PSG Group achieves further growth

17 October 2011 PSG Group
Piet Mouton

Piet Mouton

PSG Group achieved strong results for the six months to August with further growth in its diverse array of underlying investments.

The recurring headline earnings per share, representing the sum of PSG’s effective interest in all of its investments regardless of the percentage shareholding, increased by 21,7% from 111,3 cents to 135,5 cents per share.

The group’s key valuation tool, the sum of the parts (SOTP) value which represents the total market value of listed and unlisted investments, increased by 11,8% from R46,81 per share in February this year to R52,34 per share. This is in excess of 40% versus the same period a year ago.

The recurring headline earnings amounted to R229,7 million (2010: R186,1 million), and headline earnings R175,0 million (R229,1 million).

An interim dividend of 26 cents per share (2010: 20 cents) was declared, representing an increase of 30%.

PSG Group CEO, Piet Mouton, said that by focusing on recurring headline earnings, non-recurring profits are not taken into account.

Whilst the headline earnings in the period under review were less than the same period last year, the total headline earnings since 2005 amounted to R1,1 billion more than the recurring headline earnings over the period. This highlights PSG’s ability to make significant additional profits which are not-recurring in nature.

About the latest results, Mouton said that Capitec Bank has again made an important contribution to PSG’s results with an increase of 53% in its headline earnings per share. With an interest of 34,2% in Capitec Bank, the bank comprises 55,7% of PSG’s assets.

The listing of the private schools group, Curro, has also added substantial value to PSG. PSG holds an interest of 63,1% in Curro.

“Curro is considered as a very exiting investment for PSG. The aim is to establish at least 40 schools with 45000 leaners by 2020. With the opportunities for growth currently being presented to Curro, this goal might be reached sooner.

“The construction of new schools will continue to put pressure on Curro’s earnings in the short-term. However, we are building capacity and are confident that substantial benefits will be reaped in the future,” Mouton said.

Mouton said PSG Konsult has with the incorporation of PSG Asset Management entered a new phase with good prospects for growth.

PSG Konsult’s country-wide office network was extended from 216 to 222 offices during the period under review, while the number of financial planners, stockbrokers and portfolio- and asset managers increased from 642 to 674. PSG has an interest of 71,3% in the company.

PSG is also proud of PSG Online that was rated “SA’s top retail stockbroker” by winning the Business Day Investors Monthly Stockbroker of the year award in September.

Zeder Investments achieved marginal growth in the six months. This was the result of little or no growth at its two largest indirect investments, Distell and Pioneer Foods.

PSG nevertheless believe that the agriculture, food and beverage sectors offer rewarding long-term opportunities.

Mouton said that Paladin Capital, PSG’s private equity investment company which is being delisted from the JSE, will continue as a wholly-owned subsidiary. Except for the construction companies, the other investments in its portfolio showed improved performances.

“PSG’s focus remains to create wealth for our shareholders and is committed to providing superior investment returns. Attention is given to strategies to accomplish higher growth in our underlying companies,” Mouton said.

PSG Group is a listed investment group consisting of 33 underlying companies with a combined market capitalisation of R74 billion that operate across industries that include financial services, banking, agriculture, education, construction, manufacturing, mining and energy saving.

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