PSG Group reports positive results

Project Internal Focus is the group’s latest strategy whereby management’s focus is primarily directed at the optimisation, refinement and growth of its existing investment portfolio.

 

During the past financial year, the group’s sum-of-the-parts (SOTP) value per share increased by 31% to R95.01 (2013: R72.67), equating to a 27% compound annual growth rate over the last three years. About 83% of this value is calculated using listed share prices and over-the-counter traded share prices, while other investments are included at market-related valuations. The SOTP value as at 11 April 2014 was R106.42 per share.

 

Recurring headline earnings per share grew by 14% to 447 cents and headline earnings per share by 15% to 551 cents. A final dividend of 90 cents (2013: 78 cents) per share was declared for a total dividend of 133 cents (2013: 111 cents) per share for the year, a 20% increase.

 

Announcing the results, PSG Group CEO, Piet Mouton, said that Capitec remains PSG’s largest investment representing 30% (2013: 39%) of total assets as measured by the SOTP value. In 2011 this figure was 54%. Capitec nevertheless continues to be a major contributor to PSG’s recurring headline earnings.

 

The past year saw an increase in the share prices of both Curro and PSG Konsult, while that of Capitec remained virtually unchanged. As a result, PSG’s investments in Curro and PSG Konsult respectively represented 23% (2013: 16%) and 20% (2013: 14%) of total assets as at the end of February 2014.

 

"The result of this is a more balanced investment portfolio with substantial long term growth potential. Our primary focus will therefore now be to maximise such growth,” Mouton said.

 

PSG remains excited about its investment in Capitec. It is an exceptional business managed by talented people. Capitec has diversified revenue streams and is continuously becoming less dependent on lending income following strong growth in net transaction fee income.

 

Also of note is that Capitec emerged as the winner of Columinate’s 2014 Internet Banking SITEisfaction report outperforming all of the other major banks in the country. Capitec was also rated the Best Commercial Bank in SA in 2013 by World Finance and the Sunday Times recently announced Capitec as the Bank of the Year winner.

 

Curro continues to assert its leading position in the private school market in South Africa. It is well underway to achieve its target of 80 campuses by 2020 and plans to develop 10 new campuses in the year ahead. Curro will undertake a R589 million rights issue, underwritten by PSG, to help fund its capital expansion during the year ahead.

 

PSG Konsult is set to make its debut on the JSE in June this year. Each of PSG Konsult’s three divisions - PSG Wealth, PSG Asset Management and PSG Insure - produced commendable results in the year under review.

 

PSG Konsult’s strategic focus for the year ahead is top line revenue growth, which will enable it to unlock operational leverage scale benefits now that it has successfully bedded down its repositioning.

 

Zeder continued rebalancing its portfolio in line with its amended strategy during the year and is currently a good example of what the group’s Project Internal Focus entails. All its core portfolio investments delivered positive results for the year under review.

 

PSG remains optimistic about the earnings growth potential of PSG Private Equity’s investment portfolio, although it delivered weaker than expected results. Its portfolio contains a range of businesses across various industries and in different stages of maturity.

 

Thembeka Capital, a black-owned and controlled investment company in which PSG holds a 49% interest, has increased its net intrinsic value (after CGT) by 37% to R2.1 billion. It remains an extraordinary BEE success story.

 

"We remain optimistic about our investments and believe that our strategy will continue to deliver superior returns for shareholders,” Mouton said.