Wrap Text
Unaudited Interim Results For The Six Months Ended 31 August 2013
PSG Group Limited
Incorporated in the Republic of South Africa
Registration number: 1970/008484/06
JSE Ltd ("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 2013
Sum-of-the-parts value of R85,03 per share as at 4 October 2013
Recurring headline earnings increased by 20% to 194,3 cents per share
Headline earnings increased by 14% to 239 cents per share
Interim dividend of 43 cents per share
COMMENTARY
PSG is an investment holding company consisting of underlying investments that operate across
industries which include financial services, banking, private equity, agriculture and education. PSGs market
capitalisation is approximately R15,4bn, with our largest investment being a 28,3% interest in Capitec.
PERFORMANCE
We believe that performance should be measured on the return that an investor receives over time, with a specific
focus on per share wealth creation. Our objective remains to continuously create wealth for all stakeholders.
When evaluating PSGs performance over the long term, one should focus on the total return index ("TRI") as measurement
tool. The TRI is the compound annual growth rate ("CAGR") of an investment, and is calculated by taking cognisance of
share price appreciation, dividend and other distributions. This is a sound measure of wealth creation and a means
of benchmarking different companies. PSGs TRI is 50,4%, which is the highest of any JSE-listed company over the
18-year period since PSGs establishment in November 1995.
When evaluating PSGs performance over the short to medium term, we focus on the growth in PSGs sum-of-the-parts
("SOTP") value per share and recurring headline earnings per share. History confirms that PSGs share price tracks its
SOTP value per share. Positive growth in PSGs SOTP value per share thus inevitably leads to share price appreciation.
However, an increase in PSGs SOTP value per share over time will ultimately depend on sustained growth in the
profitability of our underlying investments. PSG consequently introduced the recurring headline earnings per share
concept to provide management and investors with a more realistic and transparent way of evaluating PSGs performance
from an earnings perspective.
RESULTS
PSG had a satisfactory six months to 31 August 2013, with reasonable growth in both its SOTP value and recurring
headline earnings per share.
SOTP
The calculation of the SOTP value is simple and requires limited subjectivity as approximately 82% of the value
is calculated using listed share prices, while the unlisted investments are valued using market-related multiples.
At 31 August 2013, the SOTP value per PSG share was R79,20 (28 February 2013: R72,67), which equated to a 29% CAGR
over the last three years. At 4 October 2013, the SOTP value was R85,03 per share.
28 Feb 29 Feb 28 Feb 31 Aug
2011 2012 2013 2013 % of
Asset/Liability Rm Rm Rm Rm total
Capitec* 5 138 5 978 6 128 6 030 34,8
Curro Holdings* 1 118 2 607 3 341 19,3
PSG Konsult** 1 206 1 483 2 237 2 747 15,9
Zeder* 1 069 1 067 1 412 1 694 9,8
PSG Private Equity+ 1 242 728 681 701 4,0
Thembeka Capital+ 570 899 964 5,6
PSG Corporate (incl. PSG Capital)++ 350 338 383 383 2,2
Other investments (incl. cash)++ 548 684 1 505 1 466 8,4
Total assets 9 553 11 966 15 852 17 326 100,0
Perpetual pref funding* (1 028) (1 188) (1 163) (1 419)
Other debt++ (507) (463) (845) (869)
Total SOTP value 8 018 10 315 13 844 15 038
Shares in issue (net of treasury shares) (million) 171,3 184,5 190,5 189,9
SOTP value per share (rand) 46,81 55,92 72,67 79,20
Net asset value per share (rand) 21,56 26,50 32,62 34,41
* Listed on the JSE ** Over-the-counter + SOTP value ++ Valuation
RECURRING HEADLINE EARNINGS
Year
ended Six months ended
28 Feb 31 Aug 31 Aug
2013 2012 Change 2013
Recurring headline earnings Rm Rm % Rm
Capitec 499,9 226,3 21 274,8
Curro Holdings 8,1 (2,0) n/a 7,8
PSG Konsult 118,8 51,8 36 70,4
Zeder 106,6 35,3 8 38,2
PSG Private Equity 75,0 35,2 (26) 25,9
Thembeka Capital 28,0 5,5 51 8,3
PSG Corporate (incl. PSG Capital) 15,9 3,1 (32) 2,1
Other 30,8 20,7 (24) 15,7
Recurring headline earnings before funding 883,1 375,9 18 443,2
Funding (168,2) (82,1) 7 (87,5)
Recurring headline earnings 714,9 293,8 21 355,7
Non-recurring items 160,1 86,1 (5) 81,9
Headline earnings 875,0 379,9 15 437,6
Non-headline items 264,8 (64,8) n/a 13,1
Attributable earnings 1 139,8 315,1 43 450,7
Weighted average number of shares in
issue (net of treasury shares) (million) 182,2 180,8 183,1
Earnings per share (cents)
Recurring headline 392,3 162,5 19,6 194,3
Headline 480,2 210,2 13,7 239,0
Attributable 625,5 174,3 41,3 246,2
Dividend per share (cents) 111,0 33,0 30,3 43,0
Recurring headline earnings for the six months ended 31 August 2013 increased by 19,6% to 194,3 cents per share.
The growth was primarily due to strong performances from Capitec and PSG Konsult, while the majority of the
remaining investments also reported improved earnings.
Headline earnings increased by 13,7% to 239,0 cents per share. Headline earnings per share increased by a smaller
margin than recurring headline earnings per share as PSG achieved lower non-recurring headline profits during the
period under review. This was mainly as a result of substantial marked-to-market profits achieved in Thembekas
portfolio of listed shares during the previous corresponding financial period, which were not repeated to the same
extent during the period under review.
Attributable earnings increased by 41,3% to 246,2 cents per share mainly as a result of non-headline gains during
the period under review as opposed to non-headline impairment losses during the previous corresponding financial
period.
Operating profit before finance costs and taxation increased by 53% to R873m, mainly as a result of the
aforementioned improved performance from our underlying investments and the first-time consolidation of selected
subsidiaries in which a controlling interest was acquired during the past 12 months.
PROJECT INTERNAL FOCUS
In April this year, PSG introduced its latest strategy, Project Internal Focus, to the market. PSGs investment
portfolio contains a healthy balance between established and start-up businesses, all of which offer attractive
growth potential. The majority of PSGs most significant successes has been businesses that were either started
by, or in conjunction with, PSG. Capitec, PSG Konsult and Zeder are all examples of same. In order to extract
maximum value, we formalised Project Internal Focus, a strategy whereby our focus is primarily directed at the
optimisation, refinement and growth of PSGs existing investment portfolio.
Capitec is a good example of an established business that requires limited attention from PSG management. It has
achieved much success to date, with exponential growth in headline earnings per share since establishment in 2001.
Capitec continues to provide PSG with a solid earnings base to leverage. Investments in the development phase on the
other hand, such as Curro and Chayton, require more active strategic input from PSG. These companies are likely to
experience new business strain while expanding and will only start making a contribution to PSGs earnings in
later years. As anticipated, it will initially have a negative impact on PSGs earnings and dividend growth,
as the cost of funding associated with the investment is more than the investment yield achieved from an
earnings and cash flow perspective. That said, Curro has already made a significant positive contribution to PSGs
SOTP value with the substantial increase in its share price since listing on the JSE in 2011.
Project Internal Focus in action
The drive to revisit and, if necessary, reformulate the business strategy of each investment throughout the group,
is showing promise. Every underlying business has now compiled a revised strategic plan coupled with budgeted profits
for the next few years, and the recently appointed successor CEOs at some of our larger investments have already made
a positive contribution towards the future success of those businesses.
CAPITEC (28,3%)
Capitec continued to deliver sustained growth and performance amidst challenging conditions in the unsecured credit
market, with a 20% increase in headline earnings per share during the six months ended 31 August 2013. It remains an
exceptionally well run business with, as far as we know, the most conservative approach to funding, credit criteria
and provisioning in the industry. It is well capitalised with a capital adequacy ratio of 39%. Capitec is becoming
less dependent on lending income as it continues to experience a sharp increase in net transaction fee income. This
amount grew by 54% to R899m during the period under review and now covers 55% of operating expenses, up from 45% as
at 28 February 2013.
Riaan Stassen recently announced his retirement as Capitec CEO later this year. We thank him for his devotion and
the major role which he has played as leader and innovator to help grow Capitec into the business it is today. We look
forward to Riaans continued contribution as a non-executive director on the board of Capitec. PSG is pleased to
welcome Gerrie Fourie as the new CEO and wishes him and the rest of the management team well with their task at hand.
We remain positive about Capitec, its business and its management and believe that this investment will continue to
be a significant contributor to the future success of PSG for years to come.
Capitecs comprehensive results for the six months ended 31 August 2013 are available at www.capitecbank.co.za.
CURRO HOLDINGS (57,1%)
Curro recently turned 15 years old. With the support of PSG since 2009, it has become the largest private school
company in South Africa. It boasts 21 908 (2012: 12 473) learners across 26 (2012: 22) campuses.
For the six months ended 30 June 2013, Curro reported a 91% increase in revenue to R309m and a R14m headline profit
compared to a R3m headline loss in the previous period. Aggressive expansion will continue to have a negative impact
on profits over the short term, but is bound to deliver pleasing results over the medium to long term when the
created capacity is utilised through an increase in new learners.
With the underwritten support of PSG, Curro raised R605m in cash during May this year by means of a rights issue.
This capital will be invested in the expansion of existing campuses, as well as in the addition of five new schools
for the 2014 year. In the six months under review, Curro also successfully completed two significant strategic
acquisitions:
A teachers training college, which will improve the companys sources of human capital.
The 4 300-learner Northern Academy school, which provides the backbone for the Meridian community school
division.
Curros pipeline of opportunities continues to grow and PSG remains fully supportive of the companys vision to
achieve 80 schools by 2020.
Curros comprehensive results for the six months ended 30 June 2013 are available at www.curro.co.za.
PSG KONSULT (64,8%)
PSG Konsult has, under the leadership of Francois Gouws as new CEO, refocused itself into three distinct business
segments: Wealth, Asset Management and Insure. It delivered excellent results for the six months ended
31 August 2013, with a 31% increase in recurring headline earnings per share.
PSG Asset Managements assets under management and administration increased substantially due to strong fund inflows
and increased market values as a result of favourable investment market conditions. Despite prevailing difficult
underwriting market conditions, the Insurance business benefited from managements efforts to enhance vertical
integration and exploit synergies that the short-term insurance licence and expertise provide PSG Konsult with,
resulting in improved service delivery and products to its client base. The Wealth business also benefited from
positive client inflows, increased client trading activity and generally favourable market conditions.
A key strength of PSG Konsult is the depth and quality of its financial advisers. In a complex financial environment
the high-quality advice PSG Konsult is able to provide to clients is a distinct competitive advantage which helps
protect, preserve and grow the financial wealth of its client base. PSG Konsult wants to continue growing its
advisory practices.
The PSG Asset Management team has consistently produced top quartile investment returns by investing in both local
and international securities. The strategy is to raise its brand awareness and actively pursue both retail and
institutional clients. PSG Asset Management has made substantial progress during the last six months to position
itself as a credible alternative to some of the larger incumbents.
Going forward, PSG Konsults strategy will be to sustainably grow the business and profits through, inter alia,
the following:
Position PSG Konsult as a fully fledged financial services business through its comprehensive range of services
and products.
Optimise the synergies that exist between business segments in order to create further business development
opportunities.
Extend PSG Konsults sharing in the value chain and in particular grow the asset management and short-term
insurance activities.
PSG Konsults comprehensive results for the six months ended 31 August 2013 are available at www.psg.co.za.
ZEDER (42,6%)
Zeder is an investor in the broad agribusiness industry with a specific focus on the food and beverage sectors.
The value of its underlying portfolio of investments amounted to R4,36bn (R4,74bn on a see-through basis) as at
31 August 2013. Agri Voedsel Ltd ("Agri Voedsel") (with its interest of 30,5% in Pioneer Food Group Ltd
("Pioneer Foods")) remains a large and strategic investment representing 39,2% of the portfolio. During the six
months under review, Zeder invested a further R469,4m, of which R353,3m was for an additional stake in Capespan
Group Ltd ("Capespan").
Zeders SOTP value per share increased by 8,8% to R4,34 since 28 February 2013. Zeders see-through SOTP value
per share, calculated on the exact same basis, apart from using the see-through JSE-listed market price for Agri
Voedsels investment in Pioneer Foods instead of Agri Voedsels own OTC share price, increased by 8,7% to R4,73
since 28 February 2013. At the close of business on Friday, 4 October 2013, Zeders SOTP and see-through SOTP value
per share were R4,53 and R4,99 respectively.
Recurring headline earnings per share increased by 8,2% to 9,2 cents, mainly due to improved contributions from
Capespan, Zaad Holdings Ltd ("Zaad") and Kaap Agri Ltd ("Kaap Agri") during the period under review. However,
the positive effect of the aforementioned was to some extent offset by:
The cash proceeds from the disposal of the bulk of Zeders Capevin Holdings Ltd ("Capevin Holdings") shares
yielded a lower return than what the Capevin Holdings investment did during the comparative period.
As anticipated, the investment in Chayton, a start-up business in its development phase, incurred a loss,
while drought conditions negatively affected the performance of NWK Ltd ("NWK") and Suidwes Ltd ("Suidwes").
Subsequent to 31 August 2013, NWK and Suidwes were sold for an aggregate cash consideration of R325m.
Headline earnings per share increased by 25,4% to 7,4 cents. The aforementioned, coupled with a decrease in
non-recurring costs incurred by investee companies during the period under review, resulted in the increase in
headline earnings per share.
Over the past 12 months, Zeder has communicated a refined strategy to the market. It seeks larger, strategic
stakes in entities that allow it to play a more active role in its underlying portfolio companies and assist
with the determination of appropriate long-term strategies to help expand the respective businesses. Significant
progress has been made in this regard and the investments in Zaad, Chayton and Capespan are examples thereof.
Zeder is actively engaged with its existing portfolio of companies, while continuously seeking new opportunities,
and it remains optimistic about the sector.
Zeders comprehensive results for the six months ended 31 August 2013 are available at www.zeder.co.za.
PSG PRIVATE EQUITY (100%)
Management remains optimistic about the earnings growth potential of PSG Private Equity's portfolio which contains
a range of businesses across various industries and in different stages of maturity.
Start-up businesses with exciting prospects, such as Impak (distance education) and Energy Partners (energy-
efficiency solutions), are currently investing for future growth and require input from PSG management. The larger
and more mature investments have solid growth strategies in place to deliver increased earnings going forward.
THEMBEKA CAPITAL (49%)
Thembeka is a black-owned and controlled investment company. Its portfolio of R2,49bn includes investments in
Pioneer Foods, Capitec, PSG, Curro Holdings, MTN Zakhele, Kaap Agri and Overberg Agri.
During the six months ended 31 August 2013:
Thembekas net intrinsic value (after CGT) increased by 21% to R1,62bn.
Its recurring headline earnings increased by 38% to R40m.
It invested a further R54m in Curro Holdings in terms of the aforementioned rights issue in May 2013.
Thembeka remains an extraordinary BEE success story, and under the leadership of KK Combi, has grown its intrinsic
value (after CGT) by 46% year on year over the last 7,5 years. Thembeka has a portfolio of quality investments and
is confident that continued growth by investee companies will ultimately translate into good portfolio returns going
forward.
Thembekas comprehensive results for the six months ended 31 August 2013 are available at www.thembekacapital.co.za.
PROSPECTS
PSG operates in a number of diverse industries, the performance of which is not always correlated. Although it
is difficult to predict the future, we remain optimistic and believe our strategy will continue to deliver superior
returns for shareholders.
DIVIDENDS
Ordinary shares
PSGs policy remains to pay up to 100% of free cash flow as an ordinary dividend, of which one third is payable
as an interim and the balance as a final dividend at year-end. The directors have resolved to declare a gross
interim dividend of 43 cents (2012: 33 cents) per share out of income reserves.
The company will be utilising secondary tax on companies credits amounting to 16,9 cents per ordinary share and,
as a result, the taxable dividend per share will amount to 26,1 cents per share. The dividend amount net of South
African dividends tax of 15% is therefore 39,085 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 207 589 426, and the income tax
number of the company is 9950080714.
The salient dates of this dividend distribution are:
Last day to trade cum dividend Friday, 1 November 2013
Trading ex dividend commences Monday, 4 November 2013
Record date Friday, 8 November 2013
Date of payment Monday, 11 November 2013
Share certificates may not be dematerialised or rematerialised between Monday, 4 November 2013, and Friday,
8 November 2013, both days inclusive.
Preference shares
The directors of PSG Financial Services Ltd have declared a dividend of 357,06 cents per share in respect of the
cumulative, non-redeemable, non-participating preference shares for the six months ended 31 August 2013, which was
paid on 30 September 2013. The detailed announcement in respect hereof was disseminated on Securities Exchange
News Service.
On behalf of the board
Jannie Mouton Wynand Greeff
Chairman Financial Director
14 October 2013
Stellenbosch
UNAUDITED SUMMARISED GROUP FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 31 AUGUST 2013
SUMMARISED GROUP INCOME STATEMENT
Unaudited Audited
Aug 2013 Aug 2012 Feb 2013
6 months 6 months 12 months
Rm Rm Rm
Revenue from sale of goods 2 664,7 665,4 2 001,8
Cost of goods sold (2 263,1) (578,7) (1 682,9)
Gross profit 401,6 86,7 318,9
Income
Changes in fair value of biological assets 29,2 28,7
Investment income (note 6) 238,9 190,5 418,3
Fair value gains and losses (note 6) 823,0 397,9 1 023,9
Fair value adjustment to investment contract liabilities (note 6) (832,2) (463,9) (1 186,6)
Commission and other fee income 1 373,9 894,1 1 941,1
Other operating income and expenses 37,0 69,0 830,1
1 669,8 1 087,6 3 055,5
Expenses
Insurance claims and loss adjustments, net of recoveries (140,1) 0,3 (60,0)
Marketing, administration and other expenses (1 506,8) (989,8) (2 276,6)
(1 646,9) (989,5) (2 336,6)
Income from associated companies
Share of profits of associated companies 464,5 442,6 1 036,6
Loss on impairment of associated companies (15,7) (56,8) (104,2)
448,8 385,8 932,4
Profit before finance costs and taxation 873,3 570,6 1 970,2
Finance costs (123,3) (98,3) (206,0)
Profit before taxation 750,0 472,3 1 764,2
Taxation (115,5) (43,4) (248,1)
Profit for the period 634,5 428,9 1 516,1
Attributable to:
Owners of the parent 450,7 315,1 1 139,8
Non-controlling interests 183,8 113,8 376,3
634,5 428,9 1 516,1
Reconciliation to headline earnings:
Profit for the period attributable to owners of the parent 450,7 315,1 1 139,8
Non-headline items (note 4) (13,1) 64,8 (264,8)
Headline earnings 437,6 379,9 875,0
Earnings per share
- Recurring headline 194,3 162,5 392,3
- Headline 239,0 210,2 480,2
- Attributable 246,2 174,3 625,5
- Diluted headline 237,5 208,3 476,3
- Diluted attributable 244,6 172,7 620,5
Number of shares (million)
- In issue 207,6 208,1 208,1
- In issue (net of treasury shares) 182,9 185,8 183,6
- Weighted average 183,1 180,8 182,2
- Diluted weighted average 184,3 182,4 183,7
SUMMARISED GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Audited
Aug 2013 Aug 2012 Feb 2013
6 months 6 months 12 months
Rm Rm Rm
Profit for the period 634,5 428,9 1 516,1
Other comprehensive income for the period, net of taxation,
which may subsequently be reclassified to profit or loss
Currency translation adjustments 102,0 0,5 15,6
Fair value gains and losses on investments and recycling
thereof on disposal (0,2) (0,7) (0,1)
Share of other comprehensive income of associated companies 35,2 (6,2) 6,4
Recycling of share of associated companies' other
comprehensive income on disposal (20,6) (1,2)
Total comprehensive income for the period 750,9 422,5 1 536,8
Attributable to:
Owners of the parent 500,8 308,8 1 132,4
Non-controlling interests 250,1 113,7 404,4
750,9 422,5 1 536,8
SUMMARISED GROUP STATEMENT OF FINANCIAL POSITION
Unaudited Audited
Aug 2013 Aug 2012 Feb 2013
Rm Rm Rm
Assets
Property, plant and equipment 2 581,5 1 553,7 1 799,7
Intangible assets 1 974,9 1 670,3 1 666,5
Biological assets 194,6 73,3 31,3
Investment in ordinary shares of associated companies and
joint ventures 5 828,6 5 864,4 5 961,3
Investment in preference shares of/loans granted to associated
companies and joint ventures 336,2 365,6 312,7
Deferred income tax assets 127,1 85,6 59,5
Financial assets linked to investment contracts (note 6) 11 310,1 9 661,4 10 272,4
Cash and cash equivalents (including money market funds) 149,0 51,3 65,1
Other financial assets 11 161,1 9 610,1 10 207,3
Other financial and employee benefit assets 1 017,4 760,7 734,0
Inventory 425,4 250,6 320,8
Receivables (note 7) 3 150,9 627,8 2 243,6
Current income tax assets 28,5 10,3 14,6
Cash and cash equivalents (including money market funds) 1 793,4 1 287,9 2 153,2
Non-current assets held for sale (note 9) 633,4 7,4 287,7
Total assets 29 402,0 22 219,0 25 857,3
Equity
Ordinary shareholders' equity 6 294,2 5 307,5 5 989,7
Non-controlling interests 5 197,0 3 691,9 4 159,8
Total equity 11 491,2 8 999,4 10 149,5
Liabilities
Insurance contracts 415,6 30,0 378,0
Financial liabilities under investment contracts (note 6) 11 310,1 9 661,4 10 272,4
Borrowings, other financial liabilities and employee benefits 3 154,0 2 271,5 2 373,4
Deferred income tax liabilities 361,0 236,0 243,5
Payables (note 7) 2 634,0 992,3 2 434,2
Current income tax liabilities 36,1 24,0 6,3
Non-current liabilities held for sale 4,4
Total liabilities 17 910,8 13 219,6 15 707,8
Total equity and liabilities 29 402,0 22 219,0 25 857,3
Net asset value per share (cents) 3 440,9 2 856,8 3 261,6
Net tangible asset value per share (cents) 2 361,3 1 957,8 2 354,1
SUMMARISED GROUP STATEMENT OF CHANGES IN EQUITY
Unaudited Audited
Aug 2013 Aug 2012 Feb 2013
6 months 6 months 12 months
Rm Rm Rm
Ordinary shareholders' equity at beginning of period 5 989,7 4 759,9 4 759,9
Total comprehensive income 500,8 308,8 1 132,4
Issue of shares 360,7 361,0
Share buy-back (33,1)
Share-based payment costs - employees 9,5 9,5 14,2
Net movement in treasury shares (41,0) 13,2 (123,4)
Transactions with non-controlling interests 11,4 (43,6) 7,6
Dividend paid (143,1) (101,0) (162,0)
Ordinary shareholders' equity at end of period 6 294,2 5 307,5 5 989,7
Non-controlling interests at beginning of period 4 159,8 3 187,7 3 187,7
Total comprehensive income 250,1 113,7 404,4
Issue of shares 642,0 403,1 551,5
Share-based payment costs - employees 1,9 1,3 3,3
Acquisition of subsidiaries 333,5 202,0
Transactions with non-controlling interests (81,7) 76,6 (32,2)
Dividend paid (108,6) (90,5) (156,9)
Non-controlling interests at end of period 5 197,0 3 691,9 4 159,8
Total equity 11 491,2 8 999,4 10 149,5
Dividend per share (cents)
- Interim 43,0 33,0 33,0
- Final 78,0
43,0 33,0 111,0
SUMMARISED GROUP STATEMENT OF CASH FLOWS
Unaudited Audited
Aug 2013 Aug 2012 Feb 2013
6 months 6 months 12 months
Rm Rm Rm
Cash generated by operations 303,7 156,4 623,9
Cash movement in policyholder funds 83,9 (65,9) (32,1)
Finance costs and taxation paid (180,0) (149,7) (467,2)
Net cash flow from operating activities 207,6 (59,2) 124,6
Net cash flow from investing activities (736,1) (1 031,6) (12,0)
Net cash flow from financing activities (192,7) 1 558,2 1 183,0
Net (decrease)/increase in cash and cash equivalents (721,2) 467,4 1 295,6
Exchange gains on cash and cash equivalents 21,4 1,5
Cash and cash equivalents at beginning of period 1 927,7 630,6 630,6
Cash and cash equivalents at end of period 1 227,9 1 098,0 1 927,7
Cash and cash equivalents include:
Cash and cash equivalents linked to investment contracts 149,0 51,3 65,1
Borrowings (bank overdrafts) (714,5) (241,2) (290,6)
NOTES TO THE SUMMARISED INTERIM GROUP FINANCIAL STATEMENTS
1. Basis of presentation and accounting policies
These summarised interim group 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
Listings Requirements of the JSE.
The accounting policies applied in the preparation of these summarised interim group financial statements are
consistent in all material respects with those used in the prior financial year, apart from the following new
accounting standards and amendments to IFRSs which were relevant to the group's operations from 1 March 2013:
IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and amendments to IAS 28 Investments in
Associates
The group has adopted aforementioned suite of IFRSs and amendments which deal with the accounting treatment for
the group's interests in its investees. The group has reviewed its accounting policies and concluded that the
adoption of same did not result in any material changes to the group's accounting for its investees.
IFRS 13 Fair Value Measurement
The group has adopted the new standard on how to measure fair value and enhance fair value disclosures. The
adoption did not result an any material impact on the financial statements.
Amendments to IAS 19 Employee Benefits
The amendments became relevant to the group following its acquisition of a controlling interest in Capespan
(note 5), which operates defined benefit plans. Capespan previously elected to follow a policy of
recognising remeasurements to employee benefit assets and liabilities in other comprehensive income, which has
now become mandatory.
Amendments to IAS 34 Interim Financial Reporting
The amendments relate to the introduction of IFRS 13 Fair Value Measurement and changes to IFRS 7 Financial
Instruments: Disclosures. The group has complied with the requirements of the additional disclosures in these
interim financial statements.
The group also adopted the various other revisions to IFRS which are effective for the financial year ending
28 February 2014. These revisions have not resulted in material impacts to the group's reported results or interim
disclosures.
Enhanced disclosures, as required by IFRS 12 Disclosures of Interests in Other Entities, will be provided in the
annual financial statements for the year ending 28 February 2014.
2. Preparation
These summarised interim group financial statements were compiled under the supervision of the group financial
director, Mr WL Greeff, CA(SA). Neither these summarised interim group financial statements, nor any any reference
to future financial performance included in this announcement, have been reviewed or reported on by the company's
external auditor, PricewaterhouseCoopers Inc.
3. PSG Financial Services
PSG Financial Services is a wholly owned subsidiary of PSG Group, except for the 17 415 770 (31 August 2012
and 28 February 2013: 13 419 479) preference shares which are listed on the JSE. These preference shares are
included in non-controlling interests in the statement of financial position. No separate financial statements are
presented in this announcement for PSG Financial Services as it is the only asset of PSG Group.
Unaudited Audited
Aug 2013 Aug 2012 Feb 2013
6 months 6 months 12 months
Rm Rm Rm
4. Non-headline items
Gross amounts
Impairment of investments in associated companies (15,7) (56,8) (104,2)
Net (loss)/profit on sale/dilution of investments in
associated companies (5,6) (11,8) 728,6
Fair value gain on step-up from associated company to subsidiary 40,7 22,0 21,2
Impairment of intangible assets (including goodwill) (39,1) (167,9)
Non-headline items of associated companies 34,5 28,2 23,2
Other 1,2 7,8 (6,8)
Non-controlling interests (21,3) (15,8) (106,6)
Taxation (20,7) 0,7 (122,7)
Non-headline profit/(loss) 13,1 (64,8) 264,8
5. Business combinations
The group's most significant business combinations entered into during the period under review included:
Capespan
Effective April 2013, the group, through Zeder, acquired a further 25,3% shareholding in Capespan and thereby
increased its interest to 71,1%. Subsequently, the group further increased its interest in Capespan to 71,7%.
Capespan is a global fruit procurement company and South Africa's largest fruit exporter. The remeasurement
to fair value of the interest previously held as an associated company resulted in a non-headline gain of R40,7m
being recognised in fair value gains and losses in the income statement. Non-controlling interest was recognised at
its fair value based on Capespan's over-the-counter traded share price.
Embury Institute for Teacher Education (Pty) Ltd ("Embury")
Effective April 2013, the group, through Curro Holdings, acquired the entire shareholding in Embury, a Durban-based
teachers training college.
Northern Academy
Effective April 2013, the group, through Curro Holdings, acquired the entire business operations and properties of
Northern Academy, a private education campus in Polokwane.
Precrete Holdings (Pty) Ltd ("Precrete")
Effective August 2013, the group, through PSG Private Equity, acquired a further 7,2% shareholding in Precrete and
thereby increased its interest to 55,2%. Precrete is involved in providing mine safety and support services. The
interest previously held as an associated company approximated fair value and therefore no remeasurement gain or loss
arose upon gaining control. Non-controlling interest was recognised at its proportionate share of net assets.
The amounts of identifiable net assets acquired, goodwill and non-controlling interest recognised from aforementioned
business combinations can be summarised as follows:
Northern
Capespan Embury Academy Precrete Total
Rm Rm Rm Rm Rm
Identifiable net assets acquired 922,4 20,9 60,1 151,2 1 154,6
Goodwill recognised 8,9 31,4 89,7 77,0 207,0
Non-controlling interestS recognised (270,3) (62,1) (332,4)
661,0 52,3 149,8 166,1 1 029,2
Derecognition of previous interest in
associated company (403,0) (146,4) (549,4)
Cash consideration 258,0 52,3 149,8 19,7 479,8
Goodwill recognised from these business combinations can be attributed to the employee corps, expected synergies and
growth potential. Transaction costs relating to aforementioned business combinations were insignificant and expensed
in the income statement.
6. Linked investment contracts
These represent PSG Asset Management Life clients' assets held under investment contracts, which are linked to a
corresponding liability. The impact on the income statement from the returns on investment contract policy holder
assets and liabilities, as well as the investment income earned by the ordinary shareholders of the group, were
as follows:
Investment
contract
policy Equity
holders holders Total
Rm Rm Rm
31 August 2013
Investment income 142,8 96,1 238,9
Fair value gains and losses 695,4 127,6 823,0
Fair value adjustment to investment contract liabilities (832,2) (832,2)
6,0 223,7 229,7
31 August 2012
Investment income 133,3 57,2 190,5
Fair value gains and losses 336,4 61,5 397,9
Fair value adjustment to investment contract liabilities (463,9) (463,9)
5,8 118,7 124,5
28 February 2013
Investment income 272,0 146,3 418,3
Fair value gains and losses 937,1 86,8 1 023,9
Fair value adjustment to investment contract liabilities (1 186,6) (1 186,6)
22,5 233,1 255,6
7. Receivables and payables
Included under receivables are PSG Online broker- and clearing accounts of which R1,2bn (31 August 2012: R0,1bn
and 28 February 2013: R1,6bn) represents amounts owing by the JSE for trades conducted during the last few days
before 31 August 2013. 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 payables, with the settlement to
clients taking place within 3 days after the transaction date.
8. Corporate actions
Apart from the transactions set out in notes 5 and 9, the group's most significant corporate actions included the
following:
Buy-back of 492 471 PSG Group ordinary shares for R33,1m cash.
Issue of 3 996 291 PSG Financial Services preference shares for cash proceeds of R300m at an effective
dividend yield of 9,44%.
Curro Holdings conducted a rights offer during May 2013, which was partially underwritten by the group. The
group followed its rights and the additional investment amounted to R350,6m.
Effective June 2013, the group, through PSG Konsult, increased its shareholding in Western Group Holdings Ltd
("Western"), being a short-term insurer, from 75% to 90%. Following FSB approval during September 2013, the
group acquired the remaining 10% minority shareholding in Western and then subsequently sold 40% of its
shareholding to Santam. Western now has two strong capital partners within a highly competitive and capital
intensive industry.
9. Non-current assets held for sale
Non-current assets held for sale consists mainly of the following:
The group, through Zeder, holds JSE-listed equity securities in Capevin Holdings with a carrying and market
value of R312,1m. These equity securities were classified as held for sale during the previous financial year.
At the reporting date, the group, through Zeder, was in process of disposing of its interests in NWK and
Suidwes. These investments, being associated companies, were classified as held for sale and their aggregate
carrying value at the reporting date amounted to R311,2m. Since the reporting date, the disposals have
been finalised and the aggregate cash proceeds of R325m have been collected.
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
interest rate risk, and price risk), credit risk and liquidity risk.
The summarised interim financial statements do not include all financial risk management information and disclosures
required in the annual financial statements, and therefore they should be read in conjunction with the group's annual
financial statements as at 28 February 2013. Risk management continues to be carried out by each major entity within
the group under policies approved by the respective boards of directors.
10.2 Fair value estimation
The group, through PSG Asset Management Life, 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.
The information below analyses financial assets and financial liabilities, which are carried at fair value, by level
of hierarchy as required by IFRS 7 and IFRS 13. The different levels in the hierarchy are defined below:
Level 1
The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting
date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer,
broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring
market transactions on an arm's length basis. The quoted market price used for financial assets held by the group is
the current bid price.
Level 2
Financial instruments that trade in markets that are not considered to be active but are valued (using valuation
techniques) based on quoted market prices, dealer quotations or alternative pricing sources supported by observable
inputs are classified within level 2. These include over-the-counter traded derivatives. As level 2 investments include
positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted
to reflect illiquidity and/or non-transferability, which are generally based on available market information. If all
significant inputs in determining an instrument's fair value are observable, the instrument is included in level 2.
Level 3
If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
Investments classified within level 3 have significant unobservable inputs, as they trade infrequently.
The fair value of financial assets and liabilities carried at amortised cost approximates their fair value, while
those measured at fair value (excluding aforementioned linked investment contracts) in the statement of financial
position can be summarised as follows:
Level 1 Level 2 Level 3 Total
Rm Rm Rm Rm
Assets
Derivative financial assets 24,1 24,1
Equity securities 3,8 119,6 4,3 127,7
Debt securities 31,1 264,5 3,6 299,2
Unit-linked investments 299,4 299,4
Closing carrying value 34,9 707,6 7,9 750,4
Opening carrying value 4,2
Subsidiary acquired 3,5
Unrealised fair value gains 0,2
Liabilities
Derivative financial liabilities 38,6 45,7 84,3
Payables 4,9 4,9
Insurance contracts 27,3 27,3
Third party liabilities arising on consolidation of mutual funds 41,2 41,2
Closing carrying value - 107,1 50,6 157,7
Opening carrying value 52,0
Unrealised fair value gains (1,4)
Derivative financial assets, equity securities, debt securities and unit-linked investments are all included in
other financial assets in the statement of financial position, while derivative financial liabilities and third
party liabilities arising on consolidation of mutual funds are included in other 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.
Non-current assets held for sale include assets measured at fair value, as set out in note 9, which is based on the
JSE-listed share price or other observable inputs.
11. Capital commitments
The group, through Curro Holdings, will be investing more than R500m in the expansion and development of new campuses.
12. Reclassification
Assets and liabilities relating to the linked investment contracts were reviewed and the following reclassification
has been made in respect of the assets and liabilities disclosed at 31 August 2012:
Now Previously
reported reported Effect
Rm Rm Rm
Assets
Financial assets linked to investment contracts 9 661,4 9 641,4 20,0
Cash and cash equivalents (including money market funds) 51,3 31,3 20,0
Other financial assets 9 610,1 9 610,1 -
Cash and cash equivalents (including money market funds) 1 287,9 1 307,9 (20,0)
Liabilities
Financial liabilities under investment contracts 9 661,4 9 641,4 20,0
Payables 992,3 1 012,3 (20,0)
The aforementioned reclassification had no impact on previously reported amounts of profit or loss, total assets, total
liabilities, equity or cash flows.
13. Segment report
The group's classification into seven reportable segments, namely: Capitec, Zeder, PSG Private Equity, Thembeka
Capital, Curro Holdings, PSG Konsult 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, fund
management and insurance, while Curro Holdings offers private education services. The other segments offer financing,
banking, investing and corporate finance services. All segments operate predominantly in the Republic of South Africa.
Intersegment income represents income derived from other segments within the group which is recorded at the fair
value of the consideration received or receivable for services rendered in the ordinary course of the group's
activities. Intersegment income mainly comprises intergroup management fees charged in terms of the respective
management agreements.
Headline earnings comprise recurring and non-recurring headline earnings. Recurring headline earnings are calculated
on a proportional basis, and include the proportional headline earnings of underlying investments, excluding marked-
to-market adjustments and one-off items. The result is that investments in which the group holds less than 20% and
which are generally not equity accountable in terms of accounting standards, are equity accounted for the purpose of
calculating the consolidated recurring headline earnings. Non-recurring headline earnings include one-off gains and
losses and marked-to-market fluctuations, as well as the resulting taxation charge on these items. Sum-of-the-parts
("SOTP") is 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 statement of financial position since
the latter are measured using the relevant accounting standards which include historical cost and the equity
accounting method.
The chief operating decision-maker (the executive committee) evaluates the following information to assess the
segments' performance:
Inter- Non- Headline
segment Recurring recurring earnings Sum-of-
Income income headline headline (segment the-parts
** ** earnings earnings profit) value^
Period ended 31 August 2013 Rm Rm Rm Rm Rm Rm
Capitec* 274,8 274,8 6 029,8
Zeder 1 907,8 38,2 3,7 41,9 1 693,9
PSG Private Equity 875,7 25,9 3,6 29,5 700,9
Thembeka Capital* 8,3 20,8 29,1 964,2
Curro Holdings 317,3 7,8 7,8 3 341,4
PSG Konsult 1 109,1 70,4 70,4 2 747,0
PSG Corporate 135,9 (31,9) 19,6 7,6 27,2 1 780,4
Reconciling items
Funding 25,0 (4,4) (87,5) 46,2 (41,3) (2 288,6)
Other (1,8) (1,8) 68,5
Total 4 370,8 (36,3) 355,7 81,9 437,6 15 037,5
Non-headline 13,1
Earnings attributable to non-controlling interests 183,8
Taxation 115,5
Profit before taxation 750,0
Inter- Non- Headline
segment Recurring recurring earnings Sum-of-
Income income headline headline (segment the-parts
** ** earnings earnings profit) value^
Period ended 31 August 2012 Rm Rm Rm Rm Rm Rm
Capitec* (8,6) 226,3 226,3 6 535,0
Zeder 204,5 35,3 (11,0) 24,3 1 192,0
PSG Private Equity 607,2 35,2 35,2 879,0
Thembeka Capital* 5,5 76,1 81,6 789,0
Curro Holdings 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
Reconciling items
Funding 19,7 (4,0) (71,4) (36,7) (108,1) (2 052,0)
Other (0,7) (0,7)
Total 1 786,1 (33,1) 293,8 86,1 379,9 12 973,0
Non-headline (64,8)
Earnings attributable to non-controlling interests 113,8
Taxation 43,4
Profit before taxation 472,3
Inter- Non- Headline
segment Recurring recurring earnings Sum-of-
Income income headline headline (segment the-parts
** ** earnings earnings profit) value^
Year ended 28 February 2013 Rm Rm Rm Rm Rm Rm
Capitec* 410,1 499,9 499,9 6 127,6
Zeder 755,5 106,6 (23,2) 83,4 1 411,6
PSG Private Equity 1 690,9 75,0 (9,2) 65,8 680,7
Thembeka Capital* 28,0 140,0 168,0 898,8
Curro Holdings 367,3 8,1 8,1 2 606,6
PSG Konsult 1 673,0 118,8 (0,1) 118,7 2 236,8
PSG Corporate++ 190,7 (61,0) 48,3 85,9 134,2 1 855,2
Reconciling items
Funding++ 39,0 (8,2) (168,2) (33,3) (201,5) (2 008,2)
Other (1,6) (1,6) 34,4
Total 5 126,5 (69,2) 714,9 160,1 875,0 13 843,5
Non-headline 264,8
Earnings attributable to non-controlling interests 376,3
Taxation 248,1
Profit before taxation 1 764,2
Unaudited Audited
Aug 2013 Aug 2012 Feb 2013
6 months 6 months 12 months
Rm Rm Rm
Reconciliation of segment revenue to IFRS revenue:
Segment revenue as stated above
Income 4 370,8 1 786,1 5 126,5
Inter-segment income (36,3) (33,1) (69,2)
Less:
Changes in fair value of biological assets (29,2) (28,7)
Fair value gains and losses (823,0) (397,9) (1 023,9)
Fair value adjustment to investment contract liabilities 832,2 463,9 1 186,6
Other operating income and expenses (37,0) (69,0) (830,1)
IFRS revenue 4 277,5 1 750,0 4 361,2
Non-recurring headline earnings comprised the following:
Non-recurring items 28,1 68,2 107,5
Net fair value gains 7,6 56,3 72,0
Funding and other+ 46,2 (38,4) (19,4)
81,9 86,1 160,1
* Equity accounted
** The total of Income and Intersegment income comprises the total of Revenue from sale of goods and Income per the
income statement.
^ SOTP is a key valuation tool to measure the group's performance, but does not necessarily correspond to net asset
value.
+ Year ended 28 February 2013 includes a commitment fee from Capitec.
++ Non-recurring headline losses of R29,1m pertaining to the group's interest rate hedges have been reclassified
from PSG Corporate to Funding.
DIRECTORS:
JF Mouton (Chairman)+, PE Burton^, ZL Combi^, J de V du Toit^, MM du Toit^, FJ Gouws+, WL Greeff*,
JA Holtzhausen*, MJ Jooste+ (Alt: AB la Grange), JJ Mouton+, PJ Mouton*, CA Otto^, W Theron+
* Executive + Non-executive ^ Independent non-executive
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, 70 Marshall Street, Johannesburg, 2001; PO Box 61051, Marshalltown, 2107
SPONSOR:
PSG Capital
AUDITOR:
PricewaterhouseCoopers Inc.
Date: 14/10/2013 01:30:00 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.
Sharenet Sites 
