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PSG Group Limited -
PSG Group Limited
Registration number 1970/008484/06
JSE Share code: PSG ISIN code: ZAE000013017
Unaudited interim results for the six months ended 31 August 2003
Headline earnings per share increased by 29,8% to 33,1 cents
Further unlocking of value with Capitec Bank unbundling
Net asset value per share at 641 cents
Group income statements
31 Aug 31 Aug 28 Feb
2003 2002 2003
Rm Rm Rm
Income
Net interest income 203,0 191,6 389,0
Investment income 4,0 7,1 20,8
Other operating income 152,7 120,7 279,2
Sales (note 3) 78,0 349,9 495,4
Total income 437,7 669,3 1 184,4
- Continuing operations 437,7 228,3 614,7
- Discontinued operations 441,0 569,7
Expenses
Operating expenses 302,9 283,7 556,5
Goodwill amortisation 19,0 22,0 27,6
Cost of sales (note 3) 68,0 303,5 426,4
Total expenses 389,9 609,2 1 010,5
- Continuing operations 389,9 239,8 503,3
- Discontinued operations 369,4 507,2
Net income from operations 47,8 60,1 173,9
Financing costs (4,4) (15,5) (38,5)
Income from associated 2,2 16,7 5,6
companies
Exceptional items (4,6) 6,3 (236,8)
Net income before taxation 41,0 67,6 (95,8)
- Continuing operations 41,0 (0,5) 45,7
- Discontinued operations 68,1 (141,5)
Taxation 16,4 25,6 42,5
- Continuing operations 16,4 9,8 25,9
- Discontinued operations 15,8 16,6
Net income of the group 24,6 42,0 (138,3)
Attributable to outside 9,1 24,5 47,6
shareholders
Attributable to ordinary 15,5 17,5 (185,9)
shareholders
Reconciliation of headline
earnings
Attributable to ordinary 15,5 17,5 (185,9)
shareholders
Non-headline items (note 4) 22,8 13,1 270,7
Headline earnings 38,3 30,6 84,8
Earnings per share (cents)
- attributable 13,4 14,6 (154,9)
- headline 33,1 25,5 70,7
Distribution per share
(cents)
Normal dividend
- final - - 20,0
Special distribution
- dividend - - 100,0
- capital - - 100,0
Total - - 220,0
Number of shares (million)
- in issue 109,7 120,0 120,0
- weighted average 115,8 120,0 120,0
Note: The discontinued operations referred to above are in respect of the sale
of PSG Investment Bank Holdings Limited ("PSGIB")
Group balance sheets
31 Aug 31 Aug 28 Feb
2003 2002 2003
Rm Rm Rm
Assets
Fixed assets 180,4 313,2 165,4
Net intangible assets 92,3 102,3 65,6
Investment in associated companies 64,3 277,3 80,1
Investments of long-term insurance
subsidiaries 815,3 396,5 557,6
Linked-product investments 591,4 271,9
Other investments and non-current assets
50,8 139,3 56,5
Deferred tax asset 95,2 268,9 105,0
Accounts receivable 182,0 239,4 785,6
Inventories and contracts in progress 17,8 17,8 14,1
Loans and advances 198,4 1 208,1 191,2
Investment and trading securities 53,9 184,4 72,7
Short-term money market assets 185,5
Cash and short-term funds 245,4 370,0 228,4
Total assets 2 587,2 3 702,7 2 594,1
Shareholders" funds
Ordinary shareholders" funds 703,5 1 194,5 993,1
Outside shareholders" funds 202,8 773,0 190,4
Total shareholders" funds 906,3 1 967,5 1 183,5
Liabilities
Life insurance funds
- Insurance contracts 215,5 418,2 556,9
- Investment contracts 591,5
807,0 418,2 556,9
Linked-product liabilities 591,4 271,9
Long-term liabilities 3,3 75,0 3,7
Deferred tax liability 0,9 15,5 0,4
Deposits and current accounts 28,5 801,6 25,8
Accounts payable and other liabilities 221,2 389,5 455,8
Short-term borrowings 28,6 35,4 96,1
Total liabilities 1 680,9 1 735,2 1 410,6
Total shareholders" funds and liabilities 2 587,2 3 702,7 2 594,1
Net asset value per share (cents) 641 995 828*
Net tangible asset value per share (cents) 497 778 712*
* Before distribution of 220 cents per share
Contribution to headline earnings
31 Aug 31 Aug 28 Feb
2003 2002 2003
Rm Rm Rm
Channel Life Limited 6,3 7,1 17,6
PSG Investment Services (Pty) Limited * (0,4) 7,8 6,6
PSG Capital Limited 7,1 10,0
Corporate 15,4 (13,4) 3,3
Capitec Bank Holdings Limited 9,9 2,6 16,2
PSG Investment Bank Holdings Limited 26,5 31,1
38,3 30,6 84,8
* Including contribution from mCubed
Group cash flow statements
31 Aug 31 Aug 28 Feb
2003 2002 2003
Rm Rm Rm
Cash retained from/(used in) operating
activities 94,6 (55,8) 120,0
Special distribution (240,0)
Cash retained from/(used in) investment
activities 250,8 (41,4) (275,4)
Cash flow attributable to investment in
short-term income-earning assets 14,4 154,8 176,2
Cash flow from financing activities (104,7) (141,0) (240,5)
Net increase in cash and cash
equivalents 15,1 (83,4) (219,7)
Cash and cash equivalents at beginning
of period 223,3 443,0 443,0
Cash and cash equivalents at end of
period 238,4 359,6 223,3
Commentary
Review of interim results
The results for the six months to 31 August 2003 are not strictly comparable to
those of the previous corresponding period, since PSGIB is no longer a
subsidiary of PSG Group and a special distribution of 200 cents per share was
made to shareholders on 31 March 2003, reducing equity by R240 million.
Despite this substantially reduced capital base, PSG Group increased its
headline earnings by 29,8% to 33,1 (2002: 25,5) cents per share. The net asset
value per share decreased to 641 cents per share.
PSG Group generated a positive cash flow and has no external debt.
Project unlocking value
As stated in our annual report for the year to 28 February 2003, we are
continuously addressing the unlocking of value to shareholders:
* Finalised the sale of PSGIB on 31 March 2003 and made a special distribution
of 200 cents per share.
* As announced on 29 September 2003, PSG Group has resolved to unbundle its
shares in Capitec Bank Holdings Limited ("Capitec Bank") to shareholders.
Shareholders will receive approximately 33 Capitec shares for every 100 PSG
shares.
* It is planned to pay a further special dividend/distribution will be paid to
shareholders early in the next financial year. No interim dividend will be paid.
Review of operations
Capitec Bank (55%)
Shareholders are referred to the announcement of the Capitec Bank results on 18
September 2003, as well as the notice of unbundling of 29 September 2003.
* Capitec Bank performed according to budget and we are confident that it will
continue to meet its growth and profit targets.
PSG Investment Services (Pty) Limited ("PSGIS") (96%)
During the period under review, PSGIS acquired and integrated the business of
Appleton. This was a painful process and a tougher task than originally
anticipated, with substantial losses having been incurred by Appleton. This
business has now been turned around and has passed the breakeven point.
* The original Appleton institutional asset management business was sold to
Tradek in a BEE transaction. PSGIS will retain a 10% interest in this business.
The non core asset management businesses in both London and Dublin were sold.
* The PSGIS operations have been streamlined with the integration of the
businesses of PSG Consult with the Wealth Management division. The other two
divisions will be PSG Fund Management and PSG Online.
* Funds under administration grew to R13 billion and assets under management to
R6 billion.
mCubed Holdings Limited ("mCubed") (20%)
Shareholders are referred to the announcement of the mCubed results on 29
September 2003, which reflected a 12% increase in headline earnings per share to
2,3 cents.
* Assets under administration grew to R61 billion and assets under management to
R45 billion.
Channel Life Limited ("Channel Life") (89%)
* Total assets grew to R1 billion, up 40% since year end.
* Its unique positioning in the market makes Channel Life the ideal candidate
for a BEE transaction which is under negotiation.
PSG Capital Limited ("PSG Capital") (94%)
The businesses of PSG Capital consist of PSG Trade Finance, PSG Treasury
Outsourcing, PSG Quantitative, Corporate Finance, Alternative Investments,
Private Equity and other banking assets.
* These businesses are performing satisfactorily.
Prospects
* The results and performance for the six months to 28 February 2004 will not be
comparable to those of the previous corresponding period following the sale of
PSGIB, the R2 per share special distribution and the unbundling of Capitec Bank.
* The remaining businesses in PSG Group are performing profitably although PSGIS
is lagging expectations.
Withdrawel of Cautionary Announcement
PSG Group withdraws the cautionary announcement published as part of its trading
update on 1 September 2003. Shareholders do not need to exercise caution
anymore when dealing in their PSG Group shares.
Statements of changes in owners" equity
31 Aug 31 Aug 28 Feb
2003 2002 2003
Rm Rm Rm
Ordinary shareholders" funds at
beginning of period 993,1 1 218,0 1 218,0
Shares bought back and cancelled (5
million) (17,7)
Treasury shares acquired (5,3 million) (20,5)
Movement in non-distributable reserves (2,7) (1,4) 0,6
Net income for period 15,5 17,5 (185,9)
Distribution to shareholders (263,1) (39,6) (39,6)
Adoption of AC 133 (note 2) (1,1)
Ordinary shareholders" funds at end of
period 703,5 1 194,5 993,1
Notes
1. Accounting policies
The accounting policies adopted for the purpose of this report comply with South
African Statements of Generally Accepted Accounting Practice. These accounting
policies are also consistent with those of the previous year, with the exception
of the implementation of AC 133.
2. Effect of AC 133 on results
In terms of AC 133, comparative figures are not restated and opening adjustments
for the change in the basis of valuation are accounted for directly to opening
retained income as disclosed in the statements of changes in equity. These
changes have had the effect of reducing attributable earnings for the period
under review by R0,2 million.
3. Non-financial operations
Certain subsidiary businesses are not related to that of the rest of the group
and the corresponding sales and cost of sales are disclosed on separate line
items in the income statement in order to prevent distortion of ratios.
4. Non-headline items (Rm)
31 Aug 03 31 Aug 02 28 Feb 03
Exceptional items 4,6 (6,3) 236,8
Loss on sale of PSGIB 183,3
Restructuring costs 20,6
Goodwill impairment 21,3
Impairment charges 16,6
Investment activities 4,6 (6,3) (5,0)
Goodwill amortised 19,0 22,0 27,6
Non-headline items of associated
companies 6,2
Profit before taxation 23,6 15,7 270,6
Taxation (0,1) (1,4)
Profit after taxation 23,5 15,7 269,2
Attributable to outside shareholders (0,7) (2,6) 1,5
22,8 13,1 270,7
5. Investment in associated companies (Rm)
31 Aug 03 31 Aug 02 28 Feb 03
Carrying value
- listed 62,5 260,5 78,5
- unlisted 1,8 16,8 1,6
64,3 277,3 80,1
Valuation
- listed - market value 43,5 156,8 53,5
- unlisted - directors" valuation 6,4 28,0 2,7
49,9 184,8 56,2
6. Unbundling of Capitec Bank
It was announced in the press on 29 September 2003 that PSG Group would, subject
to conditions precedent, unbundle its 38,0 million shares (55%) in Capitec Bank
with effect from 1 December 2003. In terms of the unbundling, shareholders will
receive 33,08453 Capitec Bank shares for every 100 PSG Group shares.
The following information pertains to the unbundling of Capitec Bank:
Rm
Assets and liabilities at 31 August 2003
Total assets 459,8
Total liabilities 57,6
Net assets 402,2
Income for the six months ended 31 August 2003
Headline earnings 9,9
Non-headline earnings (0,3)
Attributable earnings included in PSG Group results 9,6
PSG Group"s net asset value at 31 August 2003
Before After
Net asset value per share (cents) 641 410
Net tangible asset value per share (cents) 497 327
By order of the board
Jannie Mouton Chris Otto
Chairman Director
Stellenbosch 6 October 2003
Secretaries and registered office
PSG Corporate Services (Pty) Limited
1st Floor, Ou Kollege, 35 Kerk Street, Stellenbosch, 7600
Registrars
Ultra Registrars (Pty) Limited
11 Diagonal Street, Johannesburg, 2001
Directors
JF Mouton (chairman)*, CA Otto*, L van A Bellingan, PE Burton, J de V du Toit*,
MJ Jooste, Dr J van Zyl Smit
* Executive
Sponsor
PSG Capital Limited (Registration number: 2000/017362/06)
These results are also available on our website www.psg.co.za
Date: 06/10/2003 04:00:16 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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