PSG Group set for further growth
PSG Group, the listed investment holdings group with 35 underlying investments in a diverse range of industries, is set for further growth after announcing solid financial results for the financial year to February this year.
The group’s recurring headline earnings per share, representing the sum of PSG’s effective interest in that of all of its investments regardless of the percentage shareholding, increased by 16,6% to 241,9 cents. Marked-to-market fluctuations are in so doing excluded from the results.
The total value of listed and unlisted investments, referred to as the sum of the parts (SOTP) value, leaped by 76% to R46,81 per share and the headline earnings per share by 23,1% to 306,7 cents.
The recurring headline earnings amounted to R404,1 million (2010: R359,0 million), the SOTP value R8,0 billion (2010: R4,6 billion) and headline earnings R512,4 million (R431,4 million).
PSG Group’s underlying investments have a combined market capitalisation of R71 billion, which operate across industries that include financial services, banking, agriculture, education, construction, manufacturing, mining and now also energy saving.
A final dividend of 47 cents (2010: 29 cents) was declared for the period under review, to bring the total dividend for the year to 67 cents (42 cents). This represents an increase of 59,5%.
Announcing the results, PSG Group CEO, Piet Mouton, said the group’s investment of 34,6% in Capitec Bank is a major success story. Its contribution to PSG’s recurring headline earnings before funding increased from 34% to 43% in the period under review.
“From a value perspective Capitec constitutes more than 50% of PSG’s assets and is well positioned to provide for further growth,” Mouton said.
PSG Group managed to raise R502 million in cash through the issue of perpetual preference shares, which brought the nominal total of this type of funding to R1,19 billion. PSG used the cash predominately to invest R424,1 million in Capitec, R20,9 million in Paladin, R21,5 million in Zeder, R2,7 million in PSG Konsult and R20m was reinvested in PSG Group shares. When using the 28 February 2011 market prices, R145,8 million has been created in value for shareholders since making these investments in the past year.
“This type of funding suits PSG Group’s capital structure very well. As an investment company it provides for effective long-term decision making. Otherwise there can be pressure from financiers when less favourable trading conditions are experienced.
“PSG Group is currently well positioned for growth after some consolidation during the last four years - something many financial companies experienced during the downturn in the economy,” Mouton said.
Through the amalgamation of PSG Konsult and the operations of PSG Asset Management, we now have all the funds, licenses and advisors under the banner of PSG Konsult, creating more capacity for strong growth as synergies are created. PSG Konsult is developing into a fully-fledged financial services company.
PSG Asset Management increased headline earnings by 46% to R40,5 million in die period under review, whilst recurring headline earnings increased by 4,9% to 179 cents per share.
Zeder Investments’ portfolio consists of sound investments and PSG Group is positive about the prospects for investments in the agricultural sector. Cash and funding resources of R456 million provide the company with the necessary means to continue pursuing attractive investment opportunities.
While Paladin experienced mixed fortunes in the period under review, PSG Group is optimistic about the company’s prospects. It is expected that Curro, the private schools company which is to be listed in June, will play a major role in this.
“As an investment holding company, our focus remains to create wealth for our shareholders. We are confident of the prospects for the group in the year that lies ahead,” said Mouton.
