| Mon 11 Oct 2010, 15:15 | | PSG/PGFP - PSG Group/PSG Financial Services Limited - Unaudited interim results |
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JSE PGFP PSG
PGFP PSG
PSG/PGFP - PSG Group/PSG Financial Services Limited - Unaudited interim results
for the six months ended 31 August 2010
PSG Group Limited
(Incorporated in the Republic of South Africa)
Registration number: 1970/008484/06
JSE share code: PSG
ISIN number: ZAE000013017
("PSG Group" or "PSG" or "the company" or "the group")
PSG Financial Services Limited
(Incorporated in the Republic of South Africa)
Registration number: 1919/000478/06
JSE share code: PGFP
ISIN number: ZAE000096079
Unaudited interim results
for the six months ended 31 August 2010
- Recurring headline earnings increased by 36,6% to 111,3 cents per share
- Headline earnings increased by 0,8% to 137,0 cents per share
- Interim dividend increased by 53,8% to 20,0 cents per share
- SOTP value increased by 37,0% to R37,30 per share as at 31 August 2010
Condensed group income statement
Unaudited Unaudited Audited
31 Aug Change 31 Aug 28 Feb
2010 % 2009 2010
Rm Rm Rm
Income
Investment income (note 5) 172,2 208,9 460,7
Insurance income 2,0 2,0
Net fair value gains and losses on 302,6 544,9 688,0
financial instruments (note 5)
Fair value adjustments to investment (384,6) (617,9) (924,0)
contract liabilities (note 5)
Commission and other fee income 583,2 19,5 487,9 1060,8
Other operating income 42,3 43,1 44,6
Total income 715,7 7,0 668,9 1332,1
Expenses
Insurance claims 2,4 3,5 1,2
Operating expenses 557,9 473,9 981,9
Total expenses 560,3 17,4 477,4 983,1
Net income from operating activities 155,4 (18,9) 191,5 349,0
Finance costs (46,2) (50,2) (93,8)
Share of profits of associated 267,3 187,0 411,8
companies
Profit before taxation 376,5 14,7 328,3 667,0
Taxation (54,0) (39,0) (103,3)
Net profit for the period 322,5 11,5 289,3 563,7
Attributable to:
Non-controlling interests 113,6 95,6 172,7
Equity holders of the company 208,9 193,7 391,0
322,5 289,3 563,7
Attributable to equity holders of 208,9 193,7 391,0
the company
Non-headline items (note 2) 20,2 40,0 40,4
Headline earnings 229,1 (2,0) 233,7 431,4
Earnings per share (cents)
- attributable 125,0 11,0 112,6 225,8
- headline ("HEPS") 137,0 0,8 135,9 249,2
- diluted attributable 124,0 10,4 112,3 224,5
- diluted headline 136,0 0,3 135,6 247,8
- recurring headline 111,3 36,6 81,5 207,4
Dividend per share (cents)
- interim 20,0 13,0 13,0
- final 29,0
20,0 53,8 13,0 42,0
Number of shares (million)
- in issue (net of treasury shares) 167,0 175,4 167,0
- weighted average 167,2 172,0 173,1
- diluted weighted average 168,5 172,4 174,1
Condensed group statement of comprehensive income
Unaudited Unaudited Audited
31 Aug 31 Aug 28 Feb
2010 2009 2010
Rm Rm Rm
Net profit for the period 322,5 289,3 563,7
Other comprehensive income/(loss) for the 25,0 (6,2) 0,3
period
Share of other comprehensive income and 25,4 (0,9) 3,3
equity movements of associated companies
Currency translation adjustments and fair 0,5 (5,3) (3,0)
value gains/(losses)
Release of available-for-sale reserve (0,9)
Total comprehensive income for the period 347,5 283,1 564,0
Attributable to:
Non-controlling interests 108,0 92,9 165,8
Equity holders of the company 239,5 190,2 398,2
347,5 283,1 564,0
Condensed group statement of financial position
Unaudited Unaudited Audited
31 Aug 31 Aug 28 Feb
2010 2009 2010
Rm Rm Rm
Assets
Property, plant and equipment 304,9 34,8 38,0
Intangible assets 919,2 786,0 780,9
Investments in associated companies (note 3) 4740,5 3960,4 4452,7
Financial assets linked to investment 8534,9 8285,0 8215,8
contracts (note 5)
Other financial assets 721,5 512,8 696,5
Deferred income tax 19,8 21,6 4,1
Receivables 217,1 260,8 137,6
Cash and cash equivalents 347,9 600,5 360,7
Total assets 15805,8 14461,9 14686,3
Equity
Ordinary shareholders` equity 3132,0 2986,2 2947,0
Non-controlling interests 2519,9 2095,8 2263,5
Total equity 5651,9 5082,0 5210,5
Liabilities
Insurance liabilities 31,0 31,5 30,3
Financial liabilities under investment 8534,9 8285,0 8215,8
contracts (note 5)
Other financial liabilities 1019,5 620,0 795,5
Deferred income tax 133,6 68,6 74,5
Payables and provisions 428,9 319,6 358,1
Current income tax liabilities 6,0 55,2 1,6
Total liabilities 10153,9 9379,9 9475,8
Total equity and liabilities 15805,8 14461,9 14686,3
Net asset value per share (cents) 1875 1703 1765
Net tangible asset value per share (cents) 1325 1254 1297
Condensed group statement of changes in equity
Unaudited Unaudited Audited
31 Aug 31 Aug 28 Feb
2010 2009 2010
Rm Rm Rm
Ordinary shareholders` equity at beginning 2947,0 2755,4 2755,4
of period
Total comprehensive income for the period 239,5 190,2 398,2
Shares issued 119,9 119,8
Share buy-back (20,0) (140,9)
Transactions with non-controlling 6,4
interests
Net movement in treasury shares 4,3 (15,3) (102,1)
Share-based payment costs 3,3 1,9 5,3
Dividends paid (48,5) (65,9) (88,7)
Ordinary shareholders` equity at end of 3132,0 2986,2 2947,0
period
Non-controlling interests 2519,9 2095,8 2263,5
Beginning of period 2263,5 1863,6 1863,6
Total comprehensive income for the period 108,0 92,9 165,8
Preference shares issued 202,9
Interest acquired from non-controlling (43,9) (4,8)
shareholders
Additional interest obtained by non- 8,5 217,6 357,8
controlling shareholders
Acquisition of subsidiaries 39,7
Dividends and capital distributions paid (35,1) (44,0) (58,0)
Preference dividend paid (23,7) (34,3) (60,9)
Total equity at end of period 5651,9 5082,0 5210,5
Condensed group statement of cash flows
Unaudited Unaudited Audited
31 Aug 31 Aug 28 Feb
2010 2009 2010
Rm Rm Rm
Net cash flow from operating activities (8,5) 653,7 779,4
Net cash flow from investing activities (267,4) (124,8) (350,0)
Net cash flow from financing activities 184,3 275,7 258,2
Net (decrease)/increase in cash and cash (91,6) 804,6 687,6
equivalents
Cash and cash equivalents at beginning of 476,4 (211,2) (211,2)
period
Cash and cash equivalents at end of period * 384,8 593,4 476,4
* Include bank overdrafts and CFD financing (15,9) (137,4) (61,1)
of
* Include clients` cash linked to investment 52,8 130,2 176,6
contracts of
Notes to the condensed group financial statements
1. Basis of presentation and accounting policies
The condensed interim group financial statements have been prepared in
accordance with IAS 34 - Interim Financial Reporting and should be read in
conjunction with the annual financial statements for the year ended 28 February
2010, which have been prepared in accordance with International Financial
Reporting Standards ("IFRS").
The accounting policies applied in the preparation of these interim group
financial statements are consistent with those used in the previous year, except
for the following amendments to standards and revised standards issued which are
effective for the financial year beginning 1 March 2010:
- Amendments to IFRS 2 - Share-based Payment
- IFRS 3 Revised - Business Combinations
- IAS 27 Revised - Consolidated and Separate Financial Statements
The adoption of these amendments and revised standards had no material effect on
the results, nor has it required any restatement of previously reported results.
2. Non-headline items
Unaudited Unaudited Audited
31 Aug 31 Aug 28 Feb
2010 2009 2010
Rm Rm Rm
Net of taxation and non-controlling
interest
Impairment of investments in associated (13,8) (48,8) (49,1)
companies
Net profit/(loss) on sale/dilution of 0,1 (0,3) (7,6)
investments in subsidiaries
Net profit/(loss) on sale/dilution of 15,0 (2,9) (0,5)
investments in associated companies
Negative goodwill on acquisition of 18,0 18,1
subsidiaries
Net profit on sale of available-for-sale 0,9 4,5 5,4
financial assets
Impairment of intangible assets (incl. (13,5) (0,7)
goodwill)
Impairment of shareholders` loans (4,8)
Non-headline items of associated companies (22,9) 2,2 (2,0)
Other investment activities 0,5 0,8 0,8
(20,2) (40,0) (40,4)
3. Investments in associated companies
Carrying value
- listed 1785,9 1575,3 1696,8
- unlisted 2954,6 2385,1 2755,9
4740,5 3960,4 4452,7
Market and directors` valuation
- listed 4567,1 1964,0 2870,6
- unlisted 3083,3 2442,7 2920,2
7650,4 4406,7 5790,8
4. Commitments
Operating lease commitments 74,6 87,6 82,9
5. Linked investment contracts
PSG Group is not exposed to market movements in PSG FutureWealth`s clients`
assets held under investment contracts, as any movement in the market price of
the investment is linked to a corresponding adjustment to the liability.
The income statement impact of the returns on investment contract policy holder
assets and liabilities was as follows:
Investment
contract
policy Equity
holders holders Total
31 August 2010 Rm Rm Rm
Investment income 110,2 62,0 172,2
Net fair value gains and losses on 297,2 5,4 302,6
financial instruments
Fair value adjustment to investment (384,6) (384,6)
contract liabilities
Net investment return before taxation 22,8 67,4 90,2
Investment
contract
policy Equity
holders holders Total
31 August 2009 Rm Rm Rm
Investment income 114,7 94,2 208,9
Net fair value gains and losses on 502,0 42,9 544,9
financial instruments
Fair value adjustment to investment (617,9) (617,9)
contract liabilities
Net investment return before taxation (1,2) 137,1 135,9
Investment
contract
policy Equity
holders holders Total
28 February 2010 Rm Rm Rm
Investment income 300,1 160,6 460,7
Net fair value gains and losses on 634,3 53,7 688,0
financial instruments
Fair value adjustment to investment (924,0) (924,0)
contract liabilities
Net investment return before taxation 10,4 214,3 224,7
6. Segmental reporting
The group is organised into six reportable segments, namely: Capitec, Zeder,
Paladin, PSG Konsult, PSG Fund Management and PSG Corporate. These segments
represent the major investments of the group. The services offered by PSG
Konsult and PSG Fund Management consist of financial advice and fund management,
while the other segments offer financing, banking, private equity and corporate
finance services. All segments operate in the Republic of South Africa.
Income and intersegment income comprise total income per the income statement.
Recurring headline earnings are calculated on a see-through basis. The group`s
recurring headline earnings is the sum of its effective interest in that of its
underlying investees, regardless of its percentage shareholding. The result is
that investments which the group does not equity account and/or consolidate in
terms of accounting standards, are included in the calculations of recurring
headline earnings.
The chief operating decision-maker (the executive committee) evaluates the
following information to assess the segments` performance.
Income Inter- Recurring Non- Headline Net
segment headline recurring earnings asset
income earnings headline value
earnings
Rm Rm Rm Rm Rm Rm
For the six
months ended
31 August
2010
Capitec * 99,1 99,1 1529,0
Zeder 17,7 50,9 (13,8) 37,1 972,1
Paladin 41,5 26,3 62,4 88,7 907,7
PSG Konsult 513,5 (30,2) 31,7 31,7 303,3
PSG Fund 183,4 (2,7) 10,0 10,0 151,2
Management
PSG Corporate 17,2 (29,5) 20,4 (5,6) 14,8 347,9
Net fee 10,3 10,3 28,8
income **
Unit trust, (5,6) (5,6) 124,3
hedge fund
and share
investments
BEE 10,1 10,1 194,8
investments
Funding 7,7 (2,9) (52,1) (52,1) (1126,5)
Other - (6,6)
taxation and
STC
Other *** (0,2) (0,2) 53,9
Total 781,0 (65,3) 186,1 43,0 229,1 3132,0
Non-headline (20,2)
Attributable 208,9
earnings
* Equity accounted
** Net fee income is after deduction of salaries, operating expenses and tax
*** Consists of mainly the investments in m Cubed Holdings and Baedex
Income Inter- Recurring Non- Headline Net-
segment headline recurring earnings asset
income earnings headline value
earnings
Rm Rm Rm Rm Rm Rm
For the six
months ended
31 August
2009
Capitec * 61,8 61,8 1303,5
Zeder 53,3 30,8 2,8 33,6 913,1
Paladin 7,2 28,6 70,2 98,8 752,6
PSG Konsult 417,1 (19,2) 28,9 28,9 274,1
PSG Fund 143,9 (2,4) 10,3 10,3 137,5
Management
PSG 82,4 (17,7) 16,7 20,6 37,3 371,9
Corporate
Net fee 5,9 5,9 51,4
income **
Unit trust, 20,6 20,6 145,7
hedge fund
and share
investments
BEE 10,8 10,8 174,8
investments
Funding 13,2 (8,9) (39,3) (39,3) (825,9)
Other (0,2) (0,2) 0,6
taxation and
STC
Other *** 2,5 2,5 58,8
Total 717,1 (48,2) 140,1 93,6 233,7 2986,2
Non-headline (40,0)
Attributable 193,7
earnings
* Equity accounted
** Net fee income is after deduction of salaries, operating expenses and tax
*** Consists of mainly the investments in m Cubed Holdings and Baedex
Income Inter- Recurring Non- Headline Net
segment headline recurrin earnings asset
income earnings g value
headline
earnings
Rm Rm Rm Rm Rm Rm
For the year
ended 28 Feb
2010
Capitec * 151,7 151,7 1383,9
Zeder 57,8 (0,3) 83,6 (23,0) 60,6 925,9
Paladin 34,3 77,2 89,8 167,0 859,6
PSG Konsult 876,3 (43,0) 65,5 65,5 296,1
PSG Fund 309,6 (6,1) 26,4 26,4 149,2
Management
PSG Corporate 137,1 (41,9) 37,6 14,6 52,2 350,3
Net fee income 15,3 15,3 26,9
**
Unit trust, 1,7 14,6 16,3 138,6
hedge fund and
share
investments
BEE investments 20,6 20,6 184,8
Funding 24,2 (15,9) (80,7) (80,7) (1065,2)
Other taxation (2,0) (9,1) (11,1) (6,6)
and STC
Other *** (0,3) 0,1 (0,2) 53,8
Total 1439,3 (107,2) 359,0 72,4 431,4 2947,0
Non-headline (40,4)
Attributable 391,0
earnings
* Equity accounted
** Net fee income is after deduction of salaries, operating expenses and tax
*** Consists of mainly the investments in m Cubed Holdings and Baedex
7.PSG Financial Services Limited
PSG Financial Services Limited is a wholly owned subsidiary of PSG Group, except
for the 8 405 320 preference shares which are listed on the JSE Limited. No
separate financial statements are presented for PSG Financial Services Limited
as it is the only asset of PSG Group.
Recurring headline earnings
Headline earnings Numbe Net asset value
r
of
share
s
31 31 28 31 31 Aug 31 28
Aug Aug Feb Aug 2010 Aug Feb
2010 2009 2010 2010 Rm 2009 2010
Rm Rm Rm m Rm Rm
Recurring 186,1 140,1 359,0 2966,0 2790, 2766,
headline earnings 4 7
Capitec Bank 99,1 61,8 151,7 29,4 1529,0 1303, 1383,
5 9
PSG Konsult 31,7 28,9 65,5 538,5 303,3 274,1 296,1
PSG Fund 10,0 10,3 26,4 15,6 151,2 137,5 149,2
Management
Paladin Capital 26,3 28,6 77,2 472,3 907,7 752,6 859,6
Zeder Investments 50,9 30,8 83,6 407,9 972,1 913,1 925,9
PSG Corporate 28,8 51,4 26,9
(incl. PSG
Capital)
Management and 39,0 27,5 60,7
other
fee income
Operating costs (24,4 (15,5 (38,0
) ) )
Taxation (4,3) (6,1) (7,4)
BEE pref share 10,1 10,8 20,6 194,8 174,8 184,8
investments
Other investments (0,2) 2,5 1,4 12,2 8,7 12,1
Funding
Perpetual pref (28,8 (27,4 (51,1 (769,3 (555, (551,
share funding ) ) ) ) 3) 3)
Net interest (23,3 (11,9 (29,6 (357,2 (270, (513,
) ) ) ) 6) 9)
Other taxation (0,2) (2,0) (6,6) 0,6 (6,6)
and STC
Non-recurring 43,0 93,6 72,4 166,0 195,8 180,3
headline earnings
Paladin Capital 62,4 70,2 89,8
Zeder Investments (13,8 2,8 (23,0
) )
PSG Corporate
(net of tax)
Marked-to-market (5,6) 20,6 26,2 124,3 145,7 138,6
(loss)/profit
Deferred tax (20,7
assets written )
off
Other 0,1
m Cubed Holdings 219,7 41,7 50,1 41,7
Total headline 229,1 233,7 431,4 3132,0 2986, 2947,
earnings 2 0
Statistics Chang
e
Recurring HEPS 111,3 81,5 207,4 36,6%
(cents)
HEPS (cents) 137,0 135,9 249,2 0,8%
Commentary
PSG is an investment group consisting of some 40 underlying companies that
employ more than 39 000 people across a diverse range of industries. These
investments are either consolidated, equity accounted or marked-to-market from
an accounting perspective.
Financials
PSG continues to use the recurring headline earnings method to provide
management and investors with a more realistic and transparent way of evaluating
PSG`s financial performance. Recurring headline earnings represent the sum of
PSG`s effective interest in that of each investee, regardless of its percentage
shareholding. The result is that investments in which PSG or an investee holds
less than 20% and are generally not equity accountable in terms of accounting
standards, are included in the calculation of our consolidated recurring
headline earnings. Marked-to-market fluctuations are excluded.
Recurring headline earnings increased by 32,8% to R186,1 million and recurring
headline earnings per share by 36,6% to 111,3 cents for the period ended 31
August 2010. The majority of the companies performed better than last year, but
it was again Capitec that accounted for the major part of the positive growth.
Headline earnings increased by 0,8% to 137,0 cents per share, which is 23,1%
more than the recurring headline earnings per share, and attributable earnings
by 11,0% to 125,0 cents per share.
Sum of the Parts ("SOTP")
The PSG group consists of a diversified range of companies. The listed investee
companies and debt are valued using the quoted market price, whereas unlisted
investments are valued using market-related multiples. At 31 August 2010, the
SOTP value per PSG share was R37,30. As at 7 October 2010, the SOTP value was
R41,81 per share.
Asset/Liability Market SOTP SOTP
price per value value
share 31 Aug 28 Feb
R 2010 2010
Rm Rm
Capitec 133,50 3919 2367
PSG Konsult 1,25 673 730
Zeder 2,07 844 742
Paladin Capital 2,50 1181 834
PSG Fund Management 230 218
Management fees 300 361
Other investments (incl. 555 508
cash)
Total assets 7702 5760
Perpetual pref funding 93,35 (785) (541)
Other debt (495) (539)
SOTP value 6422 4680
SOTP value per share (rand) 37,30 27,23
Corporate action
- Raised R200 million through the issue of 2,3 million PSG Financial Services
perpetual preference shares at a yield of 8,9% per annum.
- Reinvested R20 million in PSG Group through the repurchase of 0,7 million PSG
Group shares at an average price of R28,88 per share.
- Invested R54,2 million in Capitec to maintain our 34,9% interest.
- Increased our shareholding in Paladin and Zeder having invested R20,9 million
and R21,5 million respectively.
Capitec Bank (34,9%)
Capitec Bank provides innovative transacting, saving and lending products to
serve the needs of all South Africans. Its business continued to grow during the
past six months; it now operates 422 branches and services 2,5 million active
clients.
Capitec delivered yet another set of excellent results with headline earnings
having increased by 59% to R284 million, while headline earnings per share
increased by 58% to 340 cents. Return on equity increased to 34%.
Capitec remains in a sound financial position with R1,9 billion in equity and a
well diversified mix of funding with R4,9 billion in retail and R3,6 billion in
wholesale deposits. The mix of funding available to the business makes it
possible to manage liquidity conservatively and ensures that funding is not a
constraint on growth. As at 31 August 2010 and on average throughout the six
months it would have been possible for Capitec to repay all deposits due within
one day.
For the period under review, Capitec advanced more than 2,6 million loans, 46%
higher than that of the corresponding period in the prior year. The total value
of loans granted increased by 73% to R6,4 billion, albeit at stricter lending
criteria. Capitec`s total loans outstanding at year-end increased by 97% to
R7,8 billion as more clients moved to longer-term loans of which the 48-month
loan product was a major contributor. The provision for doubtful debts as a
percentage of the gross loan book amounted to 7,1% through the application of
prudent impairment provisioning assumptions. Capitec`s risk-weighted capital
adequacy ratio of 32% remains well above the required minimum level.
Capitec`s comprehensive results for the six months ended 31 August 2010 are
available at www.capitec.co.za.
PSG Konsult (73,5%)
PSG Konsult has performed satisfactory in the six-month period to 31 August
2010, with headline earnings having increased by 9,6% to R43,3 million. Its
diversified revenue streams and focus on creating sustainable annuity income
have proven resilient amidst challenging economic conditions. Turnover,
consisting of commission and other operating income, increased by 21,4% to
R472,2 million while short-term premiums remained stable at R1,45 billion on an
annualised basis. Funds under administration increased by 12,7% to R81,6 billion
since year-end.
The following acquisitions were concluded since year-end:
- 100% of PSG Prime for R16,7 million, resulting in all the group`s stock
broking activities now housed under PSG Konsult.
- Bouwer Collins for R16 million. The company is an independent short-term
insurance intermediary with an Eastern Cape client base.
- The business activities of Diagonal Insurance ("Diagonal") effective 1
September 2010. Diagonal is a national short-term insurance broker and
administrator. It has 5 marketing offices and an administration platform
servicing 12 000 clients. Annual premium income amounts to R175 million.
- PSG Konsult`s BEE subsidiary, PSG Konsult Corporate, concluded various small
to medium-sized acquisitions specialising in healthcare brokerage.
At 31 August 2010, PSG Konsult had 209 offices (28 February 2010: 197) with 571
(28 February 2010: 572) financial planners, stockbrokers and short-term
insurance brokers.
PSG Konsult`s comprehensive results for the six months ended 31 August 2010 are
available at www.psgkonsult.co.za.
PSG Fund Management (81,0%)
PSG Fund Management`s ("PSGFM") headline earnings increased by 11,5% to R12,1
million whilst headline earnings per share declined by 3,9% to 63,5 cents per
share. Funds under administration increased by 12,2% to R26,2 billion while
funds under management decreased by 4,9% to R11,3 billion.
During the past six months management has continued to focus on creating a
single PSG branded asset management business with a simplified holistic product
range covering the full investment risk spectrum.
Excellent investment performance has been delivered by two of our core unit
trust funds, namely the PSG Flexible Fund which was ranked first over three
years, second over five years and third over one year as at 31 August 2010,
while the PSG Balanced Fund was ranked first over one year in their respective
categories.
PSGFM`s comprehensive results for the six months ended 31 August 2010 are
available at www.psgfm.co.za.
Paladin Capital (81,3%)
Paladin is PSG Group`s private equity investment company in sectors other than
agriculture, food and beverages. At 31 August 2010, Paladin had 13 investments
across a number of industries.
Paladin`s recurring headline earnings increased by 16,2% to R38,8 million while
recurring headline earnings per share decreased by 11,8% to 6,7 cents. This was
mainly a consequence of the increased number of shares in issue following
Paladin`s rights issue in September 2009, and the downturn in the construction
and manufacturing sectors.
Paladin`s headline earnings, before providing for a performance fee of R46,2
million, increased by 14,2% to R147,6 million. This increase is mainly due to
marked-to-market profits achieved in Thembeka`s investment portfolio of listed
shares in Capitec Bank and PSG Group.
Significant items of interest since year-end:
- Raised R100 million by way of a five-year, fixed rate preference share with
dividend and capital payable on maturity.
- Concluded the sale of Lesotho Milling for R26 million in cash, effective 1
September 2010.
- Entered into an agreement to sell CIC for a net consideration of R336 million.
The conclusion of the sale is subject to regulatory approvals.
- Purchased an additional 26% for a controlling 76% stake in Curro Private
Schools for R52 million. Immediately preceeding the acquisition the fair value
of the controlling stake exceeded the carrying value, and this resulted in a
R22,8 million profit being recognised in the income statement. The acquired
business contributed revenues of R12,7 million and net profit of R1,3 million to
the group for the period from 1 July 2010 to 31 August 2010. Details of the net
assets acquired, consideration paid and goodwill recognised are as follows:
Fair value
Rm
Cash and cash equivalents 2,5
Property, plant and equipment 226,1
Receivables 3,1
Intangible assets 20,5
Other financial liabilities (90,6)
Payables and provisions (9,2)
Deferred income tax (14,4)
Non-controlling interest (33,1)
Previously held interest at fair value (75,0)
Goodwill 22,1
Total purchase consideration 52,0
Analysed as follows:
Cash paid 51,0
Fair value of shares issued 1,0
52,0
Cash flow effects:
Purchase consideration settled in cash (51,0)
Cash and cash equivalents of subsidiary 2,5
acquired
Net cash outflow on acquisition (48,5)
Paladin`s comprehensive results for the six months ended 31 August 2010 are
available at www.paladincapital.co.za.
Zeder Investments (41,7%)
Zeder`s recurring headline earnings increased by 54,9% to R124,5 million while
recurring headline earnings per share increased by 24,5% to 12,7 cents. Headline
earnings per share, however, decreased by 14,7% to 9,3 cents. This was mainly as
a result of the increased number of Zeder shares in issue following a rights
issue in June 2009 together with less marked-to-market profits during the period
under review.
Kaap Agri and Capevin Holdings, with its respective core assets an effective
interest of 32,0% in Pioneer Foods and 14,9% in Distell, remain the largest
contributors to Zeder`s profitability. Zeder maintained its 41,3% interest in
Kaap Agri, with both Kaap Agri`s own operations and its investment in Pioneer
Foods expected to deliver attractive results. Pioneer Foods has indicated that
the Competition Commission settlement amount will exceed the R350 million non-
recurring provision previously made, and believes that the settlement may be
finalised within the next few weeks.
Zeder increased its interest in Capevin Holdings from 37,0% to 38,3% during the
period under review. Distell again delivered a satisfactory performance under
challenging conditions. Although it succeeded in maintaining its share of
consumer spending, benefits derived from improved throughput and better
operating efficiencies were insufficient to protect margins and profitability.
Distell`s operating profit for the year ended June 2010 consequently declined by
1,2% to R1,4 billion and headline earnings by 1,0% to R943,6 million.
Zeder`s comprehensive results for the six months ended 31 August 2010 are
available at www.zeder.co.za.
PSG Capital (100%)
PSG Capital is the corporate finance arm of PSG Group. It is a JSE-registered
sponsor and designated advisor. PSG Capital advises on mergers and acquisitions,
listings, restructurings, capital raisings, and BEE transactions, and performs
valuations and fair and reasonable opinions. It currently has 30 JSE-listed and
numerous other unlisted clients.
PSG Capital`s services are available at www.psgcapital.com.
PSG Corporate (100%)
PSG Corporate acts as PSG Group treasurer, allocates capital and determines and
monitors the group`s gearing. It is also the appointed manager to both Zeder and
Paladin. The recurring management fees earned from these two companies during
the period under review amounted to R29,5 million (2009: R17,8 million).
The net non-recurring marked-to-market loss incurred during the period under
review comprised a marked-to-market loss of R13,9 million on the interest rate
hedge held against the perpetual preference shares in issue, and a marked-to-
market profit of R8,3 million on our strategic and non-strategic investment
portfolio.
Prospects
Our focus remains to grow our underlying companies and we shall continue to
invest in assets and sectors that offer attractive growth prospects and returns.
Dividends
Ordinary shares
The directors of PSG Group Limited have resolved to increase the dividend pay-
out from 75% to 100% of free cash flow, of which one third will be paid as an
interim and the balance as a final dividend at year-end. The directors have
consequently resolved to declare an interim dividend of 20 cents (2009: 13
cents) per share.
The following are the salient dates for the payment of the interim dividend:
Last day to trade cum dividend Friday, 29 October 2010
Trading ex dividend commences Monday, 1 November 2010
Record date Friday, 5 November 2010
Day of payment Monday, 8 November 2010
Share certificates may not be dematerialised or rematerialised between Monday, 1
November 2010, and Friday, 5 November 2010, both days inclusive.
Preference shares
The directors of PSG Financial Services Limited have declared a dividend of
380,65 cents per share in respect of the cumulative, non-redeemable, non-
participating preference shares for the six months ended 31 August 2010, which
was paid on 27 September 2010.
On behalf of the board
Jannie Mouton Wynand Greeff
Chairman Financial director
11 October 2010
Stellenbosch
Directors
JF Mouton (Chairman), L van A Bellingan, PE Burton, ZL Combi,
J de V du Toit, MM du Toit, WL Greeff*, JA Holtzhausen, MJ Jooste,
JJ Mouton, PJ Mouton*, CA Otto, W Theron, CH Wiese *Executive Independent
Secretaries and registered office
PSG Corporate Services (Pty) Limited, 1st Floor, Ou Kollege, 35 Kerk Street,
Stellenbosch, 7600, PO Box 7403, Stellenbosch, 7599
Transfer secretaries
Computershare Investor Services (Pty) Limited, 70 Marshall Street, Johannesburg,
2001, PO Box 61051, Marshalltown, 2107
Sponsor
PSG Capital
These results are available at www.psggroup.co.za
Date: 11/10/2010 15:15:01 Produced by the JSE SENS Department.
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