31 August 2017 Results Presentation Piet Mouton CEO October 2017 - PowerPoint PPT Presentation

31 August 2017 Results Presentation Piet Mouton CEO October 2017

DNA of PSG Group Financial Education Food & Agri • Capitec • Curro • Zeder • PSG Konsult • Stadio  Pioneer Foods  Capespan • FutureLearn  Zaad • ITSI  Kaap Agri  Agrivision • CSI projects  Quantum Foods PSG has been good at early-stage investments – building businesses Use PSG Alpha to find new growth investments 1

Our investment philosophy Large Market Market Dynamics Engine Room • • • New investments Large inefficient Best management should be in large incumbents: teams:  “Free” services  Think different markets: Early- •  Banking (education, energy) Best operating models: stage  Energy •  Service Fragmented: investing  Education  IFAs  Pricing •  Retirement villages  Experience If successful, the returns should be substantial Balance sheet • High-growth companies should have stronger balance sheets and make limited use of debt • Management cannot simultaneously focus on high-growth (J-curve) investment opportunities and servicing debt:  Loss of focus and conservatism • Window to capture the market 2

PSG Group structure Market Cap*: R54bn 30.7% 55.6% 61.4% 49% 42.1% 97.4% Dipeo Capital * Market capitalisation as at 6 October 2017 3

Growth potential – low market share, low gearing Best management    team * • <5% of wealth mgmt • ~2% of asset mgmt ~2.7% of consumer ~0.4% of school-going Low market share • ~1% of short-term credit book learners insurance Ability to grow market    share • 35% CAR Low gearing Debt to Equity: 0.1% Debt to Equity: 33% • R36bn cash on B/S * Relative to competitors in the specific industry – subjective opinion  PSG has R1.2bn cash available for further investments 4

Sum-of-the-parts (SOTP) 31 Aug 31 Aug 6 Oct 2012 2017 2017 Share 5-year Asset/Liability Rm Rm Rm of total CAGR # Capitec* 6,535 31,954 31,689 35% 53% Curro (incl. Stadio) * 2,387 8,877 9,653 18% 16% PSG Konsult* 1,598 7,210 7,250 34% 12% Zeder* 1,192 4,607 4,382 17% 7% PSG Alpha + 879 2,510 2,530 23% 4% Dipeo (prev. Thembeka) + 789 546 480 1% Other assets Cash^ 433 1,196 1,163 2% Pref investments and loans receivable^ 519 2,128 2,120 4% PSG Corporate (incl. PSG Capital) ++ 338 Other^ 355 69 59 1% Total assets 15,025 59,097 59,326 100% Perpetual pref funding* (1,229) (1,358) (1,304) Other debt^ (823) (950) (957) Total SOTP value 12,973 56,789 57,065 Shares in issue (net of treasury shares) (m) 190.6 217.5 217.5 SOTP value per share (R) 68.05 261.05 262.32 31% Share price (R) 65.01 252.60 246.17 31% * Listed on the JSE Ltd + SOTP value ++ Valuation ^ Carrying value # Based on share price/SOTP value per share Note: PSG's live SOTP is available at www.psggroup.co.za 5

SOTP: Other assets 6 Oct 2017 Rm Cash 1,163 Pref share investment in Dipeo 1,219 Other pref share investments and loans receivable 901 Other (PPE & net receivables) 59 Total other assets 3,342 6

PSG Group’s gearing and interest cover 31 Aug 2017 14.1% Gearing * (based on PSG Group’s consolidated balance sheet NAV) 4.1% Gearing * (based on PSG Group’s SOTP value) 4.6x Interest cover ** * Incl. perpetual pref funding at MV ** Calculated using free cash flow Conclusion:  PSG Group is conservatively geared (prudent approach given market uncertainty following downgrade, etc.)  Has significant capacity for further debt if needed 7

Recurring headline earnings (RHE) Year Six months ended ended 31 Aug 31 Aug 28 Feb 2016 2017 2017 Rm Rm Rm Change * Capitec 538 628 1,164 17% Curro 47 61 96 30% PSG Konsult 132 147 300 11% Zeder 79 27 275 (66%) PSG Alpha 49 66 133 35% Dipeo (3) (34) (20) (>100%) PSG Corporate (incl. PSG Capital) 38 (18) 29 n/a Other (mainly pref div income) 51 68 112 33% Recurring headline earnings before funding 931 945 2,089 2% Funding (net of interest income) (49) (57) (104) 16% Recurring headline earnings 882 888 1,985 1% * The percentage change in the RHE contributions will differ from the per share-results reported by the investees, due to changes in our shareholding in the underlying companies during the past year (e.g. in Zeder following the internalisation of the mgmt agreement) 8

Headline earnings Year Six months ended ended 31 Aug 31 Aug 28 Feb 2016 2017 2017 Rm Rm Rm Change Recurring headline earnings 882 888 1,985 1% Non-recurring items 126 (107) 160 n/a Headline earnings 1,008 781 2,145 (23%) Non-headline items 16 52 17 225% Attributable earnings 1,024 833 2,162 (19%) Non-recurring items comprise: Unrealised MTM profit/(loss) on Dipeo’s share portfolio 132 (98) 187 Other (6) (9) (27) 126 (107) 160 9

Per-share stats Year Six months ended ended 31 Aug 31 Aug 28 Feb 2016 2017 2017 Rm Rm Rm Change Weighted average number of shares in issue (net of treasury shares) (m) 214.2 215.4 214.2 0.6% Earnings per share (cents) - Recurring headline 411.8 412.1 926.6 0.1% - Headline 470.5 362.6 1,001.4 (22.9%) - Attributable 477.8 386.4 1,009.0 (19.1%) Dividend per share (cents) 125.0 138.0 375.0 10.4% 10

Long-term performance: Total Return Index (TRI) PSG group companies’ TRI vs. JSE All Share’s TRI* 70.0% 63.9% 60.0% 55.0% 48.2% 50.0% 40.0% 34.9% 30.0% 20.0% 15.7% 14.5% 14.6% 14.5% 13.4% 11.5% 10.0% 0.0% PSG ** PSG Konsult Curro Zeder Capitec (17 Nov 1995) (11 Apr 2005) (1 Jun 2009) (1 Dec 2006) (18 Feb 2002) Company TRI JSE TRI * Measured since the respective dates noted until 31 August 2017 ** Capitec unbundling in November 2003 treated as a dividend 11

Benchmarking: RHEPS CAGR - RHEPS Ranking Company 1 year* 3 years* 5 years* Company 1 year* 3 years* 5 years* PSG Group 0% 18% 20% PSG Group 4 3 2 Capitec 17% 20% 20% Capitec 2 2 3 Curro** 22% 45% n/a Curro 1 1 n/a PSG Konsult 10% 16% 22% PSG Konsult 3 4 1 Zeder (74%) (37%) (15%) Zeder 6 6 5 Pioneer Pioneer Foods*** (47%) (10%) 3% Foods 5 5 4 * CAGR ** June H1 *** March H1 Reasonable growth in RHEPS from the majority of our core investments given the economic climate  Zeder’s investee companies’ (incl. Pioneer Foods) H1 2017 RHEPS also negatively affected by the drought in Southern Africa 12

Benchmarking: TRI measured in Rand TRI Ranking Company 1 year* 3 years* 5 years* Company 1 year* 3 years* 5 years* PSG Group 39% 41% 33% PSG Group 2 2 3 Capitec 61% 64% 39% Capitec 1 1 1 Curro (7%) 18% 24% Curro 6 3 4 PSG Konsult 31% 12% 39% PSG Konsult 3 4 2 Zeder (6%) 4% 18% Zeder 5 7 6 Pioneer Pioneer Foods (24%) 6% 22% Foods 7 6 5 JSE Alsi 11% 7% 13% JSE Alsi 4 5 7 * CAGR  All our major group companies outperformed the JSE over 5 years  The tough agribusiness cycle has resulted in Pioneer Foods and Zeder lagging the JSE over 1 and 3 years  Curro lagged the JSE over 1 year 13

Benchmarking: TRI measured in USD TRI Ranking Company 1 year* 3 years* 5 years* Company 1 year* 3 years* 5 years* PSG Group 55% 32% 22% PSG Group 2 2 3 Capitec 80% 54% 27% Capitec 1 1 1 Curro 4% 11% 14% Curro 6 3 4 PSG Konsult 46% 5% 27% PSG Konsult 3 4 2 Zeder 5% (3%) 8% Zeder 5 7 6 Pioneer Pioneer Foods (16%) (1%) 12% Foods 7 6 5 MSCI EM 25% 3% 6% MSCI EM 4 5 7 * CAGR  Solid performance by our major group companies in USD terms with the majority outperforming the MSCI EM Index over the 3- and 5-year periods  PSG Group, Capitec and PSG Konsult significantly outperformed the MSCI EM Index over the 1-year period 14

PSG Group share price vs SOTP value per share Discount PSG Group share price vs SOTP value per share (6 October 2017) Latest discount ~6% 12-month average discount 300.00 ~2% 262.32 250.00 246.17 Liquidity (per annum) 200.00 Aug 2017 25% Feb 2017 30% 150.00 Feb 2016 47% Feb 2015 17% 100.00 Feb 2014 10% Feb 2013 13% 50.00 Feb 2012 8% - SOTP value (R) Share price (R) 15

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Key metrics Total no. of clients ('000)  Past year: 10,000 9,184  Total clients ↑1.3m to 9.2m 9,000  South African population banking with Capitec: 8,000  17% of the total population 7,000  29% between the ages of 20-34 6,000  27% between the ages of 35-54 5,000  Quality banking clients up 21% 4,000  Increased distribution since Feb 17:  Branches ↑15 to 811  ATMs & DNRs ↑257 to 4,281 Banking client market share  Transaction growth:  30% 5,000 Transaction fee income up 29% 4,074 25% 3,526 4,000  Cellphone and internet transaction growth up 39% 25% 2,852 20% 22% 3,000  2,150 Total number of transactions up 27% 15% 18% 1,610 2,000 14%  10% 71% of possible transactions done on self-help 12% 1,000 5% devices 0% - 2013 2014 2015 2016 2017 Capitec share of employed population Banking clients 17

Key financials Headline earnings (Rm) Headline earnings per share (cents) 4,000 3,500 3,500 3,000 3,000 2,500 2,500 2,046 1,769 2,000 2,000 1,500 1,500 1,000 1,000 ,500 ,500 - - Net transaction fee income (Rm) Return on equity 4,500 28% 4,000 27% 26% 3,500 26% 3,000 2,386 25% 2,500 2,000 24% 1,500 23% 1,000 22% ,500 - 21% 18