THE PSG STORY

JANNIE MOUTON 20 SEPTEMBER 2012

SA COUNCIL OF SHOPPING CENTRES

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The story of PSG

• Started• Build it out• How it changed my life• My personal philosophies• What I have learned – it might

inspire somebody

PSG is my life

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SMK – my early years

• From ranking 42 to 5• DCM – 1985 to 1988 - >40 listings• Gilt market 0 to nr 1• Listings – RMB, Richemont, Medi-

Clinic, Naspers, M-Net, etc.

• 20 partners (myself CEO)

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3/8/1995 – Changed my life

• I was fired• Lost my company and my friends• 48 years old and unemployed• I lost my confidence

Defining moment of my life

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The days after 3/8

• I was worried• Kept the incident a secret• Only told my wife, Dana• Could not tell my children, mom and

sisters the full story• I was confused and could not think

properly• Then I realised that my future is in

my hands and only in my hands• I have to lift my head

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For the unemployed:

• Get a office• Get a soundboard(s)• Know yourself (SWOT analysis)• Formulate your dream, your vision

and write it down- my dream in 1995 was my focus and still applicable

• Formulate your action plans – small steps

• Read – read – think and scheme

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My dream in 1995

• Listed company or big stake in it (control)

• Financial services sector focus• Raise Capital for strong base• Management style – decentralised and

delegated• Smart people• Move to Stellenbosch• Small head office, relaxed environment• Think more and do less

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Lessons learnt

• Make decisions and take risk• Involve and inspire your family

(PSG....)• Colleagues

- Team better than individual but someone responsible- Make them shareholders

• Be positive!(reactive vs proactive)

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Lessons learnt

• Communication

“Leaders are only as powerful as the ideas they can communicate. They inspire their followers to higher levels of achievement by showing them how their work contributes to worthwhile ends. It is an emotional appeal to one of the most fundamental of human needs – the need to be important, to make a difference, to feel useful and to be part of a successful and worthwhile enterprise”

– Warren Bennis and Burt Nanus

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PAG - 25/11/1995

• Obtained control of PAG at 36cps

• Market Cap R7m

• 4/1997 sold for R107m

• LUCK

• Changed name to PSG

PSG today - Group structure

100%

32.5%

71.3%

42.4%

63.1%

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49%

100%

PSG today

• R14bn market capitalization

• 39 companies

• 39,000 people

• Pay R4.5bn tax

• Loyal shareholders

• 20% Steinhoff

• 37% directors

• 18% friends & family

PSG Group

Total return index

• R100,000 investment in 1995 = R143m today (54% CAGR)

• Without dividends reinvested = R65m today (47% CAGR)

• Top 100 company (Sunday Times)PSG 2e over 10 years

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Difficult times?

• Look for opportunities:

– 1994/1995 -> PSG

– Small bank crisis -> Capitec

– BEE -> Thembeka

– Schools & education in SA -> Curro

– Investors losing money with

untrustworthy companies/individuals ->

PSG Konsult

Capitec

• Banking the unbanked

• Change micro lending outlets to bank

branches

• TBB banking license

• Develop system and employ smart people –

a success story

FROM LOAN SHARK TO HERO

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Capitec (32.5%)- Focus!- Easy to understand- Affordable bank – a serious competitor - 3.7m clients, 500 branches- One of 27 global “brands of tomorrow”

[per CreditSuisse]

• Shareprice 2002: R 2• Shareprice 2012: R 220• Best JSE share performance over last 10

years17

Curro (58%)• 4 markets– Affordable private schools– Top-end private schools (eg.Woodhill)– Community schools (Old Mutual)– Curro Junior Academy

• 100% matric pass rate

• Maths & Science

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Curro (58%)• Education in SA– 4% private school kids in SA vs 13% globally– Public schools too full– Ex-model C schools good, but under pressure– No new schools built

• Curro– 2009 invest: 2,300 learners; 3 campuses– 2012 today: 12,500 learners; 22 campuses– 2020 target: 45,000 learners; 40 campuses– 2020 possible: 80 campuses!

• Huge opportunity!19

PSG Konsult• Largest financial intermediary in SA• Network of 227 offices; 674 brokers/advisors• 140,000 clients• PSG Online rated top stock broker:

Business Day Investors Monthly Stockbroker of the Year award- “Top retail stockbroker”

• PSG Asset Management great funds:– PSG Flexible Fund– PSG Equity Fund– PSG Balanced Fund– PSG Money Market

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Buy shares on the JSE• Create wealth for yourself!

• "Someone’s sitting in the shade today because someone planted a tree a long time ago.“

- Warren Buffett

• Speak to a PSG Konsult advisor….

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Thembeka (49%)

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• BEE investment company

• Intrinsic value grow from R0 to R2.1bn in last 6 years

• True ‘empowerment’

• eg. URC holds 6% interest– Thousands of members– Paid R80 for interest– Current value ~R85m– Receive ~R3m dividends

Africa offers opportunities

• “Twenty-five years ago the world came together to try to feed Africa, in twenty-five years’ time Africa could feed the world” – Hilary Benn

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Chayton Africa• Commercial farming in Zambia• Target 10,000 ha under irrigation• Ex-Zimbabwe farmers – experienced• 17-20 ton per ha possible – ‘double cropping’

• Africa/Zambia many opportunities– Poultry consumption 2.5kg per capita in Zambia vs.

31.8kg in SA– 40% of fresh water in Southern Africa– 8 bordering countries – all net importers of food– Great opportunities in agriculture

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Chayton

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Why Zambia?• Strong democracy

• Favourable investment climate and government – open for business

• Agreement with government and good incentives

• Africa not for sissies!

BUT

• Opportunity exists

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CA Sales

• Established in 1988

• Biggest FMCG distribution agency in Botswana

• Warehouses based in Gaborone and Francistown – 52,000 m2

• Owns 120 trucks

• 1,200 employees27

CA Sales

Gaborone Warehouse

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My business philosophy

• Read / Think / Scheme

• Challenge sounding boards

• Warren Buffet (summarized & typed)

• My own writings and philosophies

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Ultimate empowerment“Choose competent people, place them in

key positions and trust their judgment implicitly” - Conrad Hilton

Ultimate empowerment• Owner-managed company• Detest red tape and bureaucracy • Passion for excellence• Winners / confident• Fun and enjoy life• Purpose & Freedom

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CharacterCharacter / Reputation• Standing, status, character, honour.

Brand• Symbol, mark, logo, emblem, grade, label,

make name.

A brand can be bought. A reputation can only be earned.

Over time a good reputation will build solid brands whilst a bad reputation will destroy good brands.

31Character & Integrity – Ultimate

goal

Bad reputations and characters

Fidentia• Lots of advertising / sponsorships– Cricket, Rugby, Choir, etc.

• Fooled several people - One of Big 4 banks thought they were “client of high standing”

JCI / Brett Kebble• JCI was listed on JSE in 1889 – Later split

into Angloplats, Johnnic and JCI.• Friends – Glen Agliotti, Jacki Selebi• Brett Kebble Art Awards

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Reputations, brands and integrity

• Anton Rupert– Believed in solid brands built through

• Reputation, Advertising, Time / Patience

• Raymond Ackerman / Pick ‘n Pay• Christo Wiese / Shoprite & Pep• RMBH – Character - Laurie Dippenaar, GT

Ferreira, Paul Harris– Brands – Momentum, Outsurance,

Discovery, FNB / Firstrand etc

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It takes time to earn a reputation

Warren Buffett - quotes

“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do

things differently”

“You and I are the guardians of that reputation. And in the long run we will have whatever

reputation we deserve.” ~

"There is plenty of money to be made in the centre of the court. There is no need to play around the

edges.” ~

“It’s best not to do something that you know is wrong, because if you are caught, the price you

pay may be more than you can afford.”

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Reputation in Financial Services• Reputation your Everything• “My word is my bond” /

“Dictum meum pactum”- Since 1801 motto of LSE, transactions made

without exchange of documents or written pledges.

• A2 Banking Crisis (2001/2)• Started by collapse of Saambou Bank• Run on the banks – Regal, TBB, Unifer, RAD,

BOE, New Republic Bank

• Current crisis• Greed and risk

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PSG

• Not a big advertiser – did not go out to establish a brand

• Established good corporate governance – this lead to a good reputation in turn leading to a credible brand

• People are our reputation through communication – Radio,TV, newspapers, magazines

• We advertise our products with our people

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We have a brand and character

What I've learned• Not to do business with people of questionable

integrity.

• With a great reputation (Company and CEO) people/public will want to do business with you.

• If you have the reputation for integrity and fair dealing, people will approach you with deals/business.

• The shrewd / astute businessman asks: “Who is the face behind that brand?”

• Therefore protect and enhance your reputation if you want your business and its brands to grow.

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“Be more concerned with your character than with your reputation. Your

character is what you really are while your reputation is merely what others

think you are.”

Dale Carnegie

Contribution to South-Africa

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• South-Africa– Great, beautiful country– Opportunities

• Be positive!

• ’n Profitable company makes a contribution to society:– employs people– pays taxes– provides training – donations and other contributions

Making a contribution

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• PSG Group of companies– Donations > R34m– Bursaries > R13m– Salaries > R7.6bn– Taxes > R4.5bn

• Education– Curro– Impak– Siyavula– Bursaries

• Akkerdoppies

QUESTIONS?

For what is a man profited, if he shall gain the whole world, and lose his own soul?

– Matthew 16:26