PSG KONSULT LIMITED - Unaudited Financial Results For The Six Months Ended 31 August 2014
8 October, 2014 - Posted at - 13:00:00
KST 201410080020A<BR>
Unaudited Financial Results For The Six Months Ended 31 August 2014<BR>
<BR>
PSG Konsult Limited<BR>
(Incorporated in the Republic of South Africa)<BR>
Registration Number: 1993/003941/06<BR>
JSE Share Code: KST<BR>
NSX Share Code: KFS<BR>
ISIN Code: ZAE000191417<BR>
("PSG Konsult" or "the group" or "the company")<BR>
<BR>
<BR>
UNAUDITED FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2014<BR>
<BR>
SALIENT FEATURES<BR>
<BR>
- JSE listing June 2014<BR>
- NSX listing July 2014<BR>
- Revenue +26%<BR>
- Recurring headline earnings +36%<BR>
- Recurring headline earnings per share +32%<BR>
- Funds under management +39%<BR>
- Funds under administration +33%<BR>
<BR>
COMMENTARY<BR>
<BR>
PSG Konsult Limited has delivered a credible first set of interim results after its successful listing <BR>
on the JSE Limited ('JSE') in June 2014 and on the Namibian Stock Exchange ('NSX') in July 2014. Our Asset Management <BR>
and Wealth divisions produced particularly commendable results, while results from the Insure division were slightly <BR>
lower than expected. In particular, we are pleased with the business's top line revenue growth achievement, which has <BR>
been a specific area of management focus and is up 26% from the prior comparative period.<BR>
<BR>
PSG Wealth remains a key revenue driver and has maintained its upward revenue trend. It benefited from strong organic <BR>
growth and positive client inflows, as well as generally favourable market conditions, resulting in the FTSE/JSE All <BR>
Share Index increasing by 8% since 28 February 2014 and by 21% since 31 August 2013. Management fees have increased <BR>
by 39% and brokerage income by 19%. Managed assets increased by 16% to R98.6 billion (February 2014: R84.7 billion) <BR>
and total wealth assets by 12% to R239.5 billion (February 2014: R214.4 billion). In particular, we are pleased with <BR>
the R8 billion in net inflows of managed assets during the period.<BR>
<BR>
PSG Asset Management remains a high-growth area. Increased brand awareness has facilitated strong client inflows <BR>
from both retail and institutional investors. PSG Asset Management attracted net inflows of R5.6 billion, including <BR>
a new R1.0 billion institutional asset management mandate. The total assets under management increased by 39% to <BR>
R21.9 billion (February 2014: R15.8 billion), while assets under administration increased by 24% to R60.6 billion <BR>
(February 2014: R49.0 billion). It is further notable that there is less reliance on performance fees, with these <BR>
fees contributing only 6% of PSG Konsult's headline earnings, compared to 9% for the six months ended 31 August 2013.<BR>
<BR>
To reduce our overall exposure to operational and reputational risk, PSG Asset Management has decided to exit all <BR>
its current non-group related white label agreements. While reducing risk, we expect that this decision will have an <BR>
immaterial impact on PSG Konsult's profitability. <BR>
<BR>
PSG Insure achieved 29% revenue growth compared to the six-month period ended 31 August 2013 in a fiercely competitive <BR>
market. Operating costs were well contained (increasing by only 4%) but the net claims loss ratio in Western Group<BR>
Holdings Limited ('Western') increased due to higher weather-related and commercial motor claims. Net income after <BR>
tax prior to minorities increased by 28%, but due to the corporate transaction concluded with Santam effective <BR>
19 September 2013, PSG Konsult's shareholding in Western diluted from 90% to 60%. This had a R5.6 million adverse <BR>
impact on the overall headline earnings contribution of PSG Insure. <BR>
<BR>
PSG Konsult's key financial performance indicators for the six months ended 31 August 2014 are as follows:<BR>
<BR>
<BR>
31 Aug 14 Change 31 Aug 13<BR>
R000 % R000<BR>
<BR>
<BR>
Earnings attributable to ordinary shareholders 145 494 31 111 441<BR>
Non-headline items (97) (97) (2 793)<BR>
Headline earnings 145 397 34 108 648<BR>
Non-recurring items JSE listing fees 1 914 <BR>
Recurring headline earnings 147 311 36 108 648<BR>
<BR>
Weighted average number of shares in issue (million) 1 259.5 3 1 220.5<BR>
<BR>
Earnings per share (cents)<BR>
Recurring headline (basic and diluted)* 11.7 32 8.9<BR>
Headline (basic and diluted)* 11.5 30 8.9<BR>
Attributable (basic and diluted)* 11.6 28 9.1<BR>
<BR>
Dividend per share (cents) 4.0 4.0<BR>
<BR>
Funds under management (R billion) 129 39 93<BR>
Funds under administration (R billion) 266 33 200<BR>
<BR>
Divisional headline earnings<BR>
PSG Wealth 93 907 33 70 882<BR>
PSG Asset Management 33 758 63 20 727<BR>
PSG Insure 17 732 4 17 039<BR>
<BR>
145 397 34 108 648<BR>
<BR>
<BR>
* Dilution is a function of the 35.8 million shares issued on 1 March 2014 for the adviser buy-back transaction.<BR>
<BR>
DEBT FUNDING AND CASH FLOW MANAGEMENT<BR>
<BR>
During the period under review, PSG Konsult focused on optimising its cash flow management and reducing its debt funding <BR>
position to improve overall debt funding costs. We also successfully negotiated the accelerated repayment of certain <BR>
long-term and short-term funding facility arrangements. Core business debt declined to R61.3 million (February 2014: <BR>
R110.6 million), which has improved our debt to equity ratio to 5% from 10% at year-end.<BR>
<BR>
CREDIT RATING<BR>
<BR>
The rating agency Global Credit Rating Company (GCR) upgraded PSG Konsult's long-term rating to BBB+ (previously BBB). <BR>
It also affirmed the short-term rating of A2, with the outlook accorded as Stable. This is as a result of PSG Konsult's <BR>
strong operational performance over the past two years, the increased financial strength, and stability built into its <BR>
business model.<BR>
<BR>
Furthermore, the successful JSE listing had a positive impact in terms of raising PSG Konsult's profile and improving <BR>
its access to capital. This combined with our low debt profile, provides substantial funding flexibility allowing us <BR>
to consider acquisitions or similar transactions should the opportunities arise. <BR>
<BR>
We remain confident as management demonstrates its ability to unlock long-term growth in income and operating profit <BR>
regardless of market cycles.<BR>
<BR>
ACHIEVEMENTS<BR>
<BR>
We are proud of the following notable milestones, achievements and industry awards:<BR>
<BR>
PSG Wealth<BR>
<BR>
- Runner up in the 2014 Business Day Investors Monthly 'Top Private Bank and Wealth Manager' award and also voted <BR>
the top 'Wealth Manager for Successful Entrepreneurs'.<BR>
<BR>
- Consistently ranked as one of South Africa's Top 3 stockbrokers in the Business Day Investors Monthly 'Stockbroker <BR>
of the Year' award for the past four years, winning joint third place in 2014.<BR>
<BR>
PSG Asset Management<BR>
<BR>
- PSG Asset Management still grows assets faster than the industry and has passed the R20 billion mark for assets <BR>
under management, and R60 billion for assets under administration. During the period, the first institutional <BR>
mandate in excess of R1 billion was successfully implemented.<BR>
<BR>
PSG Insure<BR>
<BR>
- Awarded the 'Portfolio Administration Award for Performance Excellence' and 'National Broker Award for Performance <BR>
Excellence in Personal Lines' at the 2013 National Santam Broker Awards.<BR>
<BR>
PEOPLE<BR>
<BR>
At the period-end, PSG Konsult had 193 offices and 1 916 employees, of which 629 were financial planners, portfolio <BR>
managers, stockbrokers and asset managers, plus 396 professional associates (accountants and attorneys). Our advisers <BR>
increased by 11 (13 were appointed in the Wealth division while 2 left the Insure division) through a combination of <BR>
organic growth and the selective acquisition of additional adviser books of business. In addition, we concluded a <BR>
number of strategic hires that provides us with a strong operational platform from which to take the business into <BR>
the future. Key appointments in the group include a chief technology officer, head of marketing and an internal <BR>
auditor, as well as a chief executive officer for distribution at PSG Insure.<BR>
<BR>
Wayne Waldeck, the current chief executive officer: PSG Wealth advised the board last year of his intention to <BR>
retire at the end of 2014. As part of our succession planning Corrie de Bruyn, the current chief executive officer: <BR>
PSG Life and PSG Online, was identified as his successor and has been working closely with Wayne. Corrie has been a <BR>
member of the PSG Konsult management and executive committees for a number of years. This, in addition to the support <BR>
of his strong management team, will ensure a smooth transition in leadership. The board would like to thank Wayne for <BR>
his valuable contribution to PSG Konsult over the years and wish Corrie all the best in his new role.<BR>
<BR>
TRANSFORMATION AND SUSTAINABILITY<BR>
<BR>
PSG Konsult underwent its first broad-based black economic empowerment (BBBEE) verification process during the <BR>
period. We were rated as a level 8 BBBEE contributor and approved as a value-adding supplier. This initial rating is <BR>
viewed as a benchmark and PSG Konsult is committed to improving its BBBEE score. Transformation imperatives underscore <BR>
the strategies of the three divisions and PSG Konsult as a whole.<BR>
<BR>
STRATEGY<BR>
<BR>
PSG Wealth's key strategy is to offer a holistic end-to-end client proposition. We achieve this by providing high-<BR>
quality advice, service excellence and products to grow and preserve our clients' wealth. Our extensive and expanding <BR>
adviser distribution network allows us to build strong client relationships. By continually innovating and investing<BR>
in our technological capabilities and reporting platforms, we maintain proper control and custody of our clients'assets. <BR>
We also provide them with high-quality financial reporting. Additional investment into our internal management <BR>
information systems has enabled us to unlock operational scale and business efficiencies.<BR>
<BR>
PSG Asset Management has three core areas of strategic focus. The first is delivering excellent long-term investment <BR>
performance for our clients through our robust and consistent investment process. The second is responsibly growing <BR>
long-term assets (with a retail emphasis) at an acceptable margin through six key channels: independent advisers, PSG <BR>
Konsult advisers, platforms, multi-managers, institutional clients and direct clients. Our third core focus is <BR>
ensuring that we have robust operational processes in place to deliver operational excellence and ensure sound control <BR>
and custody of our clients' assets. In combination, and underpinned by a solid investment track record, these strategic <BR>
objectives will allow us to build on our established and respected reputation in the local market.<BR>
<BR>
PSG Insure's strategy is to offer simple, cost-effective insurance solutions and quality advice. This enables us to <BR>
simplify complex product technicalities for our clients so that they can make clear, informed decisions. We focus on <BR>
our top calibre advisers to target growth particularly in our commercial client base. In addition, we remain committed <BR>
to excellence in our underwriting skills. This is both to optimise our insurance and investment risk retention levels <BR>
and to create value-adding insurance solutions that meet our clients' needs and expectations. We have also invested <BR>
in our short-term claims and administration platforms, which were centralised to unlock operational efficiencies. This <BR>
means that our advisers have more face time with their clients. We also focus on building our insurance investment <BR>
float, which we conservatively invested in short-duration financial instruments to provide additional financial <BR>
stability.<BR>
<BR>
MARKETING<BR>
<BR>
For 2014, emphasis is placed on the renewed drive to build the PSG brand and solidify its status as a key player in <BR>
the financial services industry. We have clarified our brand architecture, refreshed our corporate identity and <BR>
established a marketing team. Supported by sustained advertising efforts and strong media relations, this helps our <BR>
advisers to sell the PSG proposition and our clients to understand the value of our offering, ultimately translating <BR>
into business growth.<BR>
<BR>
INFORMATION TECHNOLOGY<BR>
<BR>
Over the past year, PSG Konsult has invested significantly in technological infrastructure to create the required <BR>
scale that will meet its growth targets. It has also generated operational efficiencies through the automation of <BR>
various processes throughout the business. We believe both of these endeavours will be value generative for <BR>
shareholders over the short to medium term.<BR>
<BR>
BUSINESS COMBINATIONS<BR>
<BR>
As announced previously, we concluded an asset-for-share transaction on 1 March 2014 in terms of section 42 of the <BR>
Income Tax Act, 58 of 1962. This will standardise the revenue sharing model and give our advisers the opportunity to <BR>
invest in PSG Konsult's future. The transaction was settled through the issue of 35.8 million PSG Konsult shares <BR>
and a R12.5 million cash payment. This contributed (net of a R4.4 million intangible asset amortisation charge) <BR>
R3.9 million to our headline earnings during the period under review.<BR>
<BR>
CHANGES TO THE BOARD OF DIRECTORS<BR>
<BR>
During the period under review, Patrick Burton and KK Combi were appointed as independent non-executive directors on <BR>
2 March 2014 and 16 April 2014, respectively.<BR>
<BR>
LOOKING FORWARD<BR>
<BR>
PSG Konsult's strategic focus for the year ahead is on enhancing top-line revenue growth at acceptable levels of risk. <BR>
Having successfully bedded down the repositioning of our business, this will allow us to unlock operational benefits. <BR>
We will achieve growth by:<BR>
<BR>
- implementing and executing our three-year strategic plans for each of our underlying divisions;<BR>
<BR>
- building the PSG brand and positioning PSG Konsult as a fully fledged financial services business through our <BR>
comprehensive range of services and products;<BR>
<BR>
- optimising the synergy between business divisions to create further business development opportunities; and<BR>
<BR>
- extending PSG Konsult's share in the value chain, with a particular focus on growing our asset management and <BR>
short-term insurance activities.<BR>
<BR>
Although the future is always uncertain, we remain cautiously optimistic about our strategy.<BR>
<BR>
DIVIDEND<BR>
<BR>
Given the opportunities for growth in future years, and the capital required to fund such growth, the board <BR>
approved and declared a gross interim dividend payment of 4.0 cents per share (2013: 4.0 cents per share) <BR>
from income reserves for the six months ended 31 August 2014, which is in line with our policy as communicated <BR>
at the time of the JSE listing. No credits for secondary tax on companies (STC) were used as part of this declaration. <BR>
The dividend is subject to a local dividends tax rate of 15%, resulting in a net dividend of 3.4 cents per share, <BR>
unless the shareholder is exempt from paying dividends tax or is entitled to a reduced rate in terms of the <BR>
applicable double-tax agreement. The number of issued ordinary shares is 1 262 484 423 at the date of this <BR>
declaration. PSG Konsult's income tax reference number is 9550/644/07/5.<BR>
<BR>
Salient dates for payment of the dividend:<BR>
<BR>
Last day to trade (cum dividend) Friday, 24 October 2014<BR>
Trading ex dividend commences Monday, 27 October 2014<BR>
Record date Friday, 31 October 2014<BR>
Date of payment Monday, 3 November 2014<BR>
<BR>
Share certificates may not be dematerialised or rematerialised between Monday, 27 October 2014, and Friday, <BR>
31 October 2014, both days inclusive.<BR>
<BR>
The board would like to extend its gratitude to all our stakeholders, including clients, business partners, <BR>
management and employees for their efforts and contributions during the period.<BR>
<BR>
On behalf of the board<BR>
<BR>
<BR>
Willem Theron Francois Gouws<BR>
Chairman Chief executive officer<BR>
<BR>
Tyger Valley<BR>
8 October 2014<BR>
<BR>
<BR>
<BR>
THE UNAUDITED FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2014 IS PRESENTED BELOW:<BR>
<BR>
Consolidated interim statement of financial position<BR>
at 31 August and 28 February 2014<BR>
<BR>
<BR>
Restated<BR>
Unaudited Unaudited Audited<BR>
31 Aug 14 31 Aug 13 28 Feb 14<BR>
R000 R000 R000<BR>
ASSETS<BR>
Intangible assets 889 032 730 981 721 936<BR>
Property and equipment 46 202 29 856 47 590<BR>
Investment property 2 245 2 036 2 245<BR>
Investment in associated companies 39 169 39 064 39 548<BR>
Investment in joint ventures 12 511 9 000 12 057<BR>
Deferred income tax 72 993 25 986 52 101<BR>
Equity securities (note 5) 827 617 520 215 604 880<BR>
Debt securities (note 5) 1 642 197 1 740 574 2 121 432<BR>
Unit-linked investments (note 5) 11 045 876 8 850 516 10 218 629<BR>
Investment in investment contracts (note 5) 432 825 701 888 505 444<BR>
Loans and advances 97 800 123 721 109 995<BR>
Derivative financial instruments 19 075 19 880 21 190<BR>
Reinsurance assets 75 139 50 642 66 248<BR>
Deferred acquisition costs 1 658 1 211 1 025<BR>
Receivables including insurance receivables 1 856 752 1 424 263 2 129 358<BR>
Current income tax assets 22 509 16 073 12 878<BR>
Cash and cash equivalents (including money market investments)<BR>
(note 5) 469 038 430 959 709 184<BR>
Total assets 17 552 638 14 716 865 17 375 740<BR>
<BR>
EQUITY<BR>
Equity attributable to owners of the parent<BR>
Stated capital/share capital and share premium 1 325 111 1 133 340 1 134 746<BR>
Treasury shares (546) (547) (546)<BR>
Other reserves (439 799) (460 119) (445 146)<BR>
Retained earnings 451 560 279 414 399 487<BR>
1 336 326 952 088 1 088 541<BR>
Non-controlling interest 95 085 24 867 86 222<BR>
Total equity 1 431 411 976 955 1 174 763<BR>
<BR>
LIABILITIES<BR>
Insurance contracts 502 668 415 604 493 163<BR>
Deferred income tax 85 015 58 559 53 423<BR>
Borrowings 363 050 402 222 412 188<BR>
Derivative financial instruments 33 846 20 440 28 406<BR>
Investment contracts (note 5) 12 761 154 11 310 094 12 692 768<BR>
Third-party liabilities arising on consolidation of mutual funds 625 462 174 606 372 169<BR>
Deferred reinsurance acquisition revenue 2 757 2 328 2 842<BR>
Trade and other payables 1 723 302 1 344 101 2 129 914<BR>
Current income tax liabilities 23 973 11 956 16 104<BR>
Total liabilities 16 121 227 13 739 910 16 200 977<BR>
<BR>
Total equity and liabilities 17 552 638 14 716 865 17 375 740<BR>
<BR>
Net asset value per share (cents) 105.9 78.0 89.1<BR>
<BR>
<BR>
Consolidated interim income statement<BR>
for the six months ended 31 August and 12 months ended 28 February 2014<BR>
<BR>
<BR>
Restated<BR>
Unaudited Unaudited<BR>
Six months Six months Audited<BR>
ended ended Year ended<BR>
31 Aug 14 31 Aug 13 28 Feb 14<BR>
R000 R000 R000<BR>
<BR>
Gross written premium 362 974 271 166 618 217<BR>
Less: Reinsurance written premium (98 417) (90 637) (185 881)<BR>
Net premium 264 557 180 529 432 336<BR>
Change in unearned premium<BR>
Gross 9 807 (20 779) (36 204)<BR>
Reinsurers' share (614) (1 344) 2 116<BR>
Net insurance premium revenue 273 750 158 406 398 248<BR>
Commission and other fee income 1 056 475 859 909 1 805 142<BR>
Investment income 198 911 175 127 380 034<BR>
Net fair value gains and losses on financial instruments 1 011 149 744 457 1 171 564<BR>
Fair value adjustment to investment contract liabilities (1 024 359) (751 588) (1 239 669)<BR>
Other operating income 14 075 24 168 42 117<BR>
Total income 1 530 001 1 210 479 2 557 436<BR>
<BR>
Insurance claims and loss adjustment expenses (285 165) (170 143) (440 401)<BR>
Insurance claims and loss adjustment expenses recovered from<BR>
reinsurers 67 849 52 911 121 404<BR>
Net insurance benefits and claims (217 316) (117 232) (318 997)<BR>
Commission paid (474 464) (387 006) (824 757)<BR>
Depreciation and amortisation (26 339) (20 068) (40 596)<BR>
Employee benefit expenses (252 481) (220 914) (451 887)<BR>
Fair value adjustment to third-party liabilities (79 331) (44 523) (79 387)<BR>
Marketing, administration and other expenses (185 251) (167 324) (325 555)<BR>
Total expenses (1 235 182) (957 067) (2 041 179)<BR>
<BR>
Share of (losses)/profits of associated companies (379) 2 623 3 118<BR>
Loss on impairment of associated companies (342)<BR>
Share of profits of joint ventures 454 318 3 375<BR>
Total profit from associated companies and joint ventures 75 2 941 6 151<BR>
<BR>
Profit before finance costs and taxation 294 894 256 353 522 408<BR>
<BR>
Finance costs (62 459) (95 519) (138 771)<BR>
<BR>
Profit before taxation 232 435 160 834 383 637<BR>
<BR>
Taxation (75 448) (43 057) (117 677)<BR>
<BR>
Profit for the period 156 987 117 777 265 960<BR>
<BR>
Attributable to:<BR>
Owners of the parent 145 494 111 441 249 258<BR>
Non-controlling interest 11 493 6 336 16 702<BR>
156 987 117 777 265 960<BR>
Earnings per share (cents)<BR>
- Attributable (basic and diluted) 11.6 9.1 20.4<BR>
- Headline (basic and diluted) 11.5 8.9 20.0<BR>
- Recurring (basic and diluted) 11.7 8.9 20.6<BR>
<BR>
<BR>
Consolidated interim statement of comprehensive income<BR>
for the six months ended 31 August and 12 months ended 28 February 2014<BR>
<BR>
<BR>
Unaudited Unaudited<BR>
Six months Six months Audited<BR>
ended ended Year ended<BR>
31 Aug 14 31 Aug 13 28 Feb 14<BR>
R000 R000 R000<BR>
<BR>
<BR>
<BR>
Profit for the period 156 987 117 777 265 960<BR>
Other comprehensive income for the period, net of taxation (758) 619 985<BR>
To be reclassified to profit and loss:<BR>
Currency translation adjustments (758) 619 985<BR>
<BR>
Total comprehensive income for the period 156 229 118 396 266 945<BR>
<BR>
Attributable to:<BR>
Owners of the parent 144 736 112 060 250 243<BR>
Non-controlling interest 11 493 6 336 16 702<BR>
156 229 118 396 266 945<BR>
<BR>
Earnings and headline earnings per share<BR>
<BR>
<BR>
Unaudited Unaudited<BR>
Six months Six months Audited<BR>
ended ended Year ended<BR>
31 Aug 14 31 Aug 13 28 Feb 14<BR>
R000 R000 R000<BR>
<BR>
<BR>
Profit attributable to ordinary shareholders 145 494 111 441 249 258<BR>
Non-headline items (net of tax and non-controlling interest)<BR>
Profit on sale of associated companies (3 384) (3 499)<BR>
Loss on remeasurement of previous equity interest 128<BR>
(Profit)/loss on sale of intangible assets (including<BR>
goodwill) (48) 1 633 1 622<BR>
Profit on sale of books of business (382)<BR>
Profit on sale of investment in subsidiaries (643) (643)<BR>
Non-headline items of associated companies (97) (314) (2 457)<BR>
Other 48 (85) 458<BR>
<BR>
Headline earnings 145 397 108 648 244 485<BR>
Recurring 147 311 108 648 251 145<BR>
Non-recurring (1 914) (6 660)<BR>
<BR>
Earnings per share (cents)<BR>
Attributable (basic and diluted) 11.6 9.1 20.4<BR>
Headline (basic and diluted) 11.5 8.9 20.0<BR>
Recurring headline (basic and diluted) 11.7 8.9 20.6<BR>
<BR>
Number of shares (million)<BR>
in issue (net of treasury shares) 1 262.1 1 221.0 1 221.6<BR>
weighted average 1 259.5 1 220.5 1 220.5<BR>
<BR>
<BR>
Consolidated interim statement of changes in equity<BR>
for the six months ended 31 August and 12 months ended 28 February 2014<BR>
<BR>
Attributable to equity holders of the group<BR>
<BR>
Share<BR>
capital<BR>
and share<BR>
premium/ Non-<BR>
stated Treasury Other Retained controlling<BR>
capital shares reserves earnings interest Total<BR>
R000 R000 R000 R000 R000 R000<BR>
<BR>
Balance at 1 March 2013 1 105 927 (620) (463 262) 276 968 34 190 953 203<BR>
Comprehensive income<BR>
Profit for the year 111 441 6 336 117 777<BR>
Other comprehensive income 619 619<BR>
Total comprehensive income 619 111 441 6 336 118 396<BR>
Transactions with owners <BR>
Issue of ordinary shares 27 413 27 413<BR>
Share-based payments costs <BR>
employees 2 524 2 524<BR>
Transactions with non-controlling <BR>
interest (19 897) (14 464) (34 361)<BR>
Dividend paid (89 098) (771) (89 869)<BR>
Other 73 (424) (351)<BR>
<BR>
Balance at 31 August 2013 1 133 340 (547) (460 119) 279 414 24 867 976 955<BR>
<BR>
Comprehensive income<BR>
Profit for the year 137 817 10 366 148 183<BR>
Other comprehensive income 366 366<BR>
Total comprehensive income 366 137 817 10 366 148 549<BR>
Transactions with owners <BR>
Share-based payment costs <BR>
employees 3 417 3 417<BR>
Capital contribution by non-<BR>
controlling interest 16 735 16 735<BR>
Transactions with non-controlling<BR>
interest 31 094 34 563 65 657<BR>
Deferred tax on equity-settled<BR>
share-based payments 11 190 11 190<BR>
Dividend paid (48 838) (267) (49 105)<BR>
Other 1 406 1 (42) 1 365<BR>
<BR>
Balance at 28 February 2014 1 134 746 (546) (445 146) 399 487 86 222 1 174 763<BR>
<BR>
Comprehensive income<BR>
Profit for the year 145 494 11 493 156 987<BR>
Other comprehensive income (758) (758)<BR>
Total comprehensive income (758) 145 494 11 493 156 229<BR>
Transactions with owners <BR>
Issue of ordinary shares 190 365 190 365<BR>
Share-based payment costs - <BR>
employees 6 105 6 105<BR>
Transactions with non-controlling<BR>
interest (1 320) (207) (1 527)<BR>
Dividend paid (92 101) (2 423) (94 524)<BR>
<BR>
Balance at 31 August 2014 1 325 111 (546) (439 799) 451 560 95 085 1 431 411<BR>
<BR>
<BR>
<BR>
Consolidated interim statement of cash flows<BR>
for the six months ended 31 August and 12 months ended 28 February 2014<BR>
<BR>
<BR>
Restated<BR>
Unaudited Unaudited<BR>
Six months Six months Audited<BR>
ended ended Year ended<BR>
31 Aug 14 31 Aug 13 28 Feb 14<BR>
R000 R000 R000<BR>
<BR>
Cash flows from operating activities<BR>
Cash (utilised in)/generated by operating activities (176 759) 94 094 153 725<BR>
Interest income 169 002 125 895 299 998<BR>
Dividend income 29 727 49 234 79 651<BR>
Finance costs (20 498) (14 956) (35 728)<BR>
Taxation paid (62 986) (41 134) (124 953)<BR>
Operating cash flows before policyholder cash movement (61 514) 213 133 372 693<BR>
Policyholder cash movement (36 652) (65 096) (13 762)<BR>
Net cash flow from operating activities (98 166) 148 037 358 931<BR>
<BR>
Cash flows from investing activities<BR>
Acquisition of intangible assets (22 593) (12 246) (24 756)<BR>
Purchases of property and equipment (7 828) (8 963) (20 144)<BR>
Other 2 388 5 025 22 753<BR>
Net cash flow from investing activities (28 033) (16 184) (22 147)<BR>
<BR>
Cash flows from financing activities<BR>
Dividends paid (94 524) (89 869) (138 974)<BR>
Capital contributions by non-controlling interest <BR>
(ordinary shares) 16 735<BR>
Transactions with non-controlling interest (34 000) 31 295<BR>
Other (19 131) (47 646) (7 930)<BR>
Net cash flow from financing activities (113 655) (171 515) (98 874)<BR>
<BR>
Net (decrease)/increase in cash and cash equivalents (239 854) (39 662) 237 910<BR>
Cash and cash equivalents at beginning of year 709 173 470 621 470 621<BR>
Exchange (losses)/gains on cash and cash equivalents (281) 642<BR>
Cash and cash equivalents at end of year* 469 038 430 959 709 173<BR>
<BR>
Current, cheque and money market investments accounts 469 038 430 959 709 184<BR>
Bank overdrafts (11)<BR>
<BR>
* Includes the following:<BR>
Clients' cash linked to investment contracts 14 682 149 005 51 337<BR>
<BR>
Notes to the statement of cash flow:<BR>
The movement in cash utilised/generated in operating activities can vary significantly as a result of daily fluctuations <BR>
in cash linked to investment contracts and cash held by the stockbroking business. PSG Life Limited, the group's linked <BR>
insurance company, issues linked policies to policyholders (where the value of policy benefits is directly linked to the <BR>
fair value of the supporting assets). When these policies mature, the company raises a debtor for the money receivable <BR>
from the third-party investment provider, and raises a creditor for the amount owing to the client. Timing difference <BR>
occurs at month end where the money was received from the third-party investment provider, but only paid out by the <BR>
company after month end, resulting in significant fluctuations in the working capital of the company. Similar working <BR>
capital fluctuations incur at PSG Securities Limited (previously Online Securities Limited), the group's stockbroking <BR>
business, mainly due to the timing of the close of the JSE in terms of client settlements. The group's investment <BR>
strategy applied at the two short-term insurance companies in the group also resulted in a significant outflow from <BR>
money market investments held to low-risk income funds (management decided to invest capital held for regulatory <BR>
purposes in portfolios generating higher yields - these funds are generally classified as debt securities or unit-<BR>
linked investments).<BR>
<BR>
Refer below to the cash flow from operating activities movement analysis for salient details of the movements during the<BR>
six month period ended 31 August 2014:<BR>
<BR>
R000<BR>
Profit before taxation as per income statement 232 435<BR>
Add back: Non-cashflow items (Depreciation, amortisation, etc.) 32 259<BR>
Less: Taxation paid for the period (62 986)<BR>
Cash flow generated from core operating activities (excluding working capital movements) 201 708<BR>
Less: Policyholder cash movement (36 652)<BR>
165 056<BR>
Less: working capital movements during period** (153 078)<BR>
Less: other investment activity movements*** (110 144)<BR>
Net cash flow from operating activities (98 166)<BR>
<BR>
** The working capital movement was negatively impacted in the six-month period by the fluctuations in the working <BR>
capital at PSG Life Limited, with the net working capital movement for the six months being an outflow of <BR>
R82.5 million (due to policyholder payables at 28 February 2014 paid out after year-end). The group also utilised <BR>
R50 million cash during the period for the scrip lending facility at PSG Securities Limited (the scrip lending <BR>
facility is secured by the underlying ALSI 100 equity securities held by the clients utilising these facility), <BR>
earning an attractive prime interest rate on this instead of normal money market rates.<BR>
<BR>
*** Other investment activity movements largely due to the transfer of cash from money market investments (classified <BR>
as 'Cash and cash equivalents' on the face of the statement of financial position), held by the two short-term <BR>
insurance companies in the group, to low-risk income funds which were classified as either debt securities or unit-<BR>
linked investments, depending on the nature of the income fund invested in.<BR>
<BR>
<BR>
Notes to the condensed consolidated interim financial statements for the six months ended 31 August 2014<BR>
<BR>
1. Reporting entity<BR>
<BR>
PSG Konsult Limited is a company domiciled in the Republic of South Africa. The condensed consolidated interim <BR>
financial statements of the company as at and for the six months ended 31 August 2014 comprise the company and its <BR>
subsidiaries (together referred to as the "group") and the group's interests in associated companies and joint <BR>
ventures.<BR>
<BR>
2. Basis of presentation<BR>
<BR>
The condensed consolidated interim financial statements have been prepared in accordance with the recognition and <BR>
measurement principles of International Financial Reporting Standards (IFRS), including IAS 34 Interim Financial <BR>
Reporting, the Financial Reporting Guides issued by the Accounting Practices Board of SAICA as well as section 29(e) <BR>
of the South African Companies Act, 71 of 2008, as amended and the Listings Requirements of the JSE. They do not <BR>
include all of the information required for full annual financial statements and should be read in conjunction with <BR>
the consolidated financial statements of the group as at and for the year ended 28 February 2014. Neither these <BR>
condensed consolidated interim financial statements, nor any reference to future financial performance included in <BR>
this results announcement, have been reviewed or reported on by the company's external auditor, Pricewaterhouse-<BR>
Coopers Inc. The condensed consolidated interim financial statements were prepared by Stephan van der Merwe, CA(SA),<BR>
under the supervision of the chief financial officer, Mike Smith, CA(SA).<BR>
<BR>
3. Accounting policies<BR>
<BR>
The accounting policies applied in the preparation of these condensed consolidated interim financial statements <BR>
conform to IFRS and are consistent with those accounting policies applied in the preparation of the consolidated <BR>
annual financial statements as at and for the year ended 28 February 2014.<BR>
<BR>
The following new accounting standards and amendments to IFRSs, which were relevant to the group's operations, <BR>
were effective for the first time from 1 March 2014: <BR>
<BR>
- Amendments to IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities <BR>
and IAS 27 Consolidated and Separate Financial Statements Investment entities <BR>
<BR>
- Amendment to IAS 32 Financial Statements Presentation Offsetting Financial Assets and Financial Liabilities <BR>
<BR>
- Amendment to IAS 36 Impairment of Assets Recoverable amount disclosures for non-financial assets <BR>
<BR>
- Amendment to IAS 39 Financial Instruments: Recognition and measurement Novation of derivatives and <BR>
continuation of hedge accounting <BR>
<BR>
- IFRIC 21, Levies <BR>
<BR>
These revisions have not resulted in material changes to the group's reported results and disclosures in these <BR>
condensed consolidated interim financial statements.<BR>
<BR>
4. Use of estimates and judgements<BR>
<BR>
In preparing these condensed consolidated interim financial statements, the significant judgements made by management <BR>
in applying the group's accounting policies and the key sources of estimation uncertainty were the same as those that <BR>
applied to the consolidated annual financial statements for the year ended 28 February 2014.<BR>
<BR>
5. Segment information<BR>
<BR>
The composition of the reportable segments represents the internal reporting structure and the monthly reporting to <BR>
the chief operating decision-maker (CODM). The CODM for the purpose of IFRS 8, Operating Segments, has been identified <BR>
as the chief executive officer, supported by the group management committee (Manco). The group's internal reporting <BR>
structure is reviewed in order to assess performance and allocated resources. The group is organised into three <BR>
reportable segments, namely:<BR>
<BR>
- PSG Wealth<BR>
<BR>
- PSG Asset Management<BR>
<BR>
- PSG Insure<BR>
<BR>
The comparative figures have been adjusted to reflect a new refined basis of apportioning central support costs that <BR>
we implemented this financial year. Corporate support costs refers to a variety of services and functions that are <BR>
performed centrally for the individual business units within each business segment, as well as housing the group's <BR>
executive office. Besides the traditional accounting and secretarial services provided to group divisions and <BR>
subsidiaries, the corporate office also provides legal, risk, information technology (IT), marketing, human resources <BR>
(HR), payroll, internal audit and corporate finance services. The strategic elements of IT, in terms of both services <BR>
and infrastructure, are also centralised in the corporate office. The corporate costs were previously apportioned to <BR>
the three reportable segments using a fixed percentage method. From 1 March 2014, in order to enhance its accuracy, <BR>
the corporate costs were apportioned taking into account specific facts and circumstances applicable to each of the <BR>
reportable segments and comparative segment figures have been restated applying this new methodology.<BR>
<BR>
5.1. Description of business segments<BR>
<BR>
PSG Wealth, which consists of five business units Distribution, PSG Securities, LISP Platform, Multi Management and <BR>
Employee Benefits is designed to meet the needs of individuals, families and businesses. Through our highly skilled <BR>
wealth managers, PSG Wealth offers a wide range of personalised services (including portfolio management, stockbroking, <BR>
local and offshore investments, estate planning, financial planning, local and offshore fiduciary services, multi-<BR>
managed solutions, and retirement products). Our Wealth offices are fully equipped to deliver a high-quality personal <BR>
service to our customers.<BR>
<BR>
PSG Asset Management is an established investment management company with a proven investment track record. We offer <BR>
investors a simple, but comprehensive range of local and global investment products. Our products include both local <BR>
and international unit trust funds. <BR>
<BR>
PSG Insure, through our registered insurance brokers and PSG's short-term insurance company Western National Insurance <BR>
Company Limited, offer a full range of tailor made short-term insurance products and services from personal (home, car <BR>
and household insurance) to commercial (business and Agri-insurance) requirements. To harness the insurance solutions <BR>
available to our customers effectively, our expert insurance specialists, through our strict due diligence process, <BR>
will simplify the selection process for the most appropriate solution for our clients. In addition to the intermediary <BR>
services we offer, PSG Short-Term Administration supports clients through the claim process, administrative issues and <BR>
general policy maintenance, including an annual reappraisal of their portfolio.<BR>
<BR>
The Manco considers the performance of reportable segments based on total income as a measure of growth and headline <BR>
earnings as a measure of profitability. The segment information provided to Manco for the reportable segments for the <BR>
period ended 31 August 2014 is set out in notes 5.2 and 5.3.<BR>
<BR>
5.2 Headline earnings per reportable segments<BR>
<BR>
Unaudited<BR>
Asset<BR>
Wealth Management Insure Total<BR>
Headline earnings R000 R000 R000 R000<BR>
<BR>
For the six months ended 31 August 2014 <BR>
Headline earnings 93 907 33 758 17 732 145 397<BR>
recurring 94 749 34 179 18 383 147 311 <BR>
non-recurring (842) (421) (651) (1 914)<BR>
<BR>
For the six months ended 31 August 2013<BR>
Headline earnings 70 882 20 727 17 039 108 648<BR>
recurring 70 882 20 727 17 039 108 648<BR>
non-recurring <BR>
<BR>
For the year ended 28 February 2014<BR>
Headline earnings 162 279 54 334 27 872 244 485<BR>
recurring 162 279 54 334 34 532 251 145<BR>
non-recurring (6 660) (6 660)<BR>
<BR>
5.3 Income per reportable segment<BR>
<BR>
Unaudited<BR>
Asset<BR>
Wealth Management Insure Total<BR>
Total income R000 R000 R000 R000 <BR>
<BR>
For the six months ended 31 August 2014 <BR>
Total segment income 1 072 668 282 074 484 678 1 839 420<BR>
Intersegment income (200 477) (108 672) (270) (309 419)<BR>
Income from external customers 872 191 173 402 484 408 1 530 001<BR>
<BR>
For the six months ended 31 August 2013<BR>
Total segment income 914 965 215 592 355 503 1 486 060<BR>
Intersegment income (185 858) (87 598) (2 125) (275 581)<BR>
Income from external customers 729 107 127 994 353 378 1 210 479<BR>
<BR>
For the year ended 28 February 2014<BR>
Total segment income 1 793 011 475 099 789 891 3 058 001<BR>
Intersegment income (316 846) (181 300) (2 419) (500 565)<BR>
Income from external customers 1 476 165 293 799 787 472 2 557 436<BR>
<BR>
Other information provided to the Manco is measured in a manner consistent with that of the financial statements.<BR>
<BR>
5.4 Statement of financial position (client vs own)<BR>
<BR>
In order to evaluate the consolidated financial position of the group, the Manco segregates the statement of financial <BR>
position of the group between own balances and client-related balances.<BR>
<BR>
Client-related balances represent the investment contract liabilities and related linked client assets of PSG Life <BR>
Limited, the broker and clearing accounts, and the settlement control accounts of the stockbroking business, the <BR>
collective investment schemes consolidated under IFRS 10 and corresponding third-party liabilities, the short-term <BR>
claim control accounts and related bank accounts as well as the contracts for difference assets and related liabilities.<BR>
<BR>
<BR>
Unaudited as at 31 August 2014<BR>
Client-<BR>
Own related<BR>
Total balances balances<BR>
R000 R000 R000<BR>
ASSETS<BR>
Equity securities 827 617 3 505 824 112<BR>
Debt securities 1 642 197 106 302 1 535 895<BR>
Unit-linked investments 11 045 876 473 320 10 572 556<BR>
Investment in investment contracts 432 825 432 825<BR>
Receivables including insurance receivables 1 856 752 212 470 1 644 282<BR>
Derivative financial instruments 19 075 19 075<BR>
Cash and cash equivalents (including money <BR>
market investments) 469 038 447 124 21 914<BR>
Other assets* 1 259 258 1 259 258 <BR>
Total assets 17 552 638 2 501 979 15 050 659<BR>
<BR>
EQUITY<BR>
Equity attributable to owners of the parent 1 336 326 1 336 326 <BR>
Non-controlling interest 95 085 95 085 <BR>
Total equity 1 431 411 1 431 411 <BR>
<BR>
LIABILITIES<BR>
Borrowings 363 050 61 252 301 798<BR>
Investment contracts 12 761 154 12 761 154<BR>
Third-party liabilities arising on consolidation of <BR>
mutual funds 625 462 625 462<BR>
Derivative financial instruments 33 846 33 846<BR>
Trade and other payables 1 723 302 394 903 1 328 399<BR>
Other liabilities** 614 413 614 413 <BR>
Total liabilities 16 121 227 1 070 568 15 050 659<BR>
<BR>
Total equity and liabilities 17 552 638 2 501 979 15 050 659<BR>
<BR>
<BR>
Unaudited as at 31 August 2013<BR>
Client-<BR>
Own related<BR>
Total balances balances<BR>
R000 R000 R000<BR>
ASSETS<BR>
Equity securities 520 215 3 601 516 614<BR>
Debt securities 1 740 574 258 099 1 482 475<BR>
Unit-linked investments 8 850 516 218 343 8 632 173<BR>
Investment in investment contracts 701 888 701 888<BR>
Receivables including insurance receivables 1 424 263 180 968 1 243 295<BR>
Derivative financial instruments 19 880 19 880<BR>
Cash and cash equivalents (including money market <BR>
investments) 430 959 187 776 243 183<BR>
Other assets* 1 028 570 1 028 570 <BR>
Total assets 14 716 865 1 877 357 12 839 508<BR>
<BR>
EQUITY<BR>
Equity attributable to owners of the parent 952 088 952 088 <BR>
Non-controlling interest 24 867 24 867 <BR>
Total equity 976 955 976 955 <BR>
<BR>
LIABILITIES<BR>
Borrowings 402 222 157 242 244 980<BR>
Investment contracts 11 310 094 11 310 094<BR>
Third-party liabilities arising on consolidation of <BR>
mutual funds 174 606 174 606<BR>
Derivative financial instruments 20 440 20 440<BR>
Trade and other payables 1 344 101 254 713 1 089 388<BR>
Other liabilities** 488 447 488 447 <BR>
Total liabilities 13 739 910 900 402 12 839 508<BR>
<BR>
Total equity and liabilities 14 716 865 1 877 357 12 839 508<BR>
<BR>
<BR>
Audited as at 28 February 2014<BR>
<BR>
Client-<BR>
Own related<BR>
Total balances balances<BR>
R000 R000 R000<BR>
<BR>
ASSETS<BR>
Equity securities 604 880 4 630 600 250<BR>
Debt securities 2 121 432 107 297 2 014 135<BR>
Unit-linked investments 10 218 629 346 833 9 871 796<BR>
Investment in investment contracts 505 444 505 444<BR>
Receivables including insurance receivables 2 129 358 162 451 1 966 907<BR>
Derivative financial instruments 21 190 21 190<BR>
Cash and cash equivalents (including money market <BR>
investments) 709 184 663 500 45 684<BR>
Other assets* 1 065 623 1 065 623 <BR>
Total assets 17 375 740 2 350 334 15 025 406<BR>
<BR>
EQUITY <BR>
Equity attributable to owners of the parent 1 088 541 1 088 541 <BR>
Non-controlling interest 86 222 86 222 <BR>
Total equity 1 174 763 1 174 763 <BR>
<BR>
LIABILITIES<BR>
Borrowings 412 188 110 618 301 570<BR>
Investment contracts 12 692 768 12 692 768<BR>
Third-party liabilities arising on consolidation of <BR>
mutual funds 372 169 372 169<BR>
Derivative financial instruments 28 406 28 406<BR>
Trade and other payables 2 129 914 499 421 1 630 493<BR>
Other liabilities** 565 532 565 532 <BR>
Total liabilities 16 200 977 1 175 571 15 025 406<BR>
<BR>
Total equity and liabilities 17 375 740 2 350 334 15 025 406<BR>
<BR>
<BR>
* Other assets consist of property and equipment, investment property, intangible assets, investment in associated <BR>
companies, investment in joint ventures, current and deferred income tax assets, loans and advances, reinsurance <BR>
assets and deferred acquisition costs.<BR>
<BR>
** Other liabilities consist of deferred reinsurance acquisition revenue, current and deferred income tax liabilities <BR>
and insurance contracts.<BR>
<BR>
<BR>
5.5 Income statement (core vs other)<BR>
<BR>
In order to evaluate the consolidated income statement of the group, the Manco segregates the income statement by <BR>
eliminating the impact of the linked investment policies issued and the consolidation of the collective investment <BR>
schemes from the core operations in the group. <BR>
<BR>
A subsidiary of the group, PSG Life Limited, is a linked insurance company and issues linked policies to policyholders <BR>
(where the value of policy benefits is directly linked to the fair value of the supporting assets), and as such does <BR>
not expose the business to the market risk of fair value adjustments on the financial asset as this risk is assumed by <BR>
the policyholder.<BR>
<BR>
The group consolidate collective investment schemes in terms of IFRS 10 Consolidated Financial Statements over which <BR>
the group has control. The consolidation of these funds do not impact total earnings, comprehensive income, shareholders' <BR>
funds or the net asset value of the group; however, it requires the group to recognise the income statement impact as <BR>
part of that of the group.<BR>
<BR>
<BR>
Unaudited Six months ended<BR>
31 August 2014<BR>
Linked<BR>
investment<BR>
Core business<BR>
Total business and other<BR>
R000 R000 R000 <BR>
<BR>
<BR>
Commission and other fee income 1 056 475 1 042 390 14 085<BR>
Investment income 198 911 57 444 141 467<BR>
Net fair value gains and losses on financial instruments 1 011 149 6 051 1 005 098<BR>
Fair value adjustment to investment contract liabilities (1 024 359) (1 024 359)<BR>
Other* 287 825 287 825 <BR>
Total income 1 530 001 1 393 710 136 291<BR>
<BR>
Insurance claims and loss adjustment expenses (285 165) (285 639) 474<BR>
Fair value adjustment to third-party liabilities (79 331) (79 331)<BR>
Other** (870 686) (870 686) <BR>
Total expenses (1 235 182) (1 156 325) (78 857)<BR>
<BR>
Total profit from associated companies and joint ventures 75 75 <BR>
<BR>
Profit before finance costs and taxation 294 894 237 460 57 434<BR>
Finance costs (62 459) (20 498) (41 961)<BR>
Profit before taxation 232 435 216 962 15 473<BR>
Taxation (75 448) (59 975) (15 473)<BR>
Profit for the period 156 987 156 987 <BR>
<BR>
Attributable to:<BR>
Owners of the parent 145 494 145 494 <BR>
Non-controlling interest 11 493 11 493 <BR>
156 987 156 987 <BR>
<BR>
<BR>
Unaudited Six months ended<BR>
31 August 2013<BR>
Linked<BR>
investment<BR>
Core business<BR>
Total business and other<BR>
R000 R000 R000 <BR>
<BR>
<BR>
Commission and other fee income 859 909 856 819 3 090<BR>
Investment income 175 127 32 297 142 830<BR>
Net fair value gains and losses on financial instruments 744 457 4 559 739 898<BR>
Fair value adjustment to investment contract liabilities (751 588) (751 588)<BR>
Other* 182 574 182 574 <BR>
Total income 1 210 479 1 076 249 134 230<BR>
<BR>
Insurance claims and loss adjustment expenses (170 143) (167 154) (2 989)<BR>
Fair value adjustment to third-party liabilities (44 523) (44 523)<BR>
Other** (742 401) (742 401) <BR>
Total expenses (957 067) (909 555) (47 512)<BR>
<BR>
Total profit from associated companies and joint ventures 2 941 2 941 <BR>
<BR>
Profit before finance costs and taxation 256 353 169 635 86 718<BR>
Finance costs (95 519) (14 955) (80 564)<BR>
Profit before taxation 160 834 154 680 6 154<BR>
Taxation (43 057) (36 903) (6 154)<BR>
Profit for the period 117 777 117 777 <BR>
<BR>
Attributable to:<BR>
Owners of the parent 111 441 111 441 <BR>
Non-controlling interest 6 336 6 336 <BR>
117 777 117 777 <BR>
<BR>
<BR>
Unaudited Year ended<BR>
28 February 2014<BR>
Linked<BR>
investment<BR>
Core business<BR>
Total business and other<BR>
R000 R000 R000 <BR>
<BR>
<BR>
Commission and other fee income 1 805 142 1 787 617 17 525<BR>
Investment income 380 034 116 484 263 550<BR>
Net fair value gains and losses on financial instruments 1 171 564 4 498 1 167 066<BR>
Fair value adjustment to investment contract liabilities (1 239 669) (1 239 669)<BR>
Other* 440 365 440 365 <BR>
Total income 2 557 436 2 348 964 208 472<BR>
<BR>
Insurance claims and loss adjustment expenses (440 401) (437 053) (3 348)<BR>
Fair value adjustment to third-party liabilities (79 387) (79 387)<BR>
Other** (1 521 391) (1 521 391) <BR>
Total expenses (2 041 179) (1 958 444) (82 735)<BR>
<BR>
Total profit from associated companies and joint ventures 6 151 6 151 <BR>
<BR>
Profit before finance costs and taxation 522 408 396 671 125 737<BR>
Finance costs (138 771) (35 728) (103 043)<BR>
Profit before taxation 383 637 360 943 22 694<BR>
Taxation (117 677) (94 983) (22 694)<BR>
Profit for the period 265 960 265 960 <BR>
<BR>
Attributable to:<BR>
Owners of the parent 249 258 249 258 <BR>
Non-controlling interest 16 702 16 702 <BR>
265 960 265 960 <BR>
<BR>
* Other consists of net insurance premium revenue and other operating income.<BR>
** Other consists of insurance claims and loss adjustment expenses recovered from reinsurers, commission paid, depreciation<BR>
and amortisation, employee benefit expenses, marketing, administration and other expenses.<BR>
<BR>
Investment contracts are represented by the following financial assets:<BR>
<BR>
Unaudited Unaudited Audited<BR>
31 Aug 14 31 Aug 13 28 Feb 14<BR>
R000 R000 R000<BR>
<BR>
Equity securities 824 112 516 614 600 249<BR>
Debt securities 940 242 1 441 325 1 676 726<BR>
Unit-linked investments 10 549 293 8 501 262 9 859 012<BR>
Investment in investment contracts 432 825 701 888 505 444<BR>
Cash and cash equivalents 14 682 149 005 51 337<BR>
12 761 154 11 310 094 12 692 768<BR>
<BR>
6. Receivables including insurance receivables and trade and other payables<BR>
<BR>
Included under receivables are broker and clearing accounts at our stockbroking business of which R1 629.1 million <BR>
(31 Aug 2013: R1 223.7 million; 28 Feb 2014: R1 925.9 million) represents amounts owing by the JSE for trades conducted <BR>
during the last few days before the end of the period. These balances fluctuate on a daily basis depending on the activity <BR>
in the market. <BR>
<BR>
The control account for the settlement of these transactions is included under the trade and other payables, with the <BR>
settlement to the clients taking place within three days after the transaction date.<BR>
<BR>
7. Transactions with non-controlling interest<BR>
For the six months ended 31 August 2014<BR>
<BR>
i) Acquisition of an additional interest in PSG Namibia Proprietary Limited<BR>
<BR>
With effect from 1 March 2014, PSG Konsult Limited (through its subsidiary PSG Distribution Holdings Proprietary Limited) <BR>
acquired an additional 3% interest in PSG Namibia Proprietary Limited, a company incorporated in Namibia, for a consideration <BR>
of R1.5 million. The 3% stake was bought from a minority shareholder and the consideration was paid in full on 28 February 2014. <BR>
The group now holds 54% of the issued share capital of PSG Namibia Proprietary Limited.<BR>
<BR>
For the year ended 28 February 2014<BR>
<BR>
i) Acquisition of an additional interest in Western Group Holdings Limited<BR>
<BR>
With effect from 1 March 2013, PSG Konsult Limited acquired an additional 15% interest in Western Group Holdings Limited <BR>
for a consideration of R33.0 million. This Namibia-based holding company has two short-term insurance licences, one in <BR>
Namibia and the other in South Africa. The 15% stake was bought from SAAD Financial Holdings Proprietary Limited, an <BR>
investment holding company. This transaction was subject to regulatory approval, which was obtained in May 2013. The group <BR>
now held 90% of the issued share capital of Western Group Holdings Limited.<BR>
<BR>
R000<BR>
Carrying amount of non-controlling interest acquired 14 428<BR>
Consideration paid to non-controlling interest (33 000)<BR>
Excess of consideration paid recognised in equity (18 572)<BR>
<BR>
<BR>
ii) Acquisition of the remaining interest in PSG Nylstroom Proprietary Limited<BR>
<BR>
Effective 1 August 2013, PSG Konsult Limited (through its subsidiary PSG Optimum Proprietary Limited) acquired the <BR>
remaining 49% interest in PSG Nylstroom Proprietary Limited, a company incorporated in South Africa, for a consideration <BR>
of R1.3 million. On 1 August 2013, 80% of the purchase consideration was paid and the remaining 20% (subject to a profit <BR>
guarantee) was paid on 1 August 2014.<BR>
<BR>
iii) Acquisition of a further interest in Western Group Holdings Limited<BR>
<BR>
Effective 1 September 2013, PSG Konsult Limited acquired the remaining 10% interest in Western Group Holdings Limited <BR>
for a consideration of R22.0 million. The 10% stake was bought from the management group of Western Group Holdings <BR>
Limited.<BR>
<BR>
The parties entered into an agreement on 3 June 2013 (following the approval by the FSB and Namfisa of the 15% <BR>
interest acquired at the end of May 2013) in which it was agreed that PSG Konsult Limited would like to increase <BR>
its stake in Western Group Holdings Limited from 90% to 100%, subject to approval by the FSB in South Africa and <BR>
Namfisa in Namibia. The transaction was approved by the regulatory authorities in the beginning of September 2013, <BR>
resulting in Western Group Holdings Limited being a wholly-owned subsidiary of PSG Konsult Limited.<BR>
<BR>
R000<BR>
Carrying amount of non-controlling interest acquired 11 292<BR>
Consideration paid to non-controlling interest (22 000)<BR>
Excess of consideration paid recognised in equity (10 708)<BR>
<BR>
iv) Disposal of interest held in Western Group Holding Limited <BR>
<BR>
PSG Konsult Limited entered into an agreement on 2 July 2013 to dispose of 40% held by it in Western Group Holdings <BR>
Limited (following the approval by the regulatory authorities of PSG Konsult Limited's acquisition of management's <BR>
remaining 10% interest) to Swanvest 120 Proprietary Limited ('Swanvest'), a wholly-owned subsidiary of Santam Limited, <BR>
for R88.0 million. The transaction was approved by the regulatory authorities on 19 September 2013. Following the <BR>
implementation of this transaction, PSG Konsult Limited holds 60% of the issued share capital of Western Group Holdings <BR>
Limited, with the remaining 40% being held by Swanvest.<BR>
<BR>
R000<BR>
Cash consideration received 88 000<BR>
Carrying amount of non-controlling interest disposed of (45 855)<BR>
Excess of consideration received recognised in equity 42 145<BR>
<BR>
<BR>
8. Acquisition of subsidiaries<BR>
For the year ended 28 February 2014<BR>
<BR>
i) Acquisition of collective investment scheme<BR>
<BR>
The group obtained control of the PSG Diversified Income Fund (previously PSG Optimal Income Fund) towards the end of <BR>
the 2014 financial year. As at 28 February 2014, the group held an interest of 34% in this fund and the fund was <BR>
consolidated in accordance with IFRS 10 Consolidated Financial Statements. The PSG Diversified Income Fund is a <BR>
collective investment scheme managed by PSG Asset Management.<BR>
<BR>
Details of the net assets acquired are as follows: R000<BR>
Debt securities 243 563<BR>
Unit-linked investments 26 590<BR>
Receivables including insurance receivables 15 771<BR>
Third-party liabilities arising on consolidation of mutual funds (187 652)<BR>
Trade and other payables (1 296)<BR>
Net asset value 96 976<BR>
Fair value of equity interest held before the business combination (96 976)<BR>
Total consideration paid <BR>
<BR>
9. Disposal of subsidiaries<BR>
For the year ended 28 February 2014<BR>
<BR>
i) Disposal of collective investment scheme<BR>
<BR>
The group deconsolidated the PSG Stable Fund during the year ended 28 February 2014 as the group lost control of this<BR>
fund due to a decrease in the direct interest in the fund.<BR>
<BR>
Net assets of subsidiary sold: R000<BR>
Equity securities 16 876<BR>
Debt securities 23 422<BR>
Unit-linked investments 5 439<BR>
Receivables including insurance receivables 558<BR>
Cash and cash equivalents 2 401<BR>
Third-party liabilities arising on consolidation of mutual funds (23 667)<BR>
Trade and other payables (106)<BR>
Net asset value 24 923<BR>
Transfer to unit-linked investments (24 923)<BR>
Total cash consideration received <BR>
Cash and cash equivalents given up (2 401)<BR>
Net cash flow on disposal (2 401)<BR>
<BR>
10. Other acquisitions and disposals<BR>
For the six months ended 31 August 2014<BR>
<BR>
i) Standardising of revenue sharing model<BR>
<BR>
Effective 1 March 2014, the group (through its subsidiary PSG Wealth Financial Planning Proprietary Limited) concluded <BR>
an asset-for-share transaction (utilising section 42 of the Income Tax Act) with a large number of its advisers. <BR>
The purpose of this transaction was to standardise the revenue sharing arrangements between the advisers and PSG Konsult. <BR>
This provided the opportunity for the advisers to become shareholders in the business and be part of our loyal<BR>
shareholder base of individuals.<BR>
<BR>
The consideration was paid with the issue of PSG Konsult shares (35.8 million shares at R4.50 per share) and the <BR>
remaining R12.5 million paid in cash on the effective date. The transaction did not qualify for accounting in terms <BR>
of IFRS 3R, Business Combinations as the assets acquired (the right to an increased share in the income stream of <BR>
the adviser) did not constitute a business acquired.<BR>
<BR>
This transaction contributed R3.9 million to our headline earnings during the period under review.<BR>
<BR>
For the year ended 28 February 2014<BR>
<BR>
i) Disposal of associated companies<BR>
<BR>
The group disposed of various non-core investments in associated companies during the six months ended 31 August 2013. <BR>
The group disposed of its interest in Axon Xchange Proprietary Limited, Purple Line Plastics Proprietary Limited, <BR>
JWR Holdings Proprietary Limited and Excluwin Traders Proprietary Limited for a total consideration of R11.1 million, <BR>
resulting in total to non-headline profits (net of tax and non-controlling interest) of R3.4 million. <BR>
<BR>
11. Financial risk management<BR>
<BR>
The group's activities expose it to a variety of financial risks: market risk (including price risk, foreign currency <BR>
risk, cash flow risk and fair value interest rate risk), credit risk and liquidity risk. Insurance activities expose <BR>
the group to insurance risk (including pricing risk, reserving risk, underwriting risk and reinsurance risk). The group <BR>
is also exposed to operational risk and legal risk.<BR>
<BR>
The capital risk management philosophy is to maximise the return on shareholders' capital within an appropriate risk <BR>
framework.<BR>
<BR>
The condensed consolidated interim financial statements do not include all risk management information and disclosure <BR>
required in the annual financial statements and should be read in conjunction with the group's annual financial <BR>
statements as at 28 February 2014.<BR>
<BR>
The group's financial risk management objectives and policies are consistent with those disclosed in the consolidated <BR>
annual financial statements as at and for the year ended 28 February 2014.<BR>
<BR>
Market risk (price risk, foreign currency risk and interest rate risks)<BR>
Market risk is the risk of adverse financial impact due to changes in fair values or future cash flows of financial <BR>
instruments from fluctuations in interest rates, equity prices and foreign currency exchange rates.<BR>
<BR>
A portion of the policyholders' and shareholders' investments are valued at fair value and are therefore susceptible <BR>
to market fluctuations.<BR>
<BR>
With regard to the subsidiary, PSG Life Limited, this company only invests assets into portfolios that are exposed to <BR>
market price risk that matches linked policies to policyholders (where the value of policy benefits is directly linked <BR>
to the fair value of the supporting assets), and as such does not expose the business to the market risk of fair value <BR>
adjustments on the financial asset as this risk is assumed by the policyholder. Fees charged on this business are <BR>
determined as a percentage of the fair value of the underlying assets held in the linked funds, which are subject to <BR>
equity and interest rate risk. As a result, the management fees fluctuate, but cannot be less than nil.<BR>
<BR>
Included in the equity securities of R827.6 million (31 Aug 2013: R520.2 million; 28 Feb 2014: R604.9 million) are quoted <BR>
equity securities of R826.8 million (31 Aug 2013: R519.4 million; 28 Feb 2014: R604.0 million), of which R824.1 million <BR>
(31 Aug 2013: R516.6 million; 28 Feb 2014: R600.3 million) relates to investments in linked investment contracts. The price <BR>
risk of these instruments is carried by the policyholders of the linked investment contracts.<BR>
<BR>
Debt securities linked to policyholder investments amounted to R940.2 million (31 Aug 2013: R1 441.3 million; 28 Feb 2014: <BR>
R1 676.7 million) and do not expose the group to interest rate risk; cash and cash equivalents linked to policyholder <BR>
investments amounted to R14.7 million (31 Aug 2013: R149.0 million; 28 Feb 2014: R51.3 million) and do not expose the group <BR>
to interest rate risk.<BR>
<BR>
Fair value estimation<BR>
The information below analyses financial instruments, carried at fair value, by level of hierarchy as required by IFRS 13. <BR>
The different levels have been defined as follows:<BR>
<BR>
Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).<BR>
<BR>
Input other than quoted prices included within level 1 that is observable for the asset or liability, either <BR>
directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).<BR>
<BR>
Input for the asset or liability that is not based on observable market data (that is, unobservable input) <BR>
(level 3).<BR>
<BR>
There have been no significant transfers between level 1, 2 or 3 during the period under review.<BR>
<BR>
The table below analyses financial assets and liabilities, which are carried at fair value, by valuation method. There <BR>
were no significant changes in the valuation techniques and assumptions applied since 28 February 2014.<BR>
<BR>
Valuation techniques and main assumptions used in determining the fair value of financial assets and liabilities <BR>
classified within level 2 can be summarised as follows:<BR>
<BR>
Instrument Valuation techniques Main assumptions<BR>
<BR>
Derivative financial instruments Exit price on recognised over- Not applicable<BR>
the-counter (OTC) platforms<BR>
<BR>
Debt securities Valuation model that uses the Bond interest rate curves<BR>
market input (yield of Issuer credit ratings<BR>
benchmark bonds) Liquidity spreads<BR>
<BR>
Unit-linked investments Quoted put (exit) price Not applicable prices are<BR>
provided by the fund manager publicly available<BR>
<BR>
Investment in investment Prices are obtained from the Not applicable prices provided<BR>
contracts insurer of the particular by registered long-term insurers<BR>
investment contract<BR>
<BR>
Policyholder investment contract Current unit price of Not applicable<BR>
liabilities unit linked underlying unitised financial<BR>
asset that is linked to the<BR>
liability, multiplied by the<BR>
number of units held<BR>
<BR>
Third-party financial Quoted put (exit) price Not applicable prices are<BR>
liabilities arising on the provided by the fund manager publicly available<BR>
consolidation of mutual funds<BR>
<BR>
<BR>
<BR>
The fair value of financial assets and liabilities measured at fair value in the statement of financial position can <BR>
be summarised as follows:<BR>
<BR>
<BR>
Unaudited Level 1 Level 2 Level 3 Total<BR>
Financial assets R000 R000 R000 R000<BR>
<BR>
At 31 August 2014<BR>
Financial assets at fair value through profit or loss<BR>
Derivative financial assets 19 075 19 075<BR>
Equity securities 826 772 826 772<BR>
Debt securities 27 178 826 546 853 724<BR>
Unit-linked investments 9 701 389 1 344 487 11 045 876<BR>
Investment in investment contracts 227 278 227 278<BR>
Available-for-sale<BR>
Equity securities 845 845<BR>
853 950 10 774 288 1 345 332 12 973 570<BR>
<BR>
Financial liabilities<BR>
<BR>
At 31 August 2014 <BR>
Financial liabilities at fair value through profit or loss<BR>
Derivative financial liabilities 33 846 33 846<BR>
Investment contracts 10 413 034 1 344 487 11 757 521<BR>
Trade and other payables 13 659 13 659<BR>
Third-party liabilities arising on consolidation of<BR>
mutual funds 625 462 625 462<BR>
11 072 342 1 358 146 12 430 488<BR>
<BR>
<BR>
Unaudited Level 1 Level 2 Level 3 Total<BR>
Financial assets R000 R000 R000 R000<BR>
<BR>
At 31 August 2013<BR>
Financial assets at fair value through profit or loss<BR>
Derivative financial assets 19 880 19 880<BR>
Equity securities 519 370 519 370<BR>
Debt securities 31 153 718 532 226 472 976 157<BR>
Unit-linked investments 6 385 337 2 465 179 8 850 516<BR>
Investment in investment contracts 300 201 300 201<BR>
Available-for-sale<BR>
Equity securities 845 845<BR>
550 523 7 423 950 2 692 496 10 666 969<BR>
<BR>
Financial liabilities<BR>
<BR>
At 31 August 2013<BR>
Financial liabilities at fair value through profit or loss<BR>
Derivative financial liabilities 20 440 20 440<BR>
Investment contracts 7 306 932 2 688 053 9 994 985<BR>
Trade and other payables 4 929 4 929<BR>
Third-party liabilities arising on consolidation of<BR>
mutual funds 174 606 174 606<BR>
7 501 978 2 692 982 10 194 960<BR>
<BR>
<BR>
<BR>
Audited Level 1 Level 2 Level 3 Total<BR>
Financial assets R000 R000 R000 R000<BR>
<BR>
At 28 February 2014<BR>
Financial assets at fair value through profit or loss<BR>
Derivative financial assets 21 190 21 190<BR>
Equity securities 604 035 604 035<BR>
Debt securities 35 897 960 015 237 347 1 233 259<BR>
Unit-linked investments 7 968 164 2 250 465 10 218 629 <BR>
Investment in investment contracts 260 397 260 397<BR>
Available-for-sale <BR>
Equity securities 845 845<BR>
639 932 9 209 766 2 488 657 12 338 355<BR>
<BR>
Financial liabilities<BR>
<BR>
At 28 February 2014<BR>
Financial liabilities at fair value through profit or loss<BR>
Derivative financial liabilities 28 406 28 406<BR>
Investment contracts 9 056 872 2 487 811 11 544 683<BR>
Trade and other payables 10 640 10 640<BR>
Third-party liabilities arising on consolidation of <BR>
mutual funds 372 169 372 169<BR>
9 457 447 2 498 451 11 955 898<BR>
<BR>
The following table presents the changes in level 3 financial instruments during the reporting periods under review:<BR>
<BR>
Unaudited Unaudited Audited<BR>
31 Aug 14 31 Aug 13 28 Feb 14<BR>
Assets R000 R000 R000<BR>
<BR>
Opening carrying value 2 488 657 2 270 795 2 270 795<BR>
Additions 3 106 266 259 898 1 556 279<BR>
Disposals (4 386 990) (209 595) (1 503 664)<BR>
Gains recognised in profit and loss 137 399 371 398 165 258<BR>
Other movements not through profit or loss (11)<BR>
1 345 332 2 692 496 2 488 657<BR>
Liabilities<BR>
<BR>
Opening carrying value 2 498 451 2 272 810 2 272 810<BR>
Additions 3 113 635 264 264 1 562 938<BR>
Disposals (4 391 450) (215 061) (1 504 071)<BR>
Losses recognised in profit and loss 137 399 371 316 166 774<BR>
Interest and other 111 (347) <BR>
1 358 146 2 692 982 2 498 451<BR>
<BR>
<BR>
Level 3 significant fair value model assumptions and sensitivities<BR>
<BR>
Financial assets and liabilities<BR>
Unit-linked investments and debt securities represent the largest portion of the level 3 financial assets and relate <BR>
to units and debentures held in hedge funds and are priced monthly. The prices are obtained from the asset managers of <BR>
the particular hedge funds. These are held to match investment contract liabilities, and as such any change in <BR>
measurement would result in a similar adjustment to investment contract liabilities. The group's overall profit or loss<BR>
is therefore not materially sensitive to the input of the models applied to derive fair value.<BR>
<BR>
Trade and other payables classified within level 3 have significant unobservable input, as the valuation technique used<BR>
to determine the fair values takes into account the probability (at each reporting period) that the contracted party <BR>
will achieve the profit guarantee as stipulated in the business agreement.<BR>
<BR>
The table below summarises the carrying amounts and fair values of financial instruments not presented on the statement<BR>
of financial position at fair value, for which their carrying values do not approximate their fair values:<BR>
<BR>
Unaudited Unaudited Audited<BR>
31 Aug 14 31 Aug 13 28 Feb 14<BR>
R000 R000 R000<BR>
Debt securities held-to-maturity <BR>
Carrying value 788 473 764 417 888 173<BR>
Fair value 800 585 764 688 889 020<BR>
<BR>
Investment in investment contracts<BR>
Carrying value 205 547 401 687 245 047<BR>
Fair value 214 216 434 282 255 382<BR>
<BR>
Total<BR>
Carrying value 994 020 1 166 104 1 133 220<BR>
Fair value 1 014 801 1 198 970 1 144 402<BR>
<BR>
The fair value of the financial assets in the table above, is categorised in terms of level 2.<BR>
<BR>
12. Related-party transactions<BR>
<BR>
Related-party transactions similar to those disclosed in the group's annual financial statements for the year ended <BR>
28 February 2014 took place during the period under review.<BR>
<BR>
13. Capital commitments and contingencies<BR>
<BR>
<BR>
Unaudited Unaudited Audited<BR>
31 Aug 14 31 Aug 13 28 Feb 14<BR>
R000 R000 R000<BR>
<BR>
Operating lease commitments 74 736 81 335 77 926<BR>
<BR>
<BR>
14.Events after the reporting date<BR>
<BR>
No event, which is material to the financial affairs of the group, has occurred between the end of the reporting <BR>
period and the date of approval of the condensed consolidated interim financial statements.<BR>
<BR>
15. Change in accounting policy and restatements<BR>
<BR>
The following changes in accounting policies and restatements were applied to the 31 August 2013 results (to <BR>
reflect the changes in accounting policies and restatements applied to the financial results for the year ended <BR>
28 February 2014):<BR>
<BR>
IFRS 10 Consolidated Financial Statements (IFRS 10)<BR>
<BR>
IFRS 10 builds on existing principles by identifying the concept of control as the determining factor in whether <BR>
an entity should be included within the consolidated financial statements of the parent company. Under IFRS 10, <BR>
subsidiaries are all entities (including structured entities) over which the group has control.<BR>
<BR>
Previously the group consolidated collective investment schemes where the group's holding in a fund was greater than <BR>
50%. As a result of the adoption of IFRS 10, the group no longer uses the percentage holdings referred to above as the <BR>
defining parameter of control.<BR>
<BR>
The changes resulting from the above have been applied retrospectively as required by the transitional provisions of <BR>
IFRS 10. These reclassifications of mutual funds have resulted in a number of changes to items presented in both the <BR>
income statement and the statement of financial position for the six months ended 31 August 2013. However, there were no <BR>
resultant changes to the group's total earnings, comprehensive income, shareholders' funds or net asset value.<BR>
<BR>
The group held an interest of 48% in the PSG Multi-Management Foreign Flexible Fund of Funds on 1 March 2013. The <BR>
comparative figures at 31 August 2013 were restated to reflect the consolidation of this fund. This fund was also <BR>
consolidated for the six months ended 31 August 2014.<BR>
<BR>
Reclassification: Unexpired risk provision<BR>
<BR>
The group previously disclosed the unexpired risk provision (URP), which forms part of the short-term insurance <BR>
contract liabilities, as part of the provision for claims reported and loss adjustment expenses. The group decided, <BR>
to enhance the comparability with other short-term insurance companies in Southern Africa, to reflect the URP as <BR>
part of the unearned premium provision (UPP). This reclassification, which was done retrospectively, was done within <BR>
the underlying breakdown of the insurance contracts liability and therefore had no impact on the statement of financial <BR>
position. The reclassification had no impact on the 2013 interim reported earnings, diluted earnings or headline <BR>
earnings, nor the statement of financial position, statement of changes in equity and the net cash flow for these periods.<BR>
<BR>
Reclassifi-<BR>
cation<BR>
As Unexpired<BR>
previously Restatement risk<BR>
stated IFRS 10 provision Restated<BR>
R000 R000 R000 R000<BR>
31 August 2013<BR>
Consolidated statement of financial position<BR>
Unit-linked investments 8 719 605 130 911 8 850 516<BR>
Cash and cash equivalents (including money market<BR>
investments) 428 126 2 833 430 959<BR>
Third-party liabilities arising on consolidation<BR>
of mutual fund (41 150) (133 456) (174 606)<BR>
Trade and other payables (1 343 813) (288) (1 344 101)<BR>
<BR>
Consolidated income statement<BR>
Net fair value gains and losses on financial<BR>
instruments 700 862 43 595 744 457<BR>
Fair value adjustment to third-party liabilities (928) (43 595) (44 523)<BR>
<BR>
Change in unearned premium<BR>
Gross 2 045 (22 824) (20 779)<BR>
Insurance claims and loss adjustment expenses (192 967) 22 824 (170 143)<BR>
<BR>
Consolidated statement of cash flows<BR>
Cash flows from operating activities<BR>
Cash generated by operating activities 93 874 220 94 094<BR>
<BR>
Net decrease in cash and cash equivalents (39 882) 220 (39 662)<BR>
Cash and cash equivalents at beginning of year 468 008 2 613 470 621<BR>
Cash and cash equivalents at end of year 428 126 2 833 430 959<BR>
<BR>
<BR>
DIRECTORATE<BR>
<BR>
Non-executive directors<BR>
W Theron (Chairman), JF Mouton, PJ Mouton, J de V du Toit^, PE Burton*, ZL Combi*<BR>
(* Independent; ^ Lead independent)<BR>
<BR>
Executive directors<BR>
FJ Gouws (Chief executive officer), MIF Smith (Chief financial officer)<BR>
<BR>
COMPANY INFORMATION<BR>
<BR>
Company secretary<BR>
PSG Management Services Proprietary Limited<BR>
<BR>
PSG Konsult head office and registered office<BR>
Building A, Pro Sano Park South Gate, Carl Cronje Drive, Tyger Waterfront, Tyger Valley, Bellville, 7530<BR>
PO Box 3335, Tyger Valley, Bellville, 7536<BR>
<BR>
Listing<BR>
Johannesburg Stock Exchange (JSE)<BR>
Namibian Stock Exchange (NSX)<BR>
<BR>
Transfer secretary<BR>
Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg, 2001<BR>
PO Box 61051, Marshalltown, 2107<BR>
<BR>
Sponsors<BR>
JSE sponsor: PSG Capital Proprietary Limited<BR>
NSX sponsor: PSG Wealth Management (Namibia) Proprietary Limited, member of the Namibian Stock Exchange<BR>
<BR>
Auditor<BR>
PricewaterhouseCoopers Inc.<BR>
Cape Town<BR>
<BR>
Website: www.psg.co.za<BR>
<BR>
<BR>
Date: 08/10/2014 01:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). <BR>
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of<BR>
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, <BR>
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