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PSG GROUP LIMITED - Reviewed Preliminary Consolidated Financial Results For The Year Ended 28 February 2019

Release Date: 24/04/2019 13:34
Code(s): PSG PGFP     PDF:  
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Reviewed Preliminary Consolidated Financial Results For The Year Ended 28 February 2019

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

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

REVIEWED PRELIMINARY CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2019

• Recurring earnings up 9% to R10.86 per share
• Sum-of-the-parts value of R329.73 per share as at 18 April 2019
• Dividend for the year up 10% to R4.56 per share

OVERVIEW

PSG is an investment holding company consisting of underlying investments that operate across a
diverse range of industries, which include banking, financial services, education and food and
related business, as well as early-stage investments in select growth sectors. PSG’s market
capitalisation (net of treasury shares) is approximately R60bn.

PERFORMANCE

The two key benchmarks used by PSG to measure performance are sum-of-the-parts (“SOTP”) value
and recurring earnings per share, as long-term growth in PSG’s SOTP value and share price should
depend on, inter alia, sustained growth in the recurring earnings per share of our underlying
investments.

SOTP

The calculation of PSG’s SOTP value is simple and requires limited subjectivity as more than 90%
of the value is calculated using JSE-listed share prices, while other investments are included
at market-related valuations. At 28 February 2019, the SOTP value per PSG share was R311.45
(2018: R255.17), representing a 22% increase. At 18 April 2019, it was R329.73 per share. The
five-year compound annual growth rate (“CAGR”) of PSG’s SOTP value per share and share price at
28 February 2019 was 27% and 24%, respectively.

                                28 Feb      28 Feb      28 Feb      18 Apr
                                  2017        2018        2019        2019       Share   Five-year
Asset/(liability)                   Rm          Rm          Rm          Rm    of total      CAGR^^

Capitec*                        25 727      29 540      46 351      50 439         67%         48%
PSG Konsult*                     6 084       7 048       8 700       8 400         11%         16%
Curro* (including Stadio
 until unbundling in
 Oct 2017)                      11 180       7 987       5 714       5 913          8%         (2%)
PSG Alpha                        1 909       5 201       4 712       4 683          6%         21%
 Stadio* (since unbundling
  from Curro in Oct 2017)                    2 379       1 253       1 239
 Other investments**             1 909       2 822       3 459       3 444
Zeder*                           5 398       4 823       3 166       3 255          4%          1%
Dipeo**                            812         535                                             n/a
Other assets                     3 586       2 603       1 702       2 237          4%
 Cash^                           1 513       1 000         323         369
 Pref investments and
   loans receivable^             2 002       1 558       1 297       1 786
 Other^                             71          45          82          82
Total assets                    54 696      57 737      70 345      74 927        100%
Perpetual pref funding*         (1 350)     (1 278)     (1 367)     (1 446)
Other debt^                       (949)       (949)     (1 020)     (1 535)
Total SOTP value                52 397      55 510      67 958      71 946

Shares in issue (net of
 treasury shares) (m)            217.5       217.5       218.2       218.2

SOTP value per share (R)        240.87      255.17      311.45      329.73                     27%

Share price (R)                 251.43      217.50      259.78      272.90                     24%

* Listed on the JSE    ** SOTP value
^ Carrying value       ^^ Based on share price/SOTP value per share as at 28 Feb 2019

Note: PSG’s live SOTP containing further information is available at www.psggroup.co.za

Capitec remains PSG’s largest investment comprising 66% of its total SOTP assets as at
28 February 2019 (2018: 51%), and the major contributor to PSG’s recurring earnings.

RECURRING EARNINGS

PSG’s recurring earnings per share increased by 9% to R10.86 (2018: R9.94) following commendable
performance from Capitec, PSG Konsult and Curro, offset by PSG Alpha and Zeder.

                                                  28 Feb        28 Feb                      28 Feb
                                                    2017          2018        Change          2019
                                                      Rm            Rm             %            Rm

Capitec                                            1 164         1 369                       1 625
PSG Konsult                                          300           348                         361
Curro (including Stadio until
 unbundling in Oct 2017)                              96           110                         137
PSG Alpha (including Stadio since
 unbundling in Oct 2017)                             133           172                         216
Zeder                                                275           205                         207
Dipeo                                                (20)          (56)                        (29)
PSG Corporate                                         29            (7)                        (45)
Other (mainly pref div income)                       112           136                          84
Recurring earnings before funding                  2 089         2 277            12         2 556
Funding (net of interest income)                    (104)         (135)                       (199)
Recurring earnings                                 1 985         2 142            10         2 357
Non-recurring items                                  160          (186)                       (163)
Headline earnings                                  2 145         1 956            12         2 194
Non-headline items                                    17           (42)                       (268)
Attributable earnings                              2 162         1 914             1         1 926

Non-recurring items comprise:
- Unrealised fair value gains/(losses) on
   Dipeo’s investment portfolio                      187          (131)                       (246)
- Other                                              (27)          (55)                         83
                                                     160          (186)                       (163)

Weighted average number of shares in issue
 (net of treasury shares) (m)                      214.2         215.5             1         217.0

Earnings per share (R)
- Recurring                                         9.27          9.94             9         10.86
- Headline                                         10.01          9.08            11         10.11
- Attributable                                     10.09          8.88             -          8.88

Dividend per share (R)                              3.75          4.15            10          4.56

PSG’s headline earnings per share increased by 11% mainly due to the aforementioned increase in
recurring earnings, whilst attributable earnings per share showed no growth mainly as a result of
Zeder’s impairment of its investment in Pioneer Foods following the decline in its share price.

CAPITEC (30.7%)

Capitec is a South African retail bank focused on delivering simplified and affordable banking
solutions.

It reported a 19% increase in headline earnings per share for the year under review.

Capitec is listed on the JSE and its comprehensive results are available at www.capitecbank.co.za.

PSG KONSULT (60.6%)

PSG Konsult is a financial services company, focused on providing wealth management, asset
management and insurance solutions to clients.

It reported a 4% increase in recurring headline earnings per share for the year under review.

PSG Konsult has its primary listing on the JSE, with secondary listings on the Namibian Stock
Exchange and the Mauritian Stock Exchange, and its comprehensive results are available
at www.psg.co.za.

CURRO (55.4%)

Curro is the largest provider of private school education in Southern Africa.

Its schools-only business (i.e. excluding Stadio’s results prior to its unbundling in October 2017)
reported a 23% increase in headline earnings per share for its financial year ended 31 December 2018.

Curro is listed on the JSE and its comprehensive results are available at www.curro.co.za.

PSG ALPHA (98.1%)

PSG Alpha serves as incubator to identify and help build the businesses of tomorrow. Given its
nature, this portfolio is likely to yield volatile earnings, while providing optionality. Its major
investments include shareholdings in Stadio (private higher education - 44%), CA Sales (FMCG
distribution - 47.7%), Evergreen (retirement lifestyle villages - 50%) and Energy Partners
(manufacturer, owner and operator of energy assets - 54.1%).

PSG Alpha reported a 7% decline in recurring earnings per share for the year under review following
investments in initially low earnings-yielding start-up businesses such as Stadio and Evergreen.

ZEDER (43.8%)

Zeder is an investor in the broad agribusiness industry. Its largest investment is a 27.1% interest
in Pioneer Foods, comprising 43% of Zeder’s total SOTP assets.

It reported no increase in recurring headline earnings per share for the year under review.

Both Zeder and Pioneer Foods are listed on the JSE and their respective comprehensive results are
available at www.zeder.co.za and www.pioneerfoods.co.za.

DIPEO (49%)

Dipeo, a BEE investment holding company, is 51%-owned by the Dipeo BEE Education Trust of which all
beneficiaries are black individuals. The trust will use its share of the value created in Dipeo to
fund black students’ education.

Dipeo’s most significant investments as at 28 February 2019 included shareholdings in Curro (5.2%),
Stadio (3.4%), Pioneer Foods (4.3%), Quantum Foods (4.4%), Kaap Agri (20%) and Energy Partners (15.7%).
The investment in Energy Partners remain subject to a BEE lock-in period.

During the year under review, Dipeo’s SOTP value turned negative (i.e. liabilities exceeded assets)
following a continued decline in mainly Pioneer Foods’ share price, with a resultant negative impact
on PSG Group’s SOTP value through reducing its investment in Dipeo to zero and impairing PSG Group’s
pref investment in Dipeo to the extent required. PSG Group also ceased to account for recurring pref
dividend income from 1 September 2018.

PROSPECTS

Despite obvious challenges, PSG remains positive about South Africa and the opportunities it
presents. We believe PSG’s investment portfolio is suitably positioned to continue yielding
above-average returns.

DIVIDENDS

Ordinary shares

PSG’s policy remains to pay up to 100% of available free cash flow as an ordinary dividend, of which
approximately one third is payable as an interim and the balance as a final dividend at year-end.
The directors have resolved to declare a final gross dividend of 304 cents (2018: 277 cents) per
share from income reserves for a total gross dividend of 456 cents (2018: 415 cents) per share in
respect of the year ended 28 February 2019.

The final dividend amount, net of South African dividend tax of 20%, is 243.2 cents per share for
those shareholders that are not exempt from dividend tax. The number of ordinary shares in issue at
the declaration date is 232 108 050, and the income tax number of the company is 9950080714.

The salient dates for this dividend distribution are:
Last day to trade cum dividend                                                Tuesday, 14 May 2019
Trading ex-dividend commences                                               Wednesday, 15 May 2019
Record date                                                                    Friday, 17 May 2019
Payment date                                                                   Monday, 20 May 2019

Share certificates may not be dematerialised or rematerialised between Wednesday, 15 May 2019, and
Friday, 17 May 2019, both days inclusive.

Preference shares

The directors of PSG Financial Services declared a gross dividend of 418.82 cents per share in
respect of the cumulative, non-redeemable, non-participating preference shares for the six months
ended 28 February 2019, which was paid on Monday, 25 March 2019. The related detailed announcement
was disseminated on the JSE’s Stock Exchange News Service.

A SPECIAL THANK YOU TO JANNIE MOUTON

We would like to extend a special word of thanks to Jannie Mouton, PSG’s founder and chairman of
24 years, who retired from the board during the year under review. Jannie, we are eternally grateful
to you and the team for the fantastic company you have built and the positive contribution that you
have made to South Africa. The PSG board wishes you only the very best.

INTRODUCTION TO THE SUMMARY CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 28 February 2019

Basis of presentation and accounting policies

These summary consolidated financial statements are prepared in accordance with the requirements
of the JSE Listings Requirements for preliminary reports and the requirements of the Companies Act
of South Africa. The JSE Listings Requirements require preliminary reports to be prepared in
accordance with the framework concepts and the measurement and recognition requirements of
International Financial Reporting Standards (“IFRS”), SAICA Financial Reporting Guides as issued
by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the
Financial Reporting Standards Council and to also, as a minimum, contain the information required
by IAS 34 Interim Financial Reporting.

The accounting policies applied in the preparation of these summary consolidated financial
statements are in terms of IFRS and are consistent with those applied in the previous
consolidated annual financial statements, as amended for the adoption of the various revisions to
IFRS which are effective for the year ended 28 February 2019. Apart from the adoption of IFRS 9
Financial Instruments, these revisions have not resulted in material changes to the group’s
reported results and disclosures in these summary consolidated financial statements.

IFRS 9, adopted by the group effective 1 March 2018, is a new standard which replaced IAS 39
Financial Instruments: Recognition and Measurement. The standard, inter alia, replaced the
multiple classification and measurement models in IAS 39 with a single model that has only two
categories: amortised cost and fair value. Furthermore, the standard replaced the incurred credit
loss impairment model in IAS 39 with an expected credit loss impairment model.

The group applied IFRS 9 retrospectively without restating comparative figures and therefore the
group’s equity as at 1 March 2018 was adjusted for the differences in the carrying amounts of
financial instruments as measured in terms of IFRS 9 and IAS 39, respectively. The resultant
impact was an adjustment against ordinary shareholders’ equity and non-controlling interests of
R231m and R32m, respectively. The group was most significantly impacted by Capitec’s application
of the expected credit loss impairment model to its loan book. The net charge (i.e. debit against
retained earnings) to Capitec’s equity was R648m, with the resultant impact on PSG Group’s equity
being R199m in respect of its 30.7% investment in Capitec.

In preparing these summary consolidated financial statements, the significant judgements made by
management in applying the group’s accounting policies and the key sources of estimation
uncertainty were materially the same as those that applied to the group’s annual financial
statements for the year ended 28 February 2018.

Preparation

These summary consolidated preliminary financial statements were compiled under the supervision
of the group chief financial officer, Mr WL Greeff, CA (SA), and were reviewed by PSG Group’s
external auditor, PricewaterhouseCoopers Inc. A copy of their unmodified review conclusion together
with these summary consolidated financial statements are available from PSG Group’s registered
office. Any reference to future financial performance included in this announcement, has not been
reviewed or reported on by the company’s auditor.

The auditor’s report does not necessarily report on all the information contained in this
announcement. Users are therefore advised that in order to get a full understanding of the nature
of the auditor’s engagement, they should obtain a copy of the auditor’s report together with the
accompanying financial information from the company’s registered office.

PSG Financial Services

PSG Financial Services is a wholly-owned subsidiary of PSG Group, except for the 17 415 770
(2018: 17 415 770) perpetual preference shares which are listed on the JSE. These preference
shares are included in non-controlling interests in PSG Group’s summary consolidated statement of
financial position. No separate financial statements are presented in this announcement for
PSG Financial Services as it is the only directly held asset of PSG Group.

Linked investment contracts, consolidated mutual funds and other client-related balances
(“client-related balances”)

Client-related balances result in assets and liabilities of equal value being recognised in the
summary consolidated statement of financial position, although not directly related to
PSG Group shareholders. These balances mainly stem from:
• PSG Life (an existing subsidiary of PSG Konsult) issuing linked investment contracts to
  clients in terms of which the value of policy benefits payable (included under “investment
  contract liabilities”) is directly linked to the fair value of the supporting assets. The
  group is thus not exposed to the financial risks associated with these assets and liabilities.
• The group consolidates mutual funds deemed to be controlled in terms of IFRS 10 Consolidated
  Financial Statements, with the group’s own investments in these mutual funds having been
  derecognised and all the funds’ underlying assets having been recognised. Third parties’
  funds invested in the respective mutual funds are recognised as a payable and included under
  “third-party liabilities arising on consolidation of mutual funds” and the group is thus not
  exposed to the financial risks associated with these assets and liabilities.

Re-presentation of the summary consolidated financial statements

The consolidated annual financial statements previously differentiated in a note between
assets, liabilities, income, expenses and cash flows attributable to i) own balances (i.e. those
attributable to the ordinary shareholders of PSG Group and its subsidiaries) and
ii) client-related balances. However, for the sake of transparency to assist users in gaining a
better understanding of the impact of client-related balances on the reported amounts, the
aforementioned split has now been incorporated into the summary consolidated statement of
financial position, summary consolidated income statement and summary consolidated statement of
cash flows contained in this announcement. Although no previously reported results were
restated, the layout thereof was amended to give effect to the aforementioned improved
disclosures.

SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 28 February 2019

                                          Reviewed                            Audited*
                                              2019                                2018
                                           Client-                             Client-
                                   Own     related                     Own     related
                              balances    balances       Total    balances    balances       Total
                                    Rm          Rm          Rm          Rm          Rm          Rm

Assets
Property, plant and
 equipment                      11 149                  11 149       9 310                   9 310
Intangible assets                4 541                   4 541       3 825                   3 825
Investment in ordinary
 shares of associates           14 578                  14 578      13 886                  13 886
Investment in preference
 shares of/loans granted
 to associates                     178                     178         141                     141
Investment in ordinary
 shares of joint ventures          855                     855         432                     432
Loans granted to
 joint ventures                      5                       5           8                       8
Employee benefit assets             43                      43          39                      39
Unit-linked investments            776       45 719     46 495         635       41 565     42 200
Equity securities                  659        2 337      2 996       2 017        2 304      4 321
Debt securities                  1 873        4 390      6 263       2 597        3 547      6 144
Deferred income tax assets         303                     303         245                     245
Biological assets                  593                     593         558                     558
Investment in investment
 contracts                                       16         16                       15         15
Loans and advances                 443                     443         577                     577
Trade and other receivables      3 268        1 321      4 589       2 898        1 594      4 492
Derivative financial assets         22           11         33          34            9         43
Inventory                        1 696                   1 696       1 723                   1 723
Current income tax assets          102                     102          90                      90
Reinsurance assets                 109                     109          86                      86
Cash and cash equivalents        1 552          280      1 832       1 924          355      2 279
Non-current assets
 held for sale                                               -           7                       7
Total assets                    42 745       54 074     96 819      41 032       49 389     90 421

Equity
Ordinary shareholders’ equity   18 115                  18 115      17 143                  17 143
Non-controlling interests       11 776                  11 776      11 729                  11 729
Total equity                    29 891            -     29 891      28 872            -     28 872

Liabilities
Insurance contracts                543                     543         543                     543
Investment contract
 liabilities                                 25 932     25 932                   24 279     24 279
Third-party liabilities
 arising on consolidation
 of mutual funds                             26 715     26 715                   23 600     23 600
Deferred income tax
 liabilities                       963                     963         997                     997
Borrowings                       7 666          111      7 777       7 231          101      7 332
Derivative financial
 liabilities                        64           14         78          92           17        109
Employee benefit liabilities       528                     528         541                     541
Trade and other payables         3 046        1 302      4 348       2 698        1 392      4 090
Reinsurance liabilities              5                       5           3                       3
Current income tax liabilities      39                      39          55                      55
Total liabilities               12 854       54 074     66 928      12 160       49 389     61 549

Total equity and liabilities    42 745       54 074     96 819      41 032       49 389     90 421

Net asset value per share (R)    83.06                               79.39
Net tangible asset value
 per share (R)                   62.24                               61.67

* Re-presented as detailed in the introduction to the summary consolidated financial statements.

SUMMARY CONSOLIDATED INCOME STATEMENT
for the year ended 28 February 2019

                                          Reviewed                            Audited*
                                              2019                                2018
                                           Client-                             Client-
                                   Own     related                     Own     related
                              balances    balances       Total    balances    balances       Total
                                    Rm          Rm          Rm          Rm          Rm          Rm

Revenue from sale of goods      13 041                  13 041      13 956                  13 956
Cost of goods sold             (11 460)                (11 460)    (11 934)                (11 934)
Gross profit from sale
 of goods                        1 581           -       1 581       2 022           -       2 022

Income
Changes in fair value of
 biological assets                 194                     194         195                     195
Investment income                  492       1 810       2 302         474        1 585      2 059
Fair value (losses)/gains         (268)        644         376        (279)       2 037      1 758
Fair value adjustment to
 investment contract
 liabilities                                (1 073)     (1 073)                  (1 670)    (1 670)
Fair value adjustment to
 third-party liabilities
 arising on consolidation of
 mutual funds                               (1 336)     (1 336)                  (1 873)    (1 873)
Commission, school,
 net insurance and other
 fee income                      9 329         (90)      9 239       6 983         (184)     6 799
Other operating income             216                     216         185           92        277
                                 9 963         (45)      9 918       7 558          (13)     7 545

Expenses
Insurance claims and loss
 adjustments, net of
 recoveries                       (582)                   (582)       (629)                   (629)
Marketing, administration and
 other expenses                 (9 185)         57      (9 128)     (7 312)          29     (7 283)
                                (9 767)         57      (9 710)     (7 941)          29     (7 912)

Net income from associates
 and joint ventures
Share of profits of
 associates and joint
 ventures                        2 360                   2 360       1 926                   1 926
Loss on impairment of
 associates                       (676)                   (676)         (8)                     (8)
Net profit/(loss) on
 sale/dilution of interest
 in associates                      20                      20         (14)                    (14)
                                 1 704           -       1 704       1 904            -      1 904

Profit before finance costs
 and taxation                    3 481          12       3 493       3 543           16      3 559
Finance costs                     (676)                   (676)       (516)                   (516)
Profit before taxation           2 805          12       2 817       3 027           16      3 043
Taxation                          (464)        (12)       (476)       (600)         (16)      (616)
Profit for the year              2 341           -       2 341       2 427            -      2 427

Attributable to:
 Owners of the parent            1 926                               1 914
 Non-controlling interests         415                                 513
                                 2 341                               2 427

* Re-presented as detailed in the introduction to the summary consolidated financial statements.

EARNINGS/DIVIDEND PER SHARE AND NUMBER OF SHARES IN ISSUE
for the year ended 28 February 2019

                                                                    Change    Reviewed     Audited
                                                                         %        2019        2018

Earnings per share (R)
- Recurring                                                              9       10.86        9.94
- Headline (note 1)                                                     11       10.11        9.08
- Attributable                                                           -        8.88        8.88
- Diluted headline                                                      12        9.99        8.90
- Diluted attributable                                                   1        8.76        8.70

Dividend per share (R)                                                  10        4.56        4.15
- Interim                                                                         1.52        1.38
- Final                                                                           3.04        2.77

Number of shares (m)
- In issue                                                                       232.1       231.4
- In issue (net of treasury shares)                                              218.1       215.9
- Weighted average                                                               217.0       215.5
- Diluted weighted average                                                       217.7       217.9

SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 28 February 2019

                                                                              Reviewed     Audited
                                                                                  2019        2018
                                                                                    Rm          Rm

Profit for the year                                                              2 341       2 427
Other comprehensive loss for the year, net of taxation                             (50)        (92)
Items that may be subsequently reclassified to profit or loss
 Currency translation adjustments                                                  (19)       (106)
 Cash flow hedges                                                                    7         (13)
 Share of other comprehensive (losses)/income and equity movements
  of associates                                                                    (36)          7
Items that may not be subsequently reclassified to profit or loss
 (Losses)/gains from changes in financial and demographic assumptions
  of post-employment benefit obligations                                            (2)         20
Total comprehensive income for the year                                          2 291       2 335

Attributable to:
 Owners of the parent                                                            1 912       1 847
 Non-controlling interests                                                         379         488
                                                                                 2 291       2 335

SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 28 February 2019

                                                                              Reviewed     Audited
                                                                                  2019        2018
                                                                                    Rm          Rm

Ordinary shareholders’ equity at beginning of the year                          16 912      15 900
 Previously reported                                                            17 143
 Adjustment due to the initial application of new IFRS standards                  (231)
Total comprehensive income                                                       1 912       1 847
Issue of shares                                                                    157           1
Share-based payment costs - employees                                               73          66
Release of treasury shares                                                         111          30
Transactions with non-controlling interests                                       (121)        135
Dividends paid                                                                    (929)       (836)
Ordinary shareholders’ equity at end of the year                                18 115      17 143

Non-controlling interests at beginning of the year                              11 697      10 900
 Previously reported                                                            11 729
 Adjustment due to the initial application of new IFRS standards                   (32)
Total comprehensive income                                                         379         488
Issue of shares                                                                    433       1 399
Share-based payment costs - employees                                               39          32
Subsidiaries/businesses acquired (note 3.1)                                         25          47
Subsidiaries deconsolidated/sold (note 3.2)                                       (106)
Transactions with non-controlling interests                                       (191)       (723)
Dividends paid                                                                    (500)       (414)
Non-controlling interests at end of the year                                    11 776      11 729

Total equity                                                                    29 891      28 872

SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 28 February 2019

                                          Reviewed                            Audited*
                                              2019                                2018
                                           Client-                             Client-
                                   Own     related                     Own     related
                              balances    balances       Total    balances    balances       Total
                                    Rm          Rm          Rm          Rm          Rm          Rm

Net cash flow from
 operating activities
Cash generated from/
 (utilised by) operations
 (note 2)                        1 714      (1 851)       (137)      1 512      (1 253)        259
Interest income                    439       1 335       1 774         602       1 013       1 615
Dividend income                    922         476       1 398         781         421       1 202
Finance costs                     (656)        (12)       (668)       (463)                   (463)
Taxation paid                     (693)                   (693)       (503)        (29)       (532)
Net cash flow from
 operating activities            1 726         (52)      1 674       1 929         152       2 081

Net cash flow from
 investing activities             (963)        (23)       (986)     (2 937)          -      (2 937)
Cash flow from
 subsidiaries/businesses
 acquired (note 3.1)              (852)                   (852)       (428)                   (428)
Cash flow from subsidiaries
 deconsolidated/sold
 (note 3.2)                        (59)                    (59)         27                      27
Cash flow from first-time
 consolidation of
 mutual fund                                    10          10                                   -
Cash flow from
 deconsolidation of
 mutual funds                                  (33)        (33)                                  -
Acquisition of ordinary
 shares in associates and
 joint ventures                   (402)                   (402)       (598)                   (598)
Acquisition of property,
 plant and equipment            (1 451)                 (1 451)     (1 641)                 (1 641)
Other investing activities**     1 801                   1 801        (297)                   (297)

Net cash flow from
 financing activities             (983)          -        (983)        684         100         784
Dividends paid to:
 PSG Group shareholders           (929)                   (929)       (836)                   (836)
 Non-controlling interests        (500)                   (500)       (414)                   (414)
Capital contributions by
 non-controlling interests         198                     198         804                     804
Net acquisition from
 non-controlling interests        (124)                   (124)       (429)                   (429)
Borrowings drawn                 1 508                   1 508       3 306         100       3 406
Borrowings repaid               (1 274)                 (1 274)     (1 787)                 (1 787)
Proceeds from delivery
 of holding company’s
 treasury shares                   119                     119          39                      39
Shares issued                       19                      19           1                       1

Net (decrease)/increase in
 cash and cash equivalents        (220)        (75)       (295)       (324)        252         (72)
Exchange gains on cash and
 cash equivalents                    7                       7           9                       9
Cash and cash equivalents at
 beginning of the year             638         355         993         953         103       1 056
Cash and cash equivalents
 at end of the year***             425         280         705         638         355         993

*   Re-presented as detailed in the introduction to the summary consolidated financial statements.

**  Cash flow from other investing activities during the year comprised mainly proceeds of R1.2bn
    from Capespan’s, a subsidiary of Zeder, disposal of its equity security investment in
    Joy Wing Mau, a fruit distributor in China, as well as withdrawals of R0.7bn from the
    PSG Money Market Fund (i.e. disposal of debt securities) at a PSG Group-level, as further
    detailed below.

*** It is important to note that the treasury functions of PSG Group and each of its subsidiaries
    operate on a decentralised basis and thus independent from one another. All available cash held
    at a PSG Group-level is invested in the PSG Money Market Fund, while some of the available cash
    held at a subsidiary-level is invested in the PSG Money Market Fund. Available cash held at a
    PSG Group-level and invested in the PSG Money Market Fund amounted to R0.3bn (2018: R1bn) at
    the reporting date.

    As a result of the group’s consolidation of the PSG Money Market Fund, the cash invested therein
    is derecognised and all of the fund’s underlying highly liquid debt securities are recognised on
    the summary consolidated statement of financial position. Third parties’ cash invested in the
    PSG Money Market Fund is recognised as a payable and included under “third-party liabilities
    arising on consolidation of mutual funds”.

    The table below reconciles the cash and cash equivalents reported per the summary consolidated
    statement of financial position to that reported per the summary consolidated statement of
    cash flows. It furthermore also reconciles such balances to the liquid cash resources at both a
    PSG Group- and subsidiary-level.

                                          Reviewed                            Audited*
                                              2019                                2018
                                           Client-                             Client-
                                   Own     related                     Own     related
                              balances    balances       Total    balances    balances       Total
                                    Rm          Rm          Rm          Rm          Rm          Rm

    Cash and cash equivalents
     (per the summary
     consolidated statement
     of financial position)      1 552         280       1 832       1 924         355       2 279
    Bank overdrafts (included
     in “borrowings” per the
     summary consolidated
     statement of financial
     position)                  (1 127)                 (1 127)     (1 286)                 (1 286)
    Cash and cash equivalents
     (per the summary
     consolidated statement
     of cash flows)                425         280         705         638         355         993
    Debt securities (per the
     summary consolidated
     statement of financial
     position)                   1 873       4 390       6 263       2 597       3 547       6 144
    Liquid cash resources        2 298       4 670       6 968       3 235       3 902       7 137
    PSG Group-level (invested
     in the PSG Money Market
     Fund)                         323                               1 000
    Subsidiary-level             1 975                               2 235

NOTES TO THE SUMMARY CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 28 February 2019
                                                                              Reviewed     Audited
                                                                                  2019        2018
                                                                                    Rm          Rm

1. Headline earnings

   Profit for the year attributable to owners of the parent                      1 926       1 914
   Non-headline items
   Gross amounts                                                                   659          30
    Loss on impairment of associates                                               676           8
    Net (profit)/loss on sale/dilution of interest in associates                   (20)         14
    Profit from subsidiaries deconsolidated/sold (note 3.2)                         (8)        (85)
    Fair value gain on step-up from associate to subsidiary                         (2)        (11)
    Net loss on sale/impairment of intangible assets (including goodwill)          120         153
    Net (profit)/loss on sale/impairment of property, plant and equipment           (1)          1
    Non-headline items of associates                                               (81)        (31)
    Bargain purchase gain (note 3.1)                                               (25)        (18)
    Reversal of impairment of non-current assets held for sale                                  (1)
   Non-controlling interests                                                      (390)       (137)
   Taxation                                                                         (1)        149
   Headline earnings                                                             2 194       1 956

                                          Reviewed                            Audited*
                                              2019                                2018
                                           Client-                             Client-
                                   Own     related                     Own     related
                              balances    balances       Total    balances    balances       Total
                                    Rm          Rm          Rm          Rm          Rm          Rm

2. Cash generated from/
    (utilised by) operations

   Profit before taxation        2 805          12       2 817       3 027          16       3 043
   Share of profits of
    associates and joint
    ventures                    (2 360)                 (2 360)     (1 926)                 (1 926)
   Depreciation and
    amortisation                   582                     582         503                     503
   Investment income              (492)     (1 810)     (2 302)       (474)     (1 585)     (2 059)
   Finance costs                   676                     676         516                     516
   Working capital changes
    and other non-cash items       503         (53)        450        (134)        316         182
   Cash generated from/
    (utilised by) operations     1 714      (1 851)       (137)      1 512      (1 253)        259

* Re-presented as detailed in the introduction to the summary consolidated financial statements.

3. Subsidiaries/businesses consolidated and deconsolidated

3.1 Subsidiaries/businesses acquired

    The group’s subsidiaries/businesses acquired during the year under review included:

    Commercial, industrial and personal short-term insurance brokerage businesses of ABSA
    Insurance and Financial Advisers (Pty) Ltd (“AIFA businesses”)
    During June and December 2018, the group, through PSG Konsult, acquired the AIFA businesses
    for a cash consideration of R52m, as well as still outstanding deferred and contingent
    consideration of R45m and R7m, respectively. Goodwill of R35m arose in respect of, inter alia,
    the workforce of the acquired businesses.

    MBS Education Investments (Pty) Ltd and Milpark Education (Pty) Ltd (“Milpark”)
    During March 2018, the group, through Stadio, being a subsidiary of PSG Alpha, acquired an
    effective interest of 87.2% in Milpark for a cash consideration of R211m (of which R4m was
    deferred and subsequently paid) and the issue of Stadio shares worth R51m. Milpark is involved
    in the private higher education sector in South Africa, offering complementary services to
    Stadio’s existing operations. Goodwill of R222m arose in respect of, inter alia, the workforce,
    expected synergies, economies of scale and the business’s growth potential.

    Interactive Tutor (Pty) Ltd (“Media Works”)
    During May 2018, the group, through FutureLearn, being a subsidiary of PSG Alpha, acquired all
    the issued share capital of Media Works for a cash consideration of R109m, of which R15m was
    contingent and remained outstanding. Media Works provides adult education and training services
    in South Africa. Goodwill of R88m arose in respect of, inter alia, the workforce, expected
    synergies, economies of scale and the business’s growth potential.

    Cooper College (Pty) Ltd and related entities (“Cooper”)
    During April 2018, the group, through Curro, acquired an effective interest of 97% in Cooper
    for a cash consideration of R210m. Cooper operates a private school in Johannesburg,
    South Africa, being complementary to Curro’s existing operations. Goodwill of R69m arose in
    respect of, inter alia, the workforce, expected synergies, economies of scale and the
    business’s growth potential.

    Baobab Primary School operations and properties (“Baobab”)
    During July 2018, the group, through Curro, acquired the business operations and properties of
    Baobab for a cash consideration of P65m (R84m). Baobab operates a private school in Gaborone,
    Botswana, being complementary to Curro’s existing operations. Goodwill of R19m arose in
    respect of, inter alia, the workforce, expected synergies, economies of scale and the
    business’s growth potential.

    Sagewood School operations and properties (“Sagewood”)
    During January 2019, the group, through Curro, acquired the business operations and properties
    of Sagewood for a cash consideration of R83m. Sagewood operates a private school in
    Johannesburg, South Africa, being complementary to Curro’s existing operations. Goodwill of
    R29m arose in respect of, inter alia, the workforce, expected synergies, economies of scale
    and the business’s growth potential.

    The amounts of identifiable net assets of subsidiaries/businesses acquired, as well as
    goodwill and non-controlling interests recognised from business combinations during the year
    under review, can be summarised as follows:

                                              AIFA
                                             busi-                   Media                    Sub-
                                            nesses     Milpark       Works      Cooper       total
    Reviewed                                    Rm          Rm          Rm          Rm          Rm

    Identifiable net assets acquired            69          46          24         149         288
    Goodwill recognised                         35         222          88          69         414
    Non-controlling interests recognised                    (6)         (3)         (8)        (17)
    Total consideration                        104         262         109         210         685
    Ordinary shares issued by a subsidiary                 (51)                                (51)
    Deferred consideration                     (45)         (4)                                (49)
    Contingent consideration                    (7)                    (15)                    (22)
    Cash consideration paid                     52         207          94         210         563

    Cash consideration paid                    (52)       (207)        (94)       (210)       (563)
    Cash and cash equivalents acquired                      34          17           2          53
    Cash flow from subsidiaries/businesses
     acquired                                  (52)       (173)        (77)       (208)       (510)

                                              Sub-                   Sage-
                                             total      Baobab        wood       Other       Total
    Reviewed                                    Rm          Rm          Rm          Rm          Rm

    Identifiable net assets acquired           288          65          54         166         573
    Goodwill recognised                        414          19          29          99         561
    Bargain purchase gain                                                          (25)        (25)
    Non-controlling interests recognised       (17)                                 (8)        (25)
    Derecognition of investment in
     associates                                                                     (7)         (7)
    Total consideration                        685          84          83         225       1 077
    Ordinary shares issued by subsidiaries     (51)                                (13)        (64)
    Deferred consideration                     (49)                                            (49)
    Contingent consideration                   (22)                                (34)        (56)
    Cash consideration paid                    563          84          83         178         908

    Cash consideration paid                   (563)        (84)        (83)       (178)       (908)
    Cash and cash equivalents acquired          53           9           1          (7)         56
    Cash flow from subsidiaries/businesses
     acquired                                 (510)        (75)        (82)       (185)       (852)

    Transaction costs relating to the business combinations were immaterial and expensed in the
    summary consolidated income statement.

    The aforementioned business combinations’ accounting have been finalised and do not contain
    any contingent consideration or indemnification asset arrangements, unless otherwise stated.
    Non-controlling interests were measured with reference to their proportionate share of the
    identifiable net assets acquired.

    Had the aforementioned business combinations been accounted for with effect from 1 March
    2018 instead of their respective acquisition dates, the summary consolidated income statement
    would have reflected additional revenue and after-tax profit for the year of approximately
    R561m and R41m, respectively.

    Receivables of R125m are included in the identifiable net assets acquired, which are all
    considered to be recoverable. The fair value of these receivables consequently approximates
    its carrying value.

3.2 Subsidiaries deconsolidated/sold

    The subsidiaries deconsolidated/sold during the year under review included:

    Provest Group (Pty) Ltd (“Provest”)
    During January 2019, the group, through PSG Alpha, had foregone control over Provest when an
    existing non-controlling shareholder subscribed for further shares in Provest, thereby
    diluting PSG Alpha’s interest in Provest from 50.5% to 42.3%.

    The amounts of identifiable net assets of the businesses deconsolidated/sold, as well as
    non-controlling interest derecognised and the remaining interest in associate recognised
    during the year under review, can be summarised as follows:

                                                                   Provest       Other       Total
    Reviewed                                                            Rm          Rm          Rm

    Identifiable net assets derecognised                              (255)         (4)       (259)
    Derecognition of non-controlling interest                          106                     106
    Recognition of investment in associate                             157                     157
    Profit from subsidiaries deconsolidated/sold                        (8)                     (8)
    Total consideration                                                  -          (4)         (4)

    Cash consideration received                                                      4           4
    Cash and cash equivalents derecognised                             (63)                    (63)
    Cash flow from subsidiaries
     deconsolidated/sold                                               (63)          4         (59)

4.  Capital commitments and contingencies

    The most significant capital commitments relate to Curro’s continued expansion and development
    of new campuses. At the reporting date, authorised and contracted capital expenditure amounted
    to R712m (2018: R516m), while authorised but not yet contracted capital expenditure amounted
    to R1.8bn (2018: R1.1bn).

5.  Events subsequent to the reporting date

    No material event has occurred between the reporting date and the date of approval of these
    summary consolidated financial statements.

6.  Financial instruments

6.1 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.

    These summary consolidated financial statements do not include all financial risk management
    information and disclosures set out in the consolidated annual financial statements, and
    therefore they should be read in conjunction with the consolidated annual financial
    statements for the year ended 28 February 2018, as well as those for the year ended
    28 February 2019 (to be published during May 2019). Risk management continues to be carried
    out by each entity within the group under policies approved by the respective boards of
    directors.

6.2 Fair value estimation

    The information below analysis financial assets and liabilities, which are carried at fair
    value, by level of hierarchy as required by IFRS 13. The different levels in the hierarchy
    are defined below:

    Level 1: quoted prices (unadjusted) in active markets.
    Level 2: input other than quoted prices included within level 1 that is observable for the
             asset or liability, either directly (that is, as prices) or indirectly (that is,
             derived from prices).
    Level 3: input for the asset or liability that is not based on observable market data (that
             is, unobservable input).

    The carrying value of financial assets and liabilities carried at amortised cost
    approximates their fair value, while those measured at fair value can be summarised as
    follows:

                                                       Level 1     Level 2     Level 3       Total
    28 February 2019 (reviewed)                             Rm          Rm          Rm          Rm

    Assets
    Unit-linked investments                                         46 040         455      46 495
    Equity securities                                    2 822         143          31       2 996
    Debt securities                                        876       5 320                   6 196
    Investment in investment contracts                                  16                      16
    Derivative financial assets                                         33                      33
    Closing balance                                      3 698      51 552         486      55 736

    Liabilities
    Investment contract liabilities                                 25 439         435      25 874
    Third-party liabilities arising
     on consolidation of mutual funds                               26 715                  26 715
    Derivative financial liabilities                                    53          25          78
    Trade and other payables                                                       159         159
    Closing balance                                          -      52 207         619      52 826

    28 February 2018 (audited)

    Assets
    Unit-linked investments                                         41 481         719      42 200
    Equity securities                                    2 330       1 312         679       4 321
    Debt securities                                        922       1 501                   2 423
    Investment in investment contracts                                  15                      15
    Derivative financial assets                                         43                      43
    Closing balance                                      3 252      44 352       1 398      49 002

    Liabilities
    Investment contract liabilities                                 23 421         698      24 119
    Third-party liabilities arising
     on consolidation of mutual funds                               23 600                  23 600
    Derivative financial liabilities                                    70          39         109
    Trade and other payables                                                        45          45
    Closing balance                                          -      47 091         782      47 873

    The following table presents changes in level 3 financial instruments during the respective
    years:

                                                         Reviewed                 Audited
                                                             2019                    2018
                                                        Assets Liabilities      Assets Liabilities
                                                            Rm          Rm          Rm          Rm

    Opening balance                                      1 398         782       1 161       1 251
    Additions                                              230         312       1 188         542
    Disposals                                           (1 700)       (627)       (915)     (1 029)
    Fair value adjustments                                 504          35          31          18
    Other movements                                         54         117         (67)
    Closing balance                                        486         619       1 398         782

    Unit-linked investments represent the largest portion of the level 3 financial assets and relate
    to units held in hedge funds that are priced monthly. The prices are obtained from the asset
    managers of the particular hedge funds. These are held to match investment contract liabilities,
    and as such any change in measurement would result in a similar adjustment to investment contract
    liabilities, which in turn represent the largest portion of level 3 financial liabilities.

    There have been no significant transfers between level 1, 2 or 3 during the year under review,
    nor were there any significant changes to the valuation techniques and inputs used to determine
    fair values. Valuation techniques and main inputs used to determine fair value for financial
    instruments classified as level 2 can be summarised as follows:

    Instrument                          Valuation technique                Main inputs

    Unit-linked investments             Quoted exit price provided         Not applicable - daily
                                         by the fund manager                prices are publicly
                                                                            available
    Equity securities                   Valuation model that uses          Price-earnings multiples
                                         market inputs
    Debt securities                     Valuation model that uses          Bond interest rate curves,
                                         market inputs                      issuer credit ratings and
                                                                            liquidity spreads
    Investment in investment            Prices are obtained from the       Not applicable - prices
     contracts                           insurer of the particular          provided by registered
                                         investment contract                long-term insurers
    Derivative financial assets         Exit price on recognised           Not applicable
     and liabilities                     over-the-counter platforms
    Investment contract liabilities     Current unit price of underlying   Not applicable
                                         unitised financial asset that
                                         is linked to the liability,
                                         multiplied by the number of
                                         units held
    Third-party liabilities arising on  Quoted exit price provided by      Not applicable - daily
     consolidation of mutual funds       the fund manager                   prices are publicly
                                                                            available

7. Segment report

   The group’s classification into seven reportable segments, namely Capitec, PSG Konsult, Curro,
   PSG Alpha, Zeder, Dipeo and PSG Corporate, remains unchanged. These segments represent the major
   investments of the group and the services rendered by each are set out in the commentary section
   to this announcement.

   All segments operate predominantly in the Republic of South Africa. However, the group has
   exposure to operations outside the Republic of South Africa through, inter alia, Curro,
   PSG Alpha’s investments in Stadio and CA Sales, and Zeder’s investments in Capespan, Zaad and
   Agrivision Africa.

   Recurring earnings are calculated on a proportional basis, and include the proportional earnings
   of underlying investments, excluding marked-to-market adjustments and once-off items. The result
   is that investments in which the group holds less than 20% and which are generally not equity
   accountable in terms of accounting standards, are equity accounted for the purpose of calculating
   the consolidated recurring earnings. Non-recurring earnings include, inter alia, once-off gains
   and losses and marked-to-market fluctuations, as well as the resulting taxation charge on these
   items.

   SOTP is a key valuation tool used to measure PSG Group’s performance. In determining SOTP, listed
   assets and liabilities are valued using quoted market prices, whereas unlisted assets and
   liabilities are valued using appropriate valuation methods. These values will not necessarily
   correspond with the values per the summary consolidated statement of financial position since the
   latter are measured using the relevant accounting standards which include historical cost and the
   equity method of accounting.

   The chief operating decision-maker (the PSG Group Executive Committee) evaluates the following
   information to assess the segments’ performance:

                                           Revenue
                                              from
                                          external   Recurring
                                         customers    earnings        Non-
                                              (own    (segment   recurring    Headline        SOTP
                                          balances)     profit)   earnings    earnings       value
   28 February 2019 (reviewed)                  Rm          Rm          Rm          Rm          Rm

   Capitec                                               1 625                   1 625      46 351
   PSG Konsult                               4 480         361           8         369       8 700
   Curro                                     2 549         137                     137       5 714
   PSG Alpha                                 7 958         216         (59)        157       4 712
   Zeder                                     7 731         207         130         337       3 166
   Dipeo                                        17         (29)       (246)       (275)
   PSG Corporate                                71         (45)                    (45)
   Funding                                      56        (199)          4        (195)     (2 387)
   Other                                                    84                      84       1 702
   Total                                    22 862       2 357        (163)      2 194      67 958
   Revenue from sale of goods               13 041
   Investment income                           492
   Commission, school, net insurance
    and other fee income                     9 329
   Non-headline items                                                             (268)
   Earnings attributable to
    non-controlling interests                                                      415
   Taxation                                                                        476
   Profit before taxation                                                        2 817

                                           Revenue
                                              from
                                          external   Recurring
                                         customers    earnings        Non-
                                              (own    (segment   recurring    Headline        SOTP
                                          balances)     profit)   earnings    earnings       value
   28 February 2018 (audited)                   Rm          Rm          Rm          Rm          Rm

   Capitec                                               1 369                   1 369      29 540
   PSG Konsult                               4 166         348                     348       7 048
   Curro                                     2 139         110          (1)        109       7 987
   PSG Alpha                                 6 270         172         (22)        150       5 201
   Zeder                                     8 562         205         (21)        184       4 823
   Dipeo                                         2         (56)       (131)       (187)        535
   PSG Corporate                               165          (7)                     (7)
   Funding                                     109        (135)        (11)       (146)     (2 227)
   Other                                                   136                     136       2 603
   Total                                    21 413       2 142        (186)      1 956      55 510
   Revenue from sale of goods               13 956
   Investment income                           474
   Commission, school, net insurance
    and other fee income                     6 983
   Non-headline items                                                              (42)
   Earnings attributable to
    non-controlling interests                                                      513
   Taxation                                                                        616
   Profit before taxation                                                        3 043

On behalf of the board

KK Combi                             Piet Mouton                              Wynand Greeff
Chairman                             Chief Executive Officer                  Chief Financial Officer

Stellenbosch
24 April 2019

DIRECTORS:
ZL Combi (Chairman)^, PE Burton^^, FJ Gouws**, WL Greeff (CFO)*, AM Hlobo^, JA Holtzhausen*,
B Mathews^, JJ Mouton**, PJ Mouton (CEO)*, CA Otto^
* Executive ** Non-executive ^ Independent non-executive ^^ Lead independent

The following changes to the board and its sub-committees took effect during the year under review
and up to the date of this announcement:
• On 20 November 2018, Mr JF Mouton retired as director and chairman;
• On 11 January 2019, Mr ZL Combi was appointed as chairman;
• On 13 February 2019, Mr PE Burton was appointed as chairman of both the PSG Group Remuneration
  Committee and the PSG Group Social and Ethics Committee, while Mr CA Otto was appointed as chairman
  of the PSG Group Nomination Committee; and
• On 11 April 2019, Ms AM Hlobo was appointed as director and member of the PSG Group Audit and
  Risk Committee.

COMPANY SECRETARY AND REGISTERED OFFICE:
PSG Corporate Services (Pty) Ltd, 1st Floor Ou Kollege,
35 Kerk Street, Stellenbosch, 7600; PO Box 7403, Stellenbosch, 7599

TRANSFER SECRETARY:
Computershare Investor Services (Pty) Ltd, Rosebank Towers, 15 Biermann Avenue,
Rosebank, 2196; PO Box 61051, Marshalltown, 2107

SPONSOR:
PSG Capital

AUDITOR:
PricewaterhouseCoopers Inc
Date: 24/04/2019 01:34:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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