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PSG GROUP LIMITED - Unaudited interim results for the six months ended 31 August 2012

Release Date: 08/10/2012 14:17
Code(s): PSG PGFP     PDF:  
Wrap Text
Unaudited interim results for the six months ended 31 August 2012

PSG Group Limited
(Incorporated in the Republic of South Africa)
Registration number: 1970/008484/06
JSE share code: PSG
ISIN number: ZAE000013017
(PSG Group or PSG or the company or the group)

PSG Financial Services Limited
(Incorporated in the Republic of South Africa)
Registration number: 1919/000478/06
JSE share code: PGFP
ISIN number: ZAE000096079
(PSG Financial Services)

UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2012

Sum-of-the-parts value per share increased by 21,7% to R68,05 as at 31 August 2012
Recurring headline earnings per share increased by 19,9% to 162,5 cents
Interim dividend per share increased by 26,9% to 33 cents




OVERVIEW
PSG Group is an investment holding company consisting of 42 underlying investments that operate across 
industries which include financial services, banking, private equity, agriculture and education. PSGs market 
capitalisation is approximately R12,9bn, with its largest investment being a 32,2% interest in Capitec Bank.

SUM OF THE PARTS (SOTP)
A key valuation tool to measure PSGs performance by is the growth in its SOTP value per share. The calculation is 
simple and requires limited subjectivity as 81% of the SOTP value is calculated using quoted market prices, 
while the unlisted investments are valued using market-related multiples. At 31 August 2012, the SOTP value per 
PSG share was R68,05, which was 21,7% higher than that as at 29 February 2012. At 28 September 2012, the SOTP value 
was R71,08 per share.


                                                                                                 %
                                                                                                of
                                                       Feb        Feb       Feb       Aug    total
                                                      2010       2011      2012      2012   assets

Asset/Liability                                         Rm         Rm        Rm        Rm

Capitec Bank*                                        2 367      5 138     5 978     6 535    43,5%

PSG Konsult **                                         948      1 206     1 483     1 598    10,6%

Curro Holdings *                                                          1 118     2 387    15,9%

Zeder Investments *                                    742      1 069     1 067     1 192     7,9%

PSG Private Equity #                                   834      1 242       728       879     5,9%

Thembeka Capital #                                                          570       789     5,3%

PSG Corporate

 (incl. PSG Capital) ##                                361        350       338       338     2,2%

Other investments, incl.

 cash ##                                               400        548       684     1 307     8,7%

Total Assets                                         5 652      9 553    11 966    15 025   100,0%

Perpetual pref funding *                              (541)    (1 028)   (1 188)   (1 229)

Other debt ##                                         (539)      (507)     (463)     (823)

Total SOTP Value                                     4 572      8 018    10 315    12 973


Shares in issue (net of treasury

shares) (m)                                          171,8      171,3     184,5     190,6

SOTP value per share (Rand)                          26,61      46,81     55,92     68,05



*     Listed on the JSE Ltd
     
**    Over-the-counter
      
#     SOTP value
   
##    Valuation

RESULTS


A continued increase in PSG's SOTP value over the long term will depend on sustained growth in the profitability 
of our underlying investments. PSG continues to use the recurring headline earnings method to provide management 
and investors with a more realistic and transparent way of evaluating PSG's earnings performance. Consolidated
recurring headline earnings represent the sum of PSG's effective interest in that of each strategic investment. 
The result is that investments in which PSG or an underlying company holds less than 20% and are generally not 
equity accountable in terms of accounting standards, are included in the calculation of our consolidated recurring
headline earnings. Marked-to-market fluctuations and one-off items are excluded.


                                                Year ended          Six months ended

                                                    29 Feb     31 Aug   Change     31 Aug

                                                      2012       2011                2012

Recurring headline earnings                             Rm         Rm        %         Rm


Capitec Bank                                         362,4      167,9      35%      226,3

PSG Konsult                                          107,9       42,5      22%       51,8

Curro Holdings                                        (5,2)      (5,1)     n/a       (2,0)

Zeder Investments                                    115,4       53,8    (34%)       35,3

PSG Private Equity                                    32,0       16,9     108%       35,2

Thembeka Capital                                      18,7        5,8     (5%)        5,5

Other                                                 39,7       18,4      30%       23,8

Recurring headline earnings before funding           670,9      300,2      25%      375,9

Funding                                             (134,4)     (70,5)      n/a     (82,1)

Recurring headline earnings                          536,5      229,7      28%      293,8

Non-recurring items                                   30,6     (54,7)      n/a       86,1

Headline earnings                                    567,1      175,0     117%      379,9

Non-headline items                                   135,9     (26,9)      n/a     (64,8)

Attributable earnings                                703,0      148,1     113%      315,1


Weighted average number of shares in issue 
 (net of treasury shares) (m)                        173,9      169,5       7%      180,8


Earnings per share (cents)

 - Recurring headline                                308,6      135,5      20%      162,5

 - Headline                                          326,2      103,3     103%      210,2

 - Attributable                                      404,4       87,4      99%      174,3


Dividend per share (cents)                            82,0       26,0      27%       33,0




Recurring headline earnings per share increased by 19,9% to 162,5 cents for the six months ended 31 August 2012.
Capitec continued its stellar performance, while both PSG Konsult and PSG Private Equity delivered improved results.
Zeder on the other hand saw a decline in recurring headline earnings.Curro continued to sacrifice profitability while
building capacity for future growth.


Headline earnings per share increased by 103,5% to 210,2 cents per share, and attributable earnings by 99,4% to 
174,3 cents per share. This was mainly as a result of marked-to-market profits achieved in PSG's and Thembeka's 
investment portfolios of listed shares, net of a further marked-to-market loss incurred on PSG's interest rate hedge.


MATERIAL CORPORATE ACTIONS, FUNDING AND INVESTING


-  Raised R361,2m in cash through the issue of 5,4m PSG ordinary shares at an average price of R67,42 per share.

-  Raised R330m in cash through the issue of an unlisted five-year redeemable preference share with a fixed rate of 
   8,63% nacm.

-  Curro raised R346m in cash by means of a rights issue and R128m by means of a specific issue of shares for cash 
   to Thembeka.PSG exercised its rights for a further investment of R219,7m.

-  PSG acquired an effective 57,7% interest in CA Sales (a Botswana-based distributor of fast-moving consumer goods) 
   for R202m.

-  Zeder acquired a controlling interest in Chayton, a company that acquires, develops and operates commercial grain 
   production hubs in sub-Saharan Africa, mainly Zambia, for R276,9m.

-  In addition, Zeder acquired the remaining 74,9% of the share capital in Agricol, a seed company operating primarily 
   in the Republic of South Africa, for R150,4m.

-  PSG Konsult raised R187,7m in cash by means of a rights issue at R1,75 per share during September 2012.

-  On 26 September 2012, Capitec announced a rights issue of R2,25bn in anticipation of the growth prospects in 
   the market in which it operates and of the new Basel III capital requirements. PSG has undertaken to follow 
   its rights amounting to R724,5m.



CAPITEC BANK (32.2%)

Capitec continued to add more than 90 000 new clients per month. Their active client base totalled 4,2m at the end of 
August 2012. The banks footprint was expanded by opening 27 new branches during the past six months, with another 
28 new branches planned for the remainder of the financial year. 

The banks focus remains to acquire more transacting clients, to reduce the cost of credit and to maintain stringent 
credit criteria.

Capitecs headline earnings increased by 43% to R700m for the period under review. This was mainly as a result 
of the increase in loan revenue to R3,6bn and net transaction fee income to R583m, along with an improvement in the 
cost-to-income ratio to 42%.

Capitec now offers loans with a term of anywhere between one and 84 months, and a maximum amount of R230 000 per client. 
Loans with terms exceeding 12 months contributed 80% of sales compared to 66% for the six months ended August 2011. 
Higher income clients, with monthly income in excess of R15 000, have progressively accounted for an increased portion 
of unsecured credit granted. These clients carry a lower risk. Capitecs own analyses of the credit market also 
indicate that increased affordability, together with growth in disposable income means that the growth in unsecured 
lending has not necessarily resulted in borrowers becoming over-indebted. 

The proceeds of the aforementioned rights issue will be utilised to fund the anticipated growth in Capitecs loan book, 
as well as the expansion of its branch network by between 50 and 75 branches per annum for the next three years. 

Capitecs comprehensive results for the six months ended 31 August 2012 are available at www.capitecbank.co.za.

PSG KONSULT (71,3%)

PSG Konsult reported positive results for the six months ended 31 August 2012. Recurring headline earnings increased by 
20,0% to R72,6m, and headline earnings by 21,8% to R77m. Funds under administration increased by 3,6% to R144,2bn since 
year-end. Short-term premiums administered decreased by R250m to R1 300m on an annualised basis, mainly due to the sale 
of the third-party short-term administration book of business.

Effective 1 March 2012, PSG Konsult acquired an interest in Western National, a short-term insurance company. 
Negotiations have been concluded to further increase PSG Konsults interest, which is subject to regulatory approval. 

PSG Konsult will use the R187,7m in cash raised with the aforementioned rights issue for capital adequacy requirements 
and to fund acquisitions such as Western National.

PSG Online has won the 2012 Business Day Investors Monthly Stockbroker of the Year award for the second consecutive year.
We are proud of this achievement.

At 31 August 2012, PSG Konsult had 228 offices with 621 financial planners, portfolio managers, stockbrokers and asset 
managers. Its professional associates (accountants and attorneys) totalled 375.

PSG Konsults comprehensive results for the six months ended 31 August 2012 are available at www.psgkonsult.co.za.

CURRO HOLDINGS (57,5%)

Curro develops, acquires and manages private schools for children from the age of three months up to grade 12. The 
group currently consists of 22 (31 December 2011:12) schools with 12 497 (31 December 2011: 5 557) learners. When 
PSG initially invested in 2009, Curro had three schools with 1 678 learners.

Curro reported a headline loss of R3,1m (30 June 2011: R7,7m loss) for the six-month period ended 30 June 2012, 
as it continued to aggressively build capacity for the future. We anticipate that Curro will report a headline profit 
going forward.

Curro moved to the main board of the JSE following its R474m capital raising in July 2012. The additional capital, 
coupled with debt funding, has been invested to create capacity at existing campuses, to build five new campuses and 
to settle the outstanding consideration in respect of acquisitions made during the past six months.

The new learner enrolments for 2013 are exceeding expectations, further confirming the growth potential in the 
sector. PSG continues to support Curros aggressive organic and acquisitive growth plan. 

Curros comprehensive results for the six months ended 30 June 2012 are available at www.curro.co.za.

ZEDER INVESTMENTS (42,4%)
Zeder is an investor in the agribusiness, food and beverage sectors. Its investment portfolio now amounts to R3,6bn 
of which Agri Voedsel Beleggings (Pioneer) and Capevin Holdings (Distell) represent 56,3% (29 February 2012: 62,4%). 
During the period under review, Zeder invested a further R439m, of which R427m related to the abovementioned 
acquisition of controlling interests in Chayton and Agricol.

Zeders SOTP value per share increased by 5,1% to R3,31 since 29 February 2012. Its recurring headline earnings 
decreased by 35,1% to 8,5 cents per share, mainly due to a lower earnings contribution from Pioneer Foods, initial 
losses incurred by Chayton, a start-up business in its development phase, and a net interest expense as opposed to 
net interest income in the prior year as a result of the debt raised to fund the acquisitions of mainly Agricol
and Chayton.

Zeder was instrumental in the recent JSE listing of Capevin Holdings, following its merger with and delisting of 
Capevin Investments. This created R264m in value for Capevin Holdings shareholders and R105m for Zeder shareholders 
in the period under review. 

Zeders comprehensive results for the six months ended 31 August 2012 are available at www.zeder.co.za.

PSG PRIVATE EQUITY (100%)

PSG Private Equitys recurring headline earnings for the period increased by 89% to R35,2m. This improvement is 
due to strong earnings growth from a number of its investments (notably in the financial services, manufacturing and 
personnel services industries), as well as no further losses being recognised from Erbacon.

Corporate actions at PSG Private Equity included:

-   A further investment of R8,9m in African Unity Insurance to increase its shareholding from 43,2% to 49,9%.

-   A further investment of R24m in Impak, a provider of long distance learning, to increase its shareholding 
    from 50% to 89%.

-   Increased its shareholding in M&S (previously Top Fix) from 28% to 38% through the sale of 
    M&Ss loss-making scaffolding division. The remaining businesses (personnel placements and safety surveillance) 
    are expected to continue to perform profitably.

-   Erbacon has been recapitalised by means of a debt restructuring agreement with its major shareholders in terms of 
    which PSG Private Equitys shareholder loan of R15m was converted to equity, while its shareholding diluted from 
    27% to 11%.

THEMBEKA CAPITAL (49%)

Thembeka Capital is a black-owned and controlled investment company. Its investment portfolio of R2,1bn consists 
primarily of interests in PSG Group, Capitec Bank, Curro, Pioneer Foods, MTN Zakhele, Kaap Agri and Overberg Agri. 

Thembekas intrinsic value per share (after CGT) was R99,56 as at 31 August 2012, an increase of 34% since 
29 February 2012.

Corporate actions at Thembeka included:

-   Acquired a 4,4% interest in Pioneer Foods as the lead BEE partner in the Pioneer BEE deal for R514m. 
    Thembekas cash contribution to this transaction was R52m, with the balance being funded by a third party.
 
-   Invested R128m to acquire a 9% interest in Curro.

Thembeka is uniquely positioned as a niche black investor with cash on its balance sheet and solid assets in its 
portfolio. This will allow it to capitalise on further opportunities within the BEE and private equity investment market. 

PSG CAPITAL (100%)

PSG Capital is the corporate finance arm of PSG Group and provides a complete range of corporate finance and advisory 
services to a broad spectrum of clients. PSG Capital is a JSE-registered sponsor and designated advisor. They advise 
on mergers and acquisitions, fairness opinions and valuations, capital raisings and listings, JSE and regulatory 
advisory, private equity, BEE, management and leveraged transactions, corporate recovery and restructuring, and also 
provides debt and strategic advice. PSG Capital is the sponsor and designated advisor to 32 JSE-listed companies, 
and has an extensive list of unlisted clients. PSG Capitals services are available at www.psgcapital.com.

PSG CORPORATE (100%)

PSG Corporate is a profit centre. It acts as PSG Group treasurer, allocates capital and determines and monitors the 
groups gearing. 

PROSPECTS

Our focus remains on the creation of wealth for our shareholders by increasing both PSGs SOTP value and recurring 
headline earnings per share. We remain committed to providing superior investment returns.

DIVIDENDS

Ordinary shares

PSG Groups policy remains to pay up to 100% of free cash flow as an ordinary dividend, of which one third is payable 
as an interim and the balance as a final dividend at year-end. The directors have consequently resolved to declare 
an interim dividend of 33 cents (2011: 26 cents) per share.
 
Dividend income is subject to a local dividend withholding tax at a rate of 15%, unless the shareholder is exempt from 
dividend withholding tax or is entitled to a reduced rate in terms of the applicable double-tax agreement. The company, 
however, holds STC credits which will be applied in reducing the liability for dividend withholding tax. The STC credits 
utilised as part of this declaration amount to R68 667 026, and represent 33 cents per share. The portion of the 
dividend subject to dividend withholding tax is therefore nil cents per share and there will thus be no withholding.
Accordingly, the net dividend that will be paid is 33 cents per share. The amount of STC credits available for future 
utilisation following this interim dividend approximates R160m. PSG Groups total number of issued ordinary shares 
at the date of this declaration is 208 081 896.  The companys income tax reference number is 9950080714.

The following are the salient dates for the payment of the interim dividend:

Last day to trade cum dividend          Friday, 26 October 2012
Trading ex dividend commences           Monday, 29 October 2012
Record date                             Friday, 2 November 2012
Day of payment                          Monday, 5 November 2012

Share certificates may not be dematerialised or rematerialised between Monday, 29 October 2012, and Friday, 2 November 2012, 
both days inclusive.

Preference shares

The directors of PSG Financial Services have declared a dividend of 366,79 cents per share in respect of the 
cumulative, non-redeemable, non-participating preference shares for the six months ended 31 August 2012, which was 
paid on 25 September 2012. The detailed announcement in respect hereof was disseminated on SENS.

On behalf of the board


Jannie Mouton                             Wynand Greeff
Chairman                                  Financial director

8 October 2012
Stellenbosch

Directors:
JF Mouton (chairman)+, PE Burton^, ZL Combi^, J de V du Toit^, MM du Toit^, WL Greeff*, JA Holtzhausen*, 
MJ Jooste+ (Alt:AB la Grange), JJ Mouton+, PJ Mouton*, CA Otto^, W Theron+

*  Executive 
+  Non-executive 
^  Independent non-executive

Secretary:
PSG Corporate Services (Pty) Ltd

Registered office:
1st Floor, Ou Kollege, 35 Kerk Street, Stellenbosch, 7600; PO Box 7403, Stellenbosch, 7599

Transfer secretaries:
Computershare Investor Services (Pty) Ltd
70 Marshall Street, Johannesburg, 2001; PO Box 61051, Marshalltown, 2107

Sponsor:
PSG Capital

Auditor:
PricewaterhouseCoopers Inc.






CONDENSED GROUP INCOME STATEMENT
                                                                               Unaudited   Unaudited     Audited
                                                                                  31 Aug      31 Aug      29 Feb
                                                                                    2012        2011        2012
                                                                                     Rm           Rm          Rm


Revenue                                                                            665,4
Cost of sales                                                                     (578,7)
Gross profit                                                                        86,7          -           -
Income
Investment income (note 4)                                                         190,5      162,7        387,9
Net fair value gains and losses on financial instruments (note 4)                  397,9      116,6        533,7
Fair value adjustment to investment contract liabilities (note 4)                 (463,9)    (265,0)      (624,1)
Commission and other fee income                                                    894,1      757,9      1 527,6
Other operating income                                                              69,0       20,2        226,8
Total income                                                                     1 087,6      792,4      2 051,9


Expenses
Insurance claims and loss adjustments                                                0,3       (0,5)         0,3
Operating expenses                                                                (989,8)    (698,6)    (1 456,3)
Total expenses                                                                    (989,5)    (699,1)    (1 456,0)


Associated companies
Share of profits of associated companies                                           442,6      249,0        684,1
Loss on impairment of associated companies                                         (56,8)                  (41,0)
Total profit related to associated companies                                       385,8      249,0        643,1


Results of operating activities                                                    570,6      342,3      1 239,0
Finance costs                                                                      (98,3)     (59,5)      (109,6)
Profit before taxation                                                             472,3      282,8      1 129,4
Taxation                                                                           (43,4)     (30,5)      (104,1)
Profit for the period                                                              428,9      252,3      1 025,3

Attributable to:
Owners of the parent                                                               315,1      148,1        703,0
Non-controlling interest                                                           113,8      104,2        322,3
                                                                                   428,9      252,3      1 025,3


Attributable to equity holders of the company                                      315,1      148,1        703,0
Non-headline items (note 2)                                                         64,8       26,9       (135,9)
Headline earnings                                                                  379,9      175,0        567,1


Earnings per share (cents)
 - recurring headline                                                              162,5      135,5        308,6
 - headline                                                                        210,2      103,3        326,2
 - attributable                                                                    174,3       87,4        404,4
 - diluted headline                                                                208,3      102,2        322,9
 - diluted attributable                                                            172,7       86,4        400,3
 
 

Dividend per share (cents)
 - interim                                                                          33,0       26,0         26,0
 - final                                                                                                    56,0
                                                                                    33,0       26,0         82,0


Number of shares (million)
 - in issue                                                                        208,1      198,4        202,7
 - in issue (net of treasury shares)                                               185,8      175,2        179,6
 - weighted average                                                                180,8      169,5        173,9
 - diluted weighted average                                                        182,4      171,3        175,6

CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
                                                                               Unaudited  Unaudited      Audited
                                                                                  31 Aug     31 Aug       29 Feb
                                                                                    2012       2011         2012
                                                                                      Rm         Rm           Rm


Profit for the period                                                              428,9      252,3      1 025,3
Currency translation adjustments and fair value gains                                0,3                     0,9
Share of other comprehensive income and equity movements of associated companies    (6,2)      (7,8)       (18,5)
Other                                                                               (0,5)      (2,9)
Total comprehensive income for the period                                          422,5      241,6      1 007,7


Attributable to:
Owners of the parent                                                               308,8      143,3        685,4
Non-controlling interest                                                           113,7       98,3        322,3
                                                                                   422,5      241,6      1 007,7





CONDENSED GROUP STATEMENT OF FINANCIAL POSITION

                                                                             Unaudited    Unaudited      Audited
                                                                                31 Aug       31 Aug       29 Feb
                                                                                  2012         2011         2012
                                                                                   Rm            Rm           Rm

Assets
Property, plant and equipment                                                  1 553,7        507,8        654,7
Biological assets                                                                 73,3
Intangible assets                                                              1 670,3      1 111,4      1 114,3
Investments in associated companies                                            6 230,0      5 446,2      6 117,6
Financial assets linked to investment contracts (note 4)                       9 641,4      8 915,9      9 144,7
 Cash and cash equivalents linked to investment contracts                         31,3         83,8         97,2
 Other financial assets linked to investment contracts                         9 610,1      8 832,1      9 047,5
Other financial assets                                                           760,7        612,8        751,7
Deferred income tax                                                               85,6         64,3         51,3
Inventories                                                                      250,6
Receivables (note 5)                                                             627,8        188,1      2 491,5
Current income tax assets                                                         10,3          4,1          6,5
Cash and cash equivalents                                                      1 307,9        698,0        628,5
Non-current assets classified as held for sale                                     7,4         31,0

Total assets                                                                  22 219,0     17 579,6     20 960,8


Equity
Ordinary shareholders' equity                                                  5 307,5      4 020,5      4 760,0
Non-controlling interests                                                      3 691,9      3 117,8      3 187,6
Total equity                                                                   8 999,4      7 138,3      7 947,6

Liabilities
Insurance contracts                                                               30,0         30,3         29,9
Financial liabilities under investment contracts (note 4)                      9 641,4      8 915,9      9 144,7
Other financial liabilities                                                    2 271,5        845,0        952,2
Deferred income tax                                                              236,0        133,5        139,9
Payables and provisions (note 5)                                               1 012,3        496,7      2 729,5
Current income tax liabilities                                                    24,0         19,9         17,0
Non-current liabilities classified as held for sale                                4,4
Total liabilities                                                             13 219,6     10 441,3     13 013,2

Total equity and liabilities                                                  22 219,0     17 579,6     20 960,8


Net asset value per share (cents)                                                2 857        2 295        2 650
Net tangible asset value per share (cents)                                       1 958        1 660        2 030



CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY

                                                                             Unaudited    Unaudited      Audited
                                                                                31 Aug       31 Aug       29 Feb
                                                                                  2012         2011         2012
                                                                                    Rm           Rm           Rm

Ordinary shareholders' equity at beginning of period                           4 760,0      3 584,8      3 584,8
Shares issued                                                                    360,7        376,0        576,6
Net movement in treasury shares                                                   13,2         16,7         (3,4)
Share-based payment costs                                                          9,5          1,6          9,5
Transactions with non-controlling interests                                      (43,7)       (22,0)        33,8
Total comprehensive income for the period                                        308,8        143,3        685,4
Dividends paid                                                                  (101,0)       (79,9)      (126,7)

Ordinary shareholders' equity at end of period                                 5 307,5      4 020,5      4 760,0

Non-controlling interests                                                      3 691,9      3 117,8      3 187,6

Beginning of period                                                            3 187,6      3 025,8      3 025,8
Shares issued                                                                    403,1         71,0        201,5
Transactions with non-controlling interests                                       76,7          0,4       (240,3)
Acquisition of subsidiaries                                                                                  4,8
Share-based payment costs                                                          1,3
Total comprehensive income                                                       113,7         98,3        322,3
Dividends and capital distributions paid                                         (90,5)       (77,7)      (126,5)

Total equity at end of period                                                  8 999,4      7 138,3      7 947,6



CONDENSED GROUP STATEMENT OF CASH FLOWS

                                                                             Unaudited     Unaudited     Audited
                                                                                31 Aug       31 Aug       29 Feb

                                                                                  2012         2011         2012

                                                                                    Rm           Rm           Rm



Cash generated by operations                                                     156,4        114,4        576,3
Cash movement in policyholder funds                                              (65,9)      (152,9)      (237,4)
Finance costs & taxation paid                                                   (149,7)       (96,0)      (216,0)
Net cash flow from operating activities                                          (59,2)      (134,5)       122,9
Net cash flow from investment activities                                      (1 031,6)      (489,2)      (911,5)
Net cash flow from financing activities                                        1 558,2        278,2        291,9

Net increase/(decrease) in cash and cash equivalents                             467,4       (345,5)      (496,7)

Cash and cash equivalents at
beginning of period                                                              630,6      1 127,3      1 127,3

Cash and cash equivalents at
end of period *                                                                1 098,0        781,8        630,6


* Include the following:
   Bank overdrafts and CFD financing                                            (241,1)                    (95,1)
   Clients' cash linked to investment contracts                                   31,2         83,8         97,2


NOTES TO THE CONDENSED FINANCIAL STATEMENTS

1.    Basis of presentation and accounting policies

      The condensed interim group financial statements have been prepared in accordance with IAS 34 Interim Financial 
      Reporting and should be read in conjunction with the annual financial statements for the year ended 29 February 2012, 
      which have been prepared in accordance with International Financial Reporting Standards ("IFRS"); including the   
      AC 500 standards; the requirements of the South African Companies Act of 2008, as amended, and the Listings 
      Requirements of the JSE Limited. The accounting policies applied in the preparation of these condensed interim 
      group financial statements are consistent with those used in the previous financial year. No new standards, 
      interpretations or amendments, which are relevant to the group's operations, became effective during the period.


      Results of operating activities, as presented in the condensed group income statement, include share of profits 
      of associated companies as a significant part of PSG Group's business activity is performed through associated 
      companies.The comparatives have been presented on a consistent basis.


2.    Non-headline items
                                                                             Unaudited     Unaudited     Audited
                                                                                31 Aug        31 Aug      29 Feb

                                                                                  2012          2011        2012

                                                                                    Rm            Rm          Rm

      Net of taxation and non-controlling interests

      Impairment of investments in associated companies                          (56,8)        (20,2)      (36,3)
      Net profit on sale/dilution of investments in subsidiaries                   1,7                       0,2
      Net (loss)/profit on sale/dilution of investments in 
        associated companies                                                     (10,1)          3,0       176,5
      Profit/(loss) on sale of available-for-sale assets                           0,3                      (1,0)
      Impairment of intangible assets (incl. goodwill)                           (22,1)                     (4,3)
      Non-headline items of associated companies                                   9,5          (9,9)        0,7
      Fair value gain resulting from step-up acquisition                                      
        from associate to subsidiary                                               9,3
      Other investment activities                                                  3,4           0,2         0,1

                                                                                 (64,8)        (26,9)      135,9


3.    Business combinations

      The group's significant business combinations during the year under review were:

      3.1    Effective 1 March 2012 the group acquired an effective 57,7% interest in CA Sales Holdings (Pty) Ltd 
             (a Botswana-based distributor of fast-moving consumer goods) at a purchase consideration of R 202m. 
             CA Sales Holdings (Pty) Ltd acquired a 100% interest in the CA Sales Group resulting in goodwill of R300,4m.

      3.2    Effective 28 March 2012 the group, through Zeder Investments, acquired the remaining 74,9% of the share capital
             in Agricol Holdings for a cash consideration of R150,4m. Goodwill of R51,7m arose on the acquisition.

      3.3    Effective 1 April 2012 the group, through Curro Holdings, acquired 100% of the share capital of both Woodhill 
             College and Meridian College at a purchase consideration of R203,4m. Goodwill of R91,4m arose on the acquisition.

      3.4    Effective 31 July 2012 the group, through Zeder Investments' subsidiary Chayton, acquired 100% of the share
             capital of Somawhe, a company operating in Zambia. The consideration payable is estimated at R204,1m, equating 
             to the net identifiable asset value of Somawhe. Negotiations regarding the consideration will be finalised during 
             the second half of the financial year.

4.    Linked investment contracts

      These represent PSG Asset Management Administration Services (previously PSG FutureWealth) clients' assets held 
      under investment contracts, which are linked to a corresponding liability. The condensed group income statement 
      impact of the returns on investment contract policy holder assets and liabilities, as well as the investment income
      earned by the ordinary shareholders of PSG Group Ltd and its subsidiaries, were as follows:


                                                                            Investment        Equity       Total
                                                                              contract       holders
                                                                                policy
                                                                               holders
      31 August 2012                                                                Rm            Rm          Rm

      Investment income                                                          133,3          57,2       190,5
      Net fair value gains and losses on financial instruments                   336,4          61,5       397,9
      Fair value adjustment to investment contract liabilities                  (463,9)                   (463,9)
      Net investment return before taxation                                        5,8         118,7       124,5


                                                                            Investment        Equity       Total
                                                                              contract       holders
                                                                                policy
                                                                               holders
      31 August 2011                                                                Rm            Rm          Rm

      Investment income                                                          107,0          55,7       162,7
      Net fair value gains and losses on financial instruments                   163,9         (47,3)      116,6
      Fair value adjustment to investment contract liabilities                  (265,0)                   (265,0)
      Net investment return before taxation                                        5,9           8,4        14,3


                                                                            Investment         Equity       Total
                                                                              contract        holders
                                                                                policy
                                                                               holders
      29 February 2012                                                              Rm            Rm          Rm

      Investment income                                                          224,0         163,9       387,9
      Net fair value gains and losses on financial instruments                   422,9         110,8       533,7
      Fair value adjustment to investment contract liabilities                  (624,1)                   (624,1)
      Net investment return before taxation                                       22,8         274,7       297,5


5.    Broker- and clearing accounts

      Included under receivables are PSG Online broker- and clearing accounts of which R88,2m represents amounts owing 
      by the JSE for trades in the last few days before period end. These balances fluctuate on a daily basis depending 
      on the activity in the markets.


      The control account for the settlement of these transactions is included under trade and other payables, with the 
      settlement to the clients taking place within 3 days after the transaction date.



6.    Segmental reporting


      The group is organised into seven reportable segments, namely: Capitec, Zeder, PSG Private Equity (previously Paladin), 
      Thembeka Capital, Curro, PSG Konsult (including PSG Asset Management, following its amalgamation) and PSG Corporate. 
      These segments represent the major investments of the group. The services offered by PSG Konsult consist of financial 
      advice, stock broking and fund management, while Curro offers private education services. The other segments offer 
      financing,banking, investing and corporate finance services. All segments predominantly operate in the Republic of 
      South Africa.

      Income and intersegment income comprise total income per the condensed group income statement.

      Headline earnings comprise recurring and non-recurring headline earnings. Consolidated recurring headline earnings are 
      calculated on a proportional basis, and include the proportional headline earnings of underlying investments, excluding
      marked-to-market adjustments and one-off items.

                                                                                        Non-
                                                        Inter-     Recurring       recurring                        Sum-of-
                                                       segment      headline        headline       Headline       the-parts
                                           Income       income      earnings        earnings       earnings           value
    Six months ended 31 August 2012            Rm           Rm            Rm              Rm             Rm              Rm

    Capitec *                                (8,6)                     226,3                          226,3         6 535,0
    Zeder                                   125,2                       35,3           (11,0)          24,3         1 192,0
    PSG Private Equity                       21,1                       35,1                           35,1           879,0
    Thembeka Capital *                                                   5,5            76,1           81,6           789,0
    Curro                                   160,6                       (2,0)                          (2,0)        2 387,0
    PSG Konsult                             762,6                       51,8             3,1           54,9         1 598,0
    PSG Corporate                            40,1        (29,1)         13,8            54,6           68,4         1 645,0
      Net fee income **                                                  1,9            (1,7)           0,2           338,0
      Unit trust, hedge fund and share
      investments                                                                       56,3           56,3         1 070,2
      BEE investments                                                   11,9                           11,9           236,8
    Funding                                  19,7         (4,0)        (71,4)          (36,7)        (108,1)       (2 052,0)
    Other                                                               (0,6)                          (0,6)
    Total                                 1 120,7        (33,1)        293,8            86,1          379,9        12 973,0


    Non-headline                                                                                      (64,8)
    Earnings attributable to non-controlling interest                                                 113,8
    Taxation                                                                                           43,4

    Profit before taxation                                                                            472,3

                                                                                              
                                                                                        Non-
                                                         Inter-    Recurring      recurring                       Sum-of-
                                                        segment     headline       headline      Headline       the-parts
                                           Income       income      earnings       earnings      earnings           value
    Six months ended 31 August 2011            Rm           Rm            Rm             Rm            Rm              Rm


    Capitec *                                 4,5                      167,9                         167,9         6 090,0
    Zeder                                    21,7                       53,8          (17,5)          36,3         1 013,0
    PSG Private Equity                       15,4                       16,9            2,3           19,2           841,0
    Thembeka Capital *                                                   5,8            0,7            6,5
    Curro                                    79,3                       (5,1)                         (5,1)          580,0
    PSG Konsult                             694,2                       42,5            1,4           43,9         1 177,0
    PSG Corporate                             6,1        (34,4)         17,9           (1,1)          16,8         1 228,0
      Net fee income **                                                  7,8            0,3            8,1           350,0
      Unit trust, hedge fund and share
      investments                                                                      (1,4)          (1,4)          663,4
      BEE investments                                                   10,1                          10,1           214,6
    Funding                                   6,9         (1,3)        (70,5)         (40,5)        (111,0)       (1 494,0)
    Other                                                                0,5                           0,5
    Total                                   828,1        (35,7)        229,7          (54,7)         175,0         9 435,0


    Non-headline                                                                                     (26,9)
    Earnings attributable to non-controlling interest                                                104,2
    Taxation                                                                                          30,5

    Profit before taxation                                                                           282,8


                                                                                       Non-
                                                        Inter-     Recurring      recurring                        Sum-of-
                                                       segment      headline       headline        Headline      the-parts
                                           Income       income      earnings       earnings        earnings          value
    Year ended 29 February 2012                Rm           Rm            Rm             Rm              Rm             Rm

    Capitec *                               182,4                      362,4                          362,4        5 978,3
    Zeder                                    55,9                      115,4           11,6           127,0        1 067,0
    PSG Private Equity                       17,2                       32,0          (32,4)           (0,4)         727,7
    Thembeka Capital *                                                  18,7            4,4            23,1          570,3
    Curro                                   170,3                       (5,2)                          (5,2)       1 118,0
    PSG Konsult                           1 461,3                      107,9            7,8           115,7        1 482,9
    PSG Corporate                           212,4        (60,4)         41,0           68,6           109,6        1 071,0
      Net fee income **                                                 20,4                           20,4          338,3
      Unit trust, hedge fund and share
      investments                                                                      68,6            68,6          507,6
      BEE investments                                                   20,6                           20,6          225,1
    Funding                                  14,3         (1,5)       (134,4)         (29,8)         (164,2)      (1 650,2)
    Other                                                               (1,3)           0,4            (0,9)         (49,3)
    Total                                 2 113,8        (61,9)        536,5           30,6           567,1       10 315,7


    Non-headline                                                                                      135,9
    Earnings attributable to non-controlling interest                                                 322,3
    Taxation                                                                                          104,1

    Profit before taxation                                                                          1 129,4


 
    *  Equity accounted
    ** Net fee income is after the deduction of salaries, operating expenses and taxation.

7.   Commitments and contingent liabilities                                       Unaudited       Unaudited         Audited
                                                                                     31 Aug          31 Aug          29 Feb
                                                                                       2012            2011            2012
                                                                                         Rm              Rm              Rm


     Operating lease commitments                                                      277,7            81,2            70,8
     Other capital commitments                                                        319,8                           109,0
                                                                                      597,5            81,2           179,8


8.   Restatement of prior year figures


     The net cash flows from investments in equity securities (other than those that are linked to investment contracts) have 
     been reclassified from cash flows from operating activities in prior reporting periods to cash flows from investment 
     activities. 

     PSG believes that this is the more appropriate way to view such investments from a cash flow perspective and has 
     consequently resolved to restate the figures in the statement of cash flows for the period ended 31 August 2011. 
     The effect of the reclassification was as follows:


                                                                                   Reported       Reclassi-        Restated
                                                                                 previously        fication
                                                                                         Rm              Rm              Rm

     Net cash flow from operating activities                                         (316,3)          181,8          (134,5)
     Net cash flow from investment activities                                        (307,4)         (181,8)         (489,2)

9.   PSG Financial Services


     The company is a wholly owned subsidiary of PSG Group, except for the 13 419 479 preference shares which are 
     listed on the JSE Limited. No separate financial statements are presented for the company as it is the only asset of 
     PSG Group.



UNAUDITED CONDENSED GROUP FINANCIAL STATEMENTS

These unaudited condensed group financial statements were compiled under the supervision of PSG Group's financial director, 
Mr W L Greeff, who is a Chartered Accountant (SA).


Date: 08/10/2012 02:17:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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