollege, 35 Kerk Street, Stellenbosch, 7600;
 
PO Box 7403, Stellenbosch, 7599
 
 
TRANSFER SECRETARY:
 
Computershare Investor Services (Pty) Ltd, Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196;
 
PO Box 61051, Marshalltown, 2107
 
 
SPONSOR:
 
PSG Capital
 
 
AUDITOR:
 
PricewaterhouseCoopers Inc
 
Date: 16/10/2018 01:34:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
 
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