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PSG - PSG Group - Announcement Relating To The Disposal Of 34.6% Interest In Channel Life Limited PSG GROUP LIMITED Incorporated in the Republic of South Africa Registration number 1970/008484/06 JSE share code: PSG & ISIN: ZAE000013017 ("PSG Group") ANNOUNCEMENT RELATING TO THE DISPOSAL OF 34.6% INTEREST IN CHANNEL LIFE LIMITED 1. INTRODUCTION Shareholders are advised that in terms of an agreement concluded between PSG Group ("the seller") and Sanlam Life Insurance Limited ("Sanlam Life"), Sanlam Life will acquire the balance of PSG Group`s investment in Channel Life Limited ("Channel Life"), being 34.6% in Channel Life. 2. DETAILS OF CHANNEL LIFE Channel Life is a niche life insurance company that provides life assurance products to retail clients. 3. RATIONALE FOR THE TRANSACTION Channel Life has grown its business over the past few years, with the assistance of Sanlam Life as the controlling shareholder. To this extent, with the relationship having proved to be mutually beneficial, Sanlam Life now wishes to incorporate Channel Life as part of its larger stable. 4. PARTICULARS OF THE DISPOSAL 4.1 Subject matter of the disposal
The seller has disposed of 110.5 million Channel Life shares to Sanlam Life. 4.2 Disposal consideration The seller has disposed of its interest in Channel Life to Sanlam Life for a total consideration of R131.6 million, equal to the embedded value of Channel Life, and repayment to PSG Group of shareholders` loans in the order of R65.5 million. This represents a price of R1.19 per share, subject to the final statutory audit as at 31 December 2008, and implies a value of approximately R382 million for Channel Life. The full purchase consideration will be paid in cash by Sanlam Life on the third business day following the fulfilment of the suspensive condition. 4.3 Effective date The effective date of the transaction is 1 January 2009. 4.4 Suspensive condition This transaction is subject to approval by the necessary regulatory authorities, including the Registrar of Insurance, as a suspensive condition, which suspensive condition may be varied or waived by the parties in writing. 4.5 Application of transaction proceeds PSG Group will apply the proceeds to finance further investment activities. 5. FINANCIAL EFFECTS The pro forma financial effects of the transaction are presented for illustrative purposes only and because of their nature may not give a fair reflection of PSG Group`s financial positions nor of the effect on future earnings after the transaction. Set out below are the unaudited pro forma financial effects of the transaction, based on the unaudited consolidated financial results of PSG Group for the six months ended 31 August 2008. The directors are responsible for the preparation of these pro forma financial effects. Unaudited Pro forma Change Before the After the (%) transaction Transaction
(cents) (cents) Earnings per share 30.3 34.8 14.9 Headline earnings per 29.6 34.6 16.9 share Net asset value per 1 681.3 1 683.0 0.1 share Net tangible asset 1 239.8 1 241.5 0.1 value per share 1. The earnings and headline earnings per share figures in the "Pro forma After the transaction" column have been calculated: - on the basis that the transaction was effected on 1 March 2008; and
- the net proceeds would have earned interest at an after tax interest rate of 7.92%. 2. The increase in earnings and headline earnings per share when calculating the pro forma financial effects is the result of Channel Life`s equity accounted loss for the six months ended 31 August 2008 included in the "Unaudited Before the transaction" column having been replaced by after tax interest income (i.e. a profit) in the "Pro forma After the transaction" column. 3. The net asset value and net tangible asset value per share figures in the "Pro forma After the transaction" column have been calculated on the basis that the transaction was effected on 31 August 2008. Stellenbosch 9 February 2009 PSG Capital (Pty) Limited Sponsor to PSG Group Date: 09/02/2009 08:35:41 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.
