PSG KONSULT LIMITED - Unaudited Results For The Six Months Ended 31 August 2018

2018-10-11 10:56:00

KST 201810110022A
Unaudited Results For The Six Months Ended 31 August 2018

PSG Konsult Limited
(Incorporated in the Republic of South Africa)
Registration number: 1993/003941/06
JSE share code: KST
NSX share code: KFS
ISIN code: ZAE000191417
('PSG Konsult' or 'the company' or 'the group')

UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2018

SALIENT FEATURES

Recurring headline earnings per share up 18% to 21.5 cents
Gross written premium (1) up 25% to R2 012m
Number of advisers up 14% to 862
Total assets under management up 19% to R230bn
Dividend per share up 23% to 7.0 cents
Total assets under administration (2) up 7% to R426bn

(1)  Includes gross written premiums on policies administered by the Insure distribution advisers, which are placed with third-party insurers. 
     The group earns commission and administration fees on this. It excludes the short-term administration platform gross written premium.
(2)  Includes assets administered by PSG Asset Management of R119bn.

COMMENTARY

Overview

PSG Konsult delivered a commendable 18% growth in recurring headline earnings per share and a return on equity of 22%. 

The continued upward trajectory of our key operating and financial metrics demonstrates the resilience of our business model and ability to 
gain market share, even in periods during which we experience economic headwinds. Total assets under management increased to R230 billion, 
comprising assets managed by PSG Wealth of R182 billion and PSG Asset Management of R48 billion, while PSG Insure's gross written premium 
increased by 25% to R2 billion. Performance fees earned constituted 4.6% of headline earnings in comparison to 4.4% in the comparative period.

PSG Wealth

PSG Wealth achieved recurring headline earnings growth of 7%. We are satisfied with this result in the context of the prevailing investment 
market conditions. Management and other fees increased by 10% as the business continues to focus on recurring income and reduce its reliance 
on cyclical transactional brokerage fees, which decreased by 15% during the period under review due to lower transactional volumes. We continue
to enhance our information technology (IT) systems and develop both the adviser and client online platforms, and all related costs continue to
be fully expensed. Clients' assets managed by our Wealth advisers increased by 12% to R182.1 billion during the period under review, which 
included R7.0 billion of positive net inflows.

We remain confident about the fundamentals and prospects of this division. We believe that our advisers and clients will gain, over the long 
term, from our client-centric digital projects. We are particularly proud of the division's formidable financial adviser network, which 
consists of 546 advisers as at 31 August 2018. The experience and stature of the advisers that joined the firm during the period under review
continue to add credibility to our growing brand equity. We remain focused on increasing client engagement and growing our market share.

PSG Asset Management

PSG Asset Management’s recurring headline earnings grew by 53%. The strong results achieved by this division is testimony to the team’s 
excellent long-term track record of delivering top-quartile risk-adjusted investment returns for our clients. The team’s ability to consistently
generate alpha for clients across all asset classes over the appropriate investment horizon remained intact during difficult market conditions.
Client assets under management increased by 13% to R48.1 billion during the six-month period. This included R4.1 billion of positive net client
inflows, predominately into our higher-margin funds, with the bulk coming from our retail-orientated target market. We continue to add 
high-quality annuity earnings from our growing retail client base.

PSG Insure

PSG Insure achieved recurring headline earnings growth of 11%. The group is pleased with this achievement, which has been driven by improved 
underwriting results. This division is in an early growth phase and continues to make inroads into the highly competitive short-term insurance 
market through organic growth and select acquisitions. It achieved gross written premium growth of 25% as we continue to focus our efforts on 
growing the commercial lines side of the business, which requires specialist adviser expertise. No significant catastrophe or other related 
events occurred during this period. When combined with our quality underwriting practices, this allowed us to achieve an improved net underwriting 
margin of 10.5% compared to the 7.4% we achieved in the prior period. The insurance advisers increased by 29% to 316 during the six-month 
period, following the acquisition of the commercial and industrial insurance brokerage business of Absa Insurance and Financial Advisers (AIFA)
and continue to increase our market share on the commercial lines side.

PSG Konsult's key financial performance indicators for the six months ended 31 August 2018 are shown below:

                                                                                                           31 Aug 18       Change    31 Aug 17
                                                                                                                R000            %         R000

Core income                                                                                                2 277 976           10    2 062 016

Headline and recurring headline earnings                                                                     283 146           18      239 275
Non-headline items                                                                                            (1 297)                       91
Earnings attributable to ordinary shareholders                                                               281 849           18      239 366

Divisional recurring headline earnings
PSG Wealth                                                                                                   159 787            7      149 923
PSG Asset Management                                                                                          87 212           53       56 829
PSG Insure                                                                                                    36 147           11       32 523
                                                                                                             283 146           18      239 275

Weighted average number of shares in issue (net of treasury shares) (millions)                               1 318.0            -      1 314.5

Earnings per share (basic) (cents)
- Headline and recurring headline                                                                               21.5           18         18.2
- Attributable                                                                                                  21.4           17         18.2
- Headline (excluding intangible amortisation cost)                                                             23.3           17         19.9

Dividend per share (cents)                                                                                       7.0           23          5.7

Return on equity (ROE) (%)                                                                                      21.9                      21.4

Strategy

PSG Wealth's overall strategy offers an innovative and holistic end-to-end client proposition. We continue to invest in people (including the 
recruitment of experienced specialists) and in technology with the aim of enhancing user functionality to improve our client experience and 
product offering. Advisers play a key role in providing us with client feedback in order to enhance our platform and product capabilities.
Management is proud of the experience and stature of the advisers in the business. PSG Wealth continues to invest in enhancing the strength and
depth of our technology capabilities and in-house investment research team. This fully-fledged team has both fund and security investment 
research analysis capabilities. The focus continues to be on digital marketing and initiatives to best determine client needs in this regard. 
Our Wealth business is therefore well placed to meet all the investment needs of our clients. We nevertheless consistently strive to improve 
both our client and service offerings.

PSG Asset Management's strategy consists of three parts, namely investment excellence, operational efficiency, and effective sales and 
marketing initiatives. Generating the best long-term, risk-adjusted returns for investors is the division's primary focus. To this end, the 
division will continue to prioritise the investment team's performance while managing operational risks and processes. Increasing brand 
awareness, particularly in the retail investor market, continues to be a key focus area for the marketing team, which allows the division to
benefit from a growing investor base.

PSG Insure provides simple and cost-effective short-term insurance solutions to clients, protecting them from unforeseen events. Building 
critical expertise across underwriting, administration and adviser teams underpins the focus on providing value-added products that meet and 
exceed clients' expectations. The division continues to invest in its claims and administration departments. This is to build scale and unlock
operational efficiencies while freeing up valuable time for our top-calibre advisers to focus on client relationships, especially on the 
commercial lines side of the business. The entrepreneurial best-of-breed partnership model in place with our advisers allows our advisers to 
operate their own businesses independently under the PSG brand and benefit from the central services provided. Key central services include 
compliance, finance, human resources (HR), IT, marketing and risk management.

Building a cost-efficient and scalable business is a key priority for the board. As such, management pays careful attention to the group's cost 
structure as each division expands. The management team is committed to continuously invest in technology as a key enabler to achieve 
efficiency, automation and, ultimately, our growth objectives.

Corporate activity

During the period under review, the company entered into negotiations regarding a potential acquisition. If it had been successfully concluded,
based on the indicative transaction value, it would have qualified as a Category 2 transaction under the JSE Listings Requirements. 
Shareholders were advised, on 7 September 2018, that following a detailed due diligence investigation of this opportunity and lengthy 
negotiations, the parties were not able to agree on terms which would, in the view of the board, be in the long-term best interests of 
PSG Konsult's various stakeholders.

PSG Konsult's focus remains on organic growth, although it will consider acquisitions that meet its investment criteria, which require, inter
alia, acceptable pricing, a compelling strategic rationale, clearly definable synergies and ease of integration. 

In line with our organic growth strategy, we concluded a few smaller earnings-accretive adviser acquisition transactions. The transactions were
funded from existing cash resources and are aligned with our aim of identifying opportunities that will either expand our adviser footprint or
enhance our overall client service offering. The transactions were seamlessly integrated into PSG Konsult's existing business operations and 
management believes these will contribute positively to the long-term organic growth of the firm.

PSG Insure

The acquisition of AIFA's commercial and industrial insurance brokerage business was completed effective 1 June 2018. The acquired business is 
made up of 82 advisers and in excess of 31 000 clients, which was integrated into the group's distribution network of PSG Insure advisers. This 
transaction enhances PSG Insure's footprint across South Africa and is already contributing to the group's profitability. All costs incurred in
setting up the required office infrastructure to implement this transaction have been fully expensed. 

The effective date of the acquisition of the remainder of the personal lines short-term insurance face-to-face advisory insurance brokerage 
business from AIFA is still expected to be concluded during the latter part of the 2019 financial year.

The Western Group's short- and long-term insurance licences in Botswana were approved during July 2018. The business is expected to become 
profitable in the medium term.

Capital management

PSG Konsult is strongly capitalised and complies with the more stringent capital requirements of Solvency Assessment and Management (SAM), which 
became effective 1 July 2018. On 23 July 2018, our strong financial position was again affirmed in the long- and short-term investment grade 
national scale ratings assigned to PSG Konsult by rating agency Global Credit Rating Co. (GCR) of A-(ZA) and A1-(ZA) respectively, with a stable 
outlook. Other than the R100 million notes currently issued under the Domestic Medium Term Note (DMTN) programme, the group has no material 
interest-bearing debt and always maintains solid capital buffers. Our strong cash flow and low debt position allow us to use several levers to
optimise risk-adjusted returns for our shareholders.

Shareholders

The company's demonstrable track record on executing and delivering on our strategic goals has enabled us to further expand our institutional 
shareholder base.

People

PSG Konsult had 239 offices and 2 734 employees as at 31 August 2018, which included 862 wealth and insure advisers. In addition, we also have
418 professional associates (accountants and attorneys). During the six month period under review, the number of PSG advisers increased by 78 
through a combination of organic growth and selected acquisitions, including the AIFA acquisition by PSG Insure. We believe strongly in building
our own future talent and are confident that the investment in our people will allow us to continue to prosper.

Regulatory landscape and risk managment

PSG Konsult, which has 24 regulatory licences (15 in South Africa and 9 in foreign jurisdictions), continues to foster good relationships with
the regulators in the markets in which it operates.

Awards and industry accolades

The group is proud of the following milestones, achievements and industry awards:

PSG Wealth

- Ranked third overall in the 2018 Intellidex Wealth Manager of the Year competition. The division was further awarded first place in the 
  successful entrepreneur archetype, and second place in the international wealthy family archetype.
- Ranked among the top five asset managers in the Morningstar South African Ratings Analysis and was the top-ranked multi-manager in the 
  June 2018 quarterly survey.

PSG Asset Management

- Runner-up in the 2018 Raging Bull awards for South African Management Company of the Year.
- Top two manager in the Plexcrown Survey and among the top five in the Morningstar South African Ratings Analysis.

PSG Insure

- National Broker of the Year for Agricultural Business and Agricultural Award for Performance Excellence (Asset and Crop Combined) at the 
  2018 Santam National Broker Awards.

Marketing

Marketing initiatives are important to the group's goal of becoming a leader in the financial services industry.

During the period under review, the specialist marketing team embarked on its strategy of cost-efficient brand building through online 
advertising and search campaigns. This was supported by increased activity on select social media platforms. The combined result has meant an
increase in lead generation, traffic to the website and our social media following.

Enhancing the quality of our media presence through public relations remains a constant focus. Through times of political and economic 
uncertainty we have also continued to focus our efforts on client interaction through tailored events.

PSG has steadily increased both the quality and quantity of communications from world-class industry research for the savvy client to 
investor education for young savers. Clients can now choose which communications they wish to receive through the introduction of a 
subscription management tool.

Information technology

As a group we are dedicated to providing outstanding outcomes for our clients. By focusing on simple-to-use, stable, client-centric solutions 
we are committed to delivering a great digital experience.

We continue to explore new and better ways to improve all our services based on objective data and feedback to make it easy for clients to 
access products in a way that best suits them.

Looking forward

We continue to monitor all actions that stem from the current corporate, political and economic climate, and the associated impact on our 
clients and other stakeholders.

The group's aim remains to service existing clients in an integrated manner that is seamless and market leading, as well as to gain new 
clients. Several initiatives are in place to ensure this continues. The group's focus on products, platforms and client service excellence,
through the quality of its advice process, works. As such, the prospects for continued growth remain compelling.

The cash-generative nature of the business gives PSG Konsult several options for funding business growth initiatives. These are ultimately 
aimed at enhancing our overall client experience.

The group will continue to prioritise organic growth in our current selected markets where we have relatively low, but rapidly expanding, 
market shares. The group's capital position adequately considers our current growth plans.

Events after reporting date

No event material to the understanding of these results has occurred between 31 August 2018 and the date of approval of the condensed 
consolidated interim financial statements.

Dividend

Given our continued confidence in business prospects, the board decided to approve and declare an interim gross dividend of 7.0 cents per 
share from income reserves for the six months ended 31 August 2018 (2017: 5.7 cents per share), which represents a 23% increase from the 
previous interim period. The group's dividend payout ratio remains at the low end of the dividend payout policy range announced at the time of
listing.

The dividend is subject to a South African dividend withholding tax (DWT) rate of 20%, unless the shareholder is exempt from paying dividends 
tax or is entitled to a reduced rate in terms of the applicable double-tax agreement. Including DWT results in a net dividend of 5.6 cents per 
share. The number of issued ordinary shares is 1 342 242 208 at the date of this declaration. PSG Konsult's income tax reference number is 
9550/644/07/5.

The following are the salient dates in relation to the dividend:

Last day to trade (cum dividend)                                                                                      Tuesday, 30 October 2018
Trading ex dividend commences                                                                                       Wednesday, 31 October 2018
Record date                                                                                                            Friday, 2 November 2018
Date of payment                                                                                                        Monday, 5 November 2018

Share certificates may not be dematerialised or rematerialised between Wednesday, 31 October 2018, and Friday, 2 November 2018, both days included.

The board would like to extend its gratitude to stakeholders, including shareholders, advisers, clients, business partners, management and 
employees, for their efforts and contributions during the past six months. 

On behalf of the board

Willem Theron                   Francois Gouws
Chairman                        Chief executive officer

Tyger Valley
11 October 2018


FINANCIAL RESULTS

Condensed consolidated statement of financial position
as at 31 August and 28 February 2018

                                                                                                           Unaudited    Unaudited      Audited
                                                                                                               as at        as at        as at
                                                                                                           31 Aug 18    31 Aug 17    28 Feb 18
                                                                                                   Notes        R000         R000         R000

ASSETS
Intangible assets                                                                                          1 125 274    1 006 595    1 027 805
Property and equipment                                                                                        71 552       48 620       74 286
Investment in joint ventures                                                                                   1 238        1 133        1 094
Deferred income tax assets                                                                                    86 305       80 435      102 091
Equity securities                                                                                          2 520 607    2 104 693    2 321 482
Debt securities                                                                                            2 878 932    3 943 613    2 582 815
Unit-linked investments                                                                                   48 718 417   40 849 291   42 196 090
Investment in investment contracts                                                                            17 414       16 323       14 798
Loans and advances                                                                                           111 404      125 099      134 202
Derivative financial instruments                                                                              17 105       13 005        8 854
Reinsurance assets                                                                                            70 241       80 283       80 544
Deferred acquisition costs                                                                                     5 671        4 393        4 820
Receivables including insurance receivables                                                                1 807 997    1 700 815    1 904 775
Current income tax assets                                                                                     21 602       19 621       39 089
Cash and cash equivalents (including money market funds)                                                   1 769 571    1 455 880    1 920 626
Assets held for sale                                                                                   8      16 980            -            -
Total assets                                                                                              59 240 310   51 449 799   52 413 371

EQUITY
Equity attributable to owners of the parent
Stated capital                                                                                             1 908 804    1 903 517    1 908 804
Treasury shares                                                                                             (177 196)    (176 612)    (192 247)
Other reserves                                                                                              (361 177)    (383 160)    (386 722)
Retained earnings                                                                                          1 294 829      968 177    1 175 226
                                                                                                           2 665 260    2 311 922    2 505 061
Non-controlling interest                                                                                     256 272      212 875      235 654
Total equity                                                                                               2 921 532    2 524 797    2 740 715

LIABILITIES
Insurance contracts                                                                                          489 480      524 572      542 709
Deferred income tax liabilities                                                                               30 153       21 196       18 894
Borrowings                                                                                                   102 960      109 101      103 695
Derivative financial instruments                                                                              20 056       14 854       16 857
Investment contracts                                                                                   6  26 219 315   24 767 685   24 278 949
Third-party liabilities arising on consolidation of mutual funds                                          27 311 201   21 603 419   22 585 256
Deferred reinsurance acquisition revenue                                                                       4 993        3 663        3 681
Trade and other payables                                                                                   2 123 249    1 873 675    2 116 527
Current income tax liabilities                                                                                10 466        6 837        6 088
Liabilities held for sale                                                                              8       6 905            -            -
Total liabilities                                                                                         56 318 778   48 925 002   49 672 656

Total equity and liabilities                                                                              59 240 310   51 449 799   52 413 371

Net asset value per share (cents)                                                                              202.0        175.3        190.1


Condensed consolidated income statement
for the six months ended 31 August and the year ended 28 February 2018

                                                                                                           Unaudited    Unaudited      
                                                                                                          Six months   Six months      Audited
                                                                                                               ended        ended   Year ended  
                                                                                                           31 Aug 18    31 Aug 17    28 Feb 18       
                                                                                                                R000         R000         R000

Gross written premium                                                                                        604 427      596 679    1 181 333
Less: Reinsurance written premium                                                                           (163 945)    (146 555)    (296 740)
Net written premium                                                                                          440 482      450 124      884 593
Change in unearned premium
- Gross                                                                                                       32 156       23 324       28 477
- Reinsurers' share                                                                                            2 696       (2 617)      (4 033)
Net insurance premium revenue                                                                                475 334      470 831      909 037
Commission and other fee income                                                                            1 577 267    1 398 828    2 880 635
Interest income on amortised cost financial instruments                                                       92 975       81 760      197 328
Interest income on fair value through profit or loss financial instruments                                   598 219      507 049    1 006 048
Dividend income                                                                                              107 451      174 653      423 476
Net fair value gains and losses on financial instruments                                                   3 067 585    1 746 493    2 053 793
Fair value adjustment to investment contract liabilities                                                  (1 778 571)  (1 185 456)  (1 654 563)
Fair value adjustment to third-party liabilities                                                          (1 943 853)  (1 176 449)  (1 722 789)
Other operating income                                                                                       109 832       89 027      110 675
Total income                                                                                               2 306 239    2 106 756    4 203 640

Insurance claims and loss adjustment expenses                                                               (376 842)    (431 306)    (816 429)
Insurance claims and loss adjustment expenses recovered from reinsurers                                       75 056       95 448      187 368
Net insurance benefits and claims                                                                           (301 786)    (335 858)    (629 061)
Commission paid                                                                                             (716 188)    (631 698)  (1 199 447)
Depreciation and amortisation (1)                                                                            (40 099)     (34 591)     (69 725)
Employee benefit expenses                                                                                   (461 047)    (393 477)    (825 668)
Marketing, administration and other expenses                                                                (332 499)    (307 537)    (571 842)
Total expenses                                                                                            (1 851 619)  (1 703 161)  (3 295 743)

Share of profits/(losses) of joint ventures                                                                      144          (45)         (84)
Total profit/(loss) from joint ventures                                                                          144          (45)         (84)

Profit before finance costs and taxation                                                                     454 764      403 550      907 813
Finance costs                                                                                                (21 498)     (24 151)     (38 941)
Profit before taxation                                                                                       433 266      379 399      868 872
Taxation                                                                                                    (127 009)    (119 273)    (256 221)
Profit for the period                                                                                        306 257      260 126      612 651

Attributable to:
Owners of the parent                                                                                         281 849      239 366      566 476
Non-controlling interest                                                                                      24 408       20 760       46 175
                                                                                                             306 257      260 126      612 651

Earnings per share (cents)
Attributable (basic)                                                                                            21.4         18.2         43.0
Attributable (diluted)                                                                                          21.2         18.1         42.6
Headline and recurring headline (basic)                                                                         21.5         18.2         43.0
Headline and recurring headline (diluted)                                                                       21.3         18.1         42.6

(1)  Includes amortisation cost of R25.3 million (31 Aug 2017: R22.7 million; 28 Feb 2018: R45.6 million).


Condensed consolidated statement of comprehensive income
for the six months ended 31 August and the year ended 28 February 2018

                                                                                                           Unaudited    Unaudited    
                                                                                                          Six months   Six months      Audited
                                                                                                               ended        ended   Year ended
                                                                                                           31 Aug 18    31 Aug 17    28 Feb 18      
                                                                                                                R000         R000         R000

Profit for the period                                                                                        306 257      260 126      612 651

Other comprehensive income for the period, net of taxation                                                     5 855       (1 494)      (1 851)
To be reclassified to profit or loss:
Currency translation adjustments                                                                               5 855       (1 494)      (1 851)

Total comprehensive income for the period                                                                    312 112      258 632      610 800

Attributable to:
Owners of the parent                                                                                         287 704      237 872      564 625
Non-controlling interest                                                                                      24 408       20 760       46 175
                                                                                                             312 112      258 632      610 800


Earnings and headline earnings per share
for the six months ended 31 August and the year ended 28 February 2018

                                                                                                           Unaudited    Unaudited    
                                                                                                          Six months   Six months      Audited 
                                                                                                               ended        ended   Year ended 
                                                                                                           31 Aug 18    31 Aug 17    28 Feb 18  
                                                                                                                R000         R000         R000

Headline earnings                                                                                            283 146      239 275      566 396
Recurring                                                                                                    283 146      239 275      566 396
Non-recurring                                                                                                      -            -            -

Non-headline items (net of non-controlling interest and related tax effect)
(Loss)/profit on disposal of intangible assets (including goodwill)                                           (1 437)          18         (148)
Other                                                                                                            140           73          228
Profit attributable to ordinary shareholders                                                                 281 849      239 366      566 476

Earnings per share (cents)
Attributable (basic)                                                                                            21.4         18.2         43.0
Attributable (diluted)                                                                                          21.2         18.1         42.6
Headline and recurring headline (basic)                                                                         21.5         18.2         43.0
Headline and recurring headline (diluted)                                                                       21.3         18.1         42.6

Number of shares (millions)
In issue (net of treasury shares)                                                                            1 319.3      1 318.6      1 317.5
Weighted average (net of treasury shares)                                                                    1 318.0      1 314.5      1 317.6


Condensed consolidated statement of changes in equity
for the six months ended 31 August and the year ended 28 February 2018

                                                                         Attributable to equity holders of the group
                                                                                                                             Non-        
                                                                            Stated   Treasury      Other    Retained  controlling         
                                                                           capital     shares   reserves    earnings     interest        Total
                                                                              R000       R000       R000        R000         R000         R000

Balance at 1 March 2017 (Audited)                                        1 749 505    (59 206)  (399 700)    862 689      197 212    2 350 500

Comprehensive income
Profit for the period                                                            -          -          -     239 366       20 760      260 126
Other comprehensive income for the period                                        -          -     (1 494)          -            -       (1 494)
Total comprehensive income for the period                                        -          -     (1 494)    239 366       20 760      258 632
Transactions with owners                                                   154 012   (117 406)    18 034    (133 878)      (5 097)     (84 335)
Issue of ordinary shares                                                   154 012          -          -           -            -      154 012
Share-based payment costs                                                        -          -     18 034           -            -       18 034
Net movement in treasury shares                                                  -   (117 406)         -           -            -     (117 406)
Dividends paid                                                                   -          -          -    (133 878)      (5 097)    (138 975)

Balance at 31 August 2017 (Unaudited)                                    1 903 517   (176 612)  (383 160)    968 177      212 875    2 524 797

Comprehensive income
Profit for the period                                                            -          -          -     327 110       25 415      352 525
Other comprehensive income for the period                                        -          -       (357)          -            -         (357)
Total comprehensive income for the period                                        -          -       (357)    327 110       25 415      352 168
Transactions with owners                                                     5 287    (15 635)    (3 205)   (120 061)      (2 636)    (136 250)
Issue of ordinary shares                                                     5 287          -          -           -            -        5 287
Share-based payment costs                                                        -          -     18 045           -            -       18 045
Capital contribution by non-controlling interest                                 -          -          -           -          432          432
Net movement in treasury shares                                                  -     (9 382)         -           -            -       (9 382)
Equity-settled share-based payments                                              -          -    (21 250)    (51 108)           -      (72 358)
Release of profits from treasury shares to retained earnings                     -     (6 253)         -       6 253            -            -
Dividends paid                                                                   -          -          -     (75 206)      (3 068)     (78 274)

Balance at 28 February 2018 (Audited)                                    1 908 804   (192 247)  (386 722)  1 175 226      235 654    2 740 715

Comprehensive income
Profit for the period                                                            -          -          -     281 849       24 408      306 257
Other comprehensive income for the period                                        -          -      5 855           -            -        5 855
Total comprehensive income for the period                                        -          -      5 855     281 849       24 408      312 112
Transactions with owners                                                         -     15 051     19 690    (162 246)      (3 790)    (131 295)
Share-based payment costs                                                        -          -     19 690           -            -       19 690
Net movement in treasury shares (1)                                              -     15 051          -           -            -       15 051
Dividends paid                                                                   -          -          -    (162 246)      (3 790)    (166 036)

Balance at 31 August 2018 (Unaudited)                                    1 908 804   (177 196)  (361 177)  1 294 829      256 272    2 921 532

(1)  The net movement in treasury shares relates to the release of shares to staff by the share trust in order to fulfil the deferred bonus 
     obligations.


Condensed consolidated statement of cash flows
for the six months ended 31 August and the year ended 28 February 2018

                                                                                                                         Restated      
                                                                                                           Unaudited    Unaudited   
                                                                                                          Six months   Six months      Audited
                                                                                                               ended        ended   Year ended     
                                                                                                           31 Aug 18    31 Aug 17    28 Feb 18
                                                                                                   Notes        R000         R000         R000

Cash flows from operating activities
Cash utilised in operations                                                                                 (583 350)    (489 097)    (487 401)
Interest income                                                                                              691 194      588 809    1 203 376
Dividend income                                                                                              107 451      174 653      423 476
Finance costs                                                                                                (13 566)     (15 370)     (23 105)
Taxation paid                                                                                                (87 075)     (99 081)    (276 860)
Operating cash flows before policyholder cash movement                                                       114 654      159 914      839 486
Policyholder cash movement                                                                                     5 363       41 231      (13 238)
Net cash flow from operating activities                                                                      120 017      201 145      826 248

Cash flows from investing activities
Acquisition of subsidiaries and businesses                                                           9.1     (23 224)           -            -
Disposal of subsidiaries and businesses                                                              9.2     (17 182)           -            -
Acquisition of intangible assets                                                                             (75 381)     (33 657)     (68 497)
Purchases of property and equipment                                                                          (13 021)      (7 166)     (45 321)
Other                                                                                                          2 721          726          860
Net cash flow from investing activities                                                                     (126 087)     (40 097)    (112 958)

Cash flows from financing activities
Dividends paid                                                                                              (166 036)    (138 975)    (217 249)
Advance of borrowings                                                                                              -      100 000      100 000
Shares issued                                                                                                      -       66 623       70 339
Holding company's treasury shares sold by subsidiary                                                          15 051      144 976      172 170
Purchase of holding company's treasury shares                                                                      -     (262 382)    (298 958)
Other                                                                                                           (784)      (1 678)      (3 180)
Net cash flow from financing activities                                                                     (151 769)     (91 436)    (176 878)

Net (decrease)/increase in cash and cash equivalents                                                        (157 839)      69 612      536 412
Cash and cash equivalents at beginning of the period                                                       1 920 626    1 385 542    1 385 542
Exchange gains/(losses) on cash and cash equivalents                                                           9 212          726       (1 328)
Cash and cash equivalents at end of the period (1)                                                   9.4   1 771 999    1 455 880    1 920 626

(1)  Includes the following:
     Clients' cash linked to investment contracts                                                              6 337       55 443          974
     Other client-related balances                                                                           309 491      242 984      353 759
                                                                                                             315 828      298 427      354 733

Notes to the statement of cash flow:
The movement in cash utilised in operations can vary significantly as a result of daily fluctuations in cash linked to investment contracts, 
cash held by the stockbroking business and cash utilised for the loan facility obtained by the group on the loan facilities provided to clients
on their share portfolios at PSG Securities Limited. PSG Life Limited, the group's linked insurance company, issues linked policies to 
policyholders (where the value of policy benefits is directly linked to the fair value of the supporting assets). When these policies mature,
the company raises a debtor for the money receivable from the third-party investment provider, and raises a creditor for the amount owing to 
the client. Timing difference occurs at month-end when the money was received from the third-party investment provider, but only paid out by 
the company after month-end, resulting in significant fluctuations in the working capital of the company. Similar working capital fluctuations 
occur at PSG Securities Limited, the group's stockbroking business, mainly due to the timing of the close of the JSE in terms of client 
settlements. Refer to note 5.7 for the impact of the client-related balances on the cash flows from operating activities.


Notes to the condensed consolidated interim financial statements
for the six months ended 31 August 2018

1. Reporting entity

PSG Konsult Limited is a public company domiciled in the Republic of South Africa. The condensed consolidated interim financial statements as 
at and for the six months ended 31 August 2018, comprise the company and its subsidiaries (together referred to as 'the group') and the group's
interest in joint ventures.

2. Basis of preparation

Statement of compliance
The condensed consolidated interim financial statements as at and for the six months ended 31 August 2018 have been prepared in accordance with 
the requirements of the JSE Limited (JSE) and the requirements of the Companies Act, No. 71 of 2008, as amended, applicable to condensed financial
statements. The JSE requires condensed financial statements to be prepared in accordance with the framework concepts and the measurement and 
recognition requirements of International Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued by the Accounting 
Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and to also, as a minimum, contain the
information required by IAS 34 - Interim financial reporting. The condensed consolidated interim financial statements do not include all of the
information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the
group as at and for the year ended 28 February 2018. Any forecast financial information is the responsibility of the board of PSG Konsult Limited
and has not been reviewed or reported on by the auditors. The comparative consolidated statement of cash flows and related segment information 
was restated, refer to note 14 for further details.

These condensed consolidated interim financial statements were prepared under the supervision of the chief financial officer, Mike Smith, CA(SA).

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

3. Independent review

The condensed consolidated interim financial statements are the responsibility of the board of directors of the company.

Neither these condensed consolidated interim financial statements, nor any reference to future financial performance included in this results 
announcement, have been reviewed or reported on by the company's external auditor, PricewaterhouseCoopers Inc.

4. Accounting policies

The accounting policies applied in the preparation of these condensed consolidated interim financial statements are in terms of IFRS and are 
consistent with those accounting policies applied in the preparation of the previous consolidated annual financial statements as at and for the
year ended 28 February 2018, except for the mandatory adoption of IFRS 9 - Financial instruments and IFRS 15 - Revenue from contracts with 
customers. The group has applied both standards retrospectively without restating comparative figures. Refer to note 15 for further detail.

5. Segment information

The composition of the reportable segments represents the internal reporting structure and the monthly reporting to the chief operating 
decision-maker (CODM). The CODM for the purpose of IFRS 8 - Operating segments has been identified as the chief executive officer, supported 
by the group management committee (Manco). The group's internal reporting structure is reviewed in order to assess performance and allocate
resources. The group is organised into three reportable segments, namely:
- PSG Wealth - deriving income mainly from total managed assets and total platform assets
- PSG Asset Management - deriving income mainly from total assets under management and administration
- PSG Insure - deriving income mainly from written premiums and underwriting

Corporate support costs refer to a variety of services and functions that are performed centrally for the individual business units within each
business segment, as well as housing the group's executive office. Besides the traditional accounting and secretarial services provided to 
group divisions and subsidiaries, the corporate office also provides legal, risk, IT, marketing, HR, payroll, internal audit and corporate 
finance services. The strategic elements of IT, in terms of both services and infrastructure, are also centralised in the corporate office. 
The corporate costs are allocated to the three reportable segments.

5.1  Description of business segments

PSG Wealth, which consists of five business units - Distribution, Securities, LISP and Life Platform, Multi Management and Employee Benefits -
is designed to meet the needs of individuals, families and businesses. Through its highly skilled wealth managers, PSG Wealth offers a wide 
range of personalised services (including portfolio management, stockbroking, local and offshore investments, estate planning, financial 
planning, local and offshore fiduciary services, multi-managed solutions and retirement products). The Wealth offices are fully equipped to 
deliver a high-quality personal service to customers.

PSG Asset Management is an established investment management company with a proven investment track record. It offers investors a simple, but
comprehensive range of local and global investment products. The division's products include both local and international unit trust funds.

PSG Insure, through its registered insurance brokers and PSG's short-term insurance company, Western National Insurance Company Limited, offers
a full range of tailor-made short-term insurance products and services from personal (home, car and household insurance) to commercial 
(business and agri-insurance) requirements. To harness the insurance solutions available to customers effectively, the division's expert 
insurance specialists, through a strict due diligence process, will simplify the selection process for the most appropriate solution for its 
clients. In addition to the intermediary services which PSG Insure offers; PSG Short-Term Administration supports clients through the claim 
process, administrative issues and general policy maintenance, including an annual reappraisal of their portfolio.

The CODM considers the performance of reportable segments based on total core income as a measure of growth and headline earnings as a measure 
of profitability. In order to evaluate the core results of the group, the CODM segregates the income statement by eliminating the impact of the 
linked investment policies issued and the consolidation of the collective investment schemes from the core operations in the group.

A subsidiary of the group, PSG Life Limited, is a linked insurance company and issues linked policies to policyholders (where the value of 
policy benefits is directly linked to the fair value of the supporting assets), and as such does not expose the group to the market risk of fair
value adjustments on the financial asset as this risk is assumed by the policyholder.

The group consolidates collective investment schemes, in terms of IFRS 10 - Consolidated financial statements, over which the group has control.
The consolidation of these funds does not impact total earnings, comprehensive income, shareholders' funds or the net asset value of the group;
however, it requires the group to recognise the income statement impact as part of that of the group.

5.2  Headline earnings per reportable segment

                                                                                                               Asset       
                                                                                                  Wealth  Management       Insure        Total
Headline earnings                                                                                   R000        R000         R000         R000

For the six months ended 31 August 2018 (Unaudited)
Headline earnings (1)                                                                            159 787      87 212       36 147      283 146
- recurring                                                                                      159 787      87 212       36 147      283 146
- non-recurring                                                                                        -           -            -            -

For the six months ended 31 August 2017 (Unaudited)
Headline earnings (1)                                                                            149 923      56 829       32 523      239 275
- recurring                                                                                      149 923      56 829       32 523      239 275
- non-recurring                                                                                        -           -            -            -

For the year ended 28 February 2018 (Audited)
Headline earnings (1)                                                                            339 129     155 825       71 442      566 396
- recurring                                                                                      339 129     155 825       71 442      566 396
- non-recurring                                                                                        -           -            -            -

(1)  Headline earnings, calculated in terms of the requirements stipulated in Circular 4/2018 as issued by SAICA, comprise recurring and non-
     recurring headline earnings. Recurring headline earnings are calculated by excluding non-recurring headline earnings to increase 
     comparability of the performance of the group from one year to another. Non-recurring headline earnings include one-off gains and losses 
     and the resulting tax charge on these items.

5.3  Income per reportable segment

                                                                                                               Asset
                                                                                                  Wealth  Management       Insure        Total
For the six months ended 31 August 2018 (Unaudited)                                                 R000        R000         R000         R000

Total IFRS reported income                                                                     1 149 492     290 090      866 657    2 306 239

Linked investment business and other income                                                      (28 263)          -            -      (28 263)

Total core income                                                                              1 121 229     290 090      866 657    2 277 976

Total segment income                                                                           1 406 531     438 929      881 587    2 727 047
Intersegment income                                                                             (285 302)   (148 839)     (14 930)    (449 071)

                                                                                                               Asset  
                                                                                                  Wealth  Management       Insure        Total
For the six months ended 31 August 2017 (Unaudited)                                                 R000        R000         R000         R000

Total IFRS reported income                                                                     1 100 874     219 452      786 430    2 106 756

Linked investment business and other income                                                      (44 740)          -            -      (44 740)

Total core income                                                                              1 056 134     219 452      786 430    2 062 016

Total segment income                                                                           1 358 226     371 025      800 513    2 529 764
Intersegment income                                                                             (302 092)   (151 573)     (14 083)    (467 748)

                                                                                                               Asset     
                                                                                                  Wealth  Management       Insure        Total
For the year ended 28 February 2018 (Audited)                                                       R000        R000         R000         R000

Total IFRS reported income                                                                     2 133 530     527 188    1 542 922    4 203 640

Linked investment business and other income                                                       (3 332)          -            -       (3 332)

Total core income                                                                              2 130 198     527 188    1 542 922    4 200 308

Total segment income                                                                           2 931 355     825 512    1 593 439    5 350 306
Intersegment income                                                                             (801 157)   (298 324)     (50 517)  (1 149 998)

Other information provided to the CODM is measured in a manner consistent with that of the financial statements.

5.4  Divisional income statements

The profit or loss information follows a similar format to the consolidated income statement. The divisional income statements reflect the core
business operations of the group.

                                                                                                               Asset
                                                                                                  Wealth  Management       Insure        Total
For the six months ended 31 August 2018 (Unaudited)                                                 R000        R000         R000         R000
                                                                          
Total income                                                                                   1 121 229     290 090      866 657    2 277 976
Total expenses                                                                                  (877 102)   (174 710)    (787 487)  (1 839 299)
                                                                                                 244 127     115 380       79 170      438 677
Total profit from joint ventures                                                                       -           -          144          144
Profit before finance costs and taxation                                                         244 127     115 380       79 314      438 821
Finance costs (1)                                                                                (13 364)       (167)         (35)     (13 566)
Profit before taxation                                                                           230 763     115 213       79 279      425 255
Taxation                                                                                         (67 778)    (28 001)     (23 219)    (118 998)
Profit for the period                                                                            162 985      87 212       56 060      306 257

Attributable to:
Owners of the parent                                                                             159 841      87 212       34 796      281 849
Non-controlling interest                                                                           3 144           -       21 264       24 408
                                                                                                 162 985      87 212       56 060      306 257

Headline and recurring headline earnings                                                         159 787      87 212       36 147      283 146

                                                                                                               Asset
                                                                                                  Wealth  Management       Insure        Total
For the six months ended 31 August 2017 (Unaudited)                                                 R000        R000         R000         R000

Total income                                                                                   1 056 134     219 452      786 430    2 062 016
Total