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PSG Group strategy yield strong results

14 October 2013 Piet Mouton, PSG
Piet Mouton, PSG Group CEO

Piet Mouton, PSG Group CEO

PSG Group, the JSE-listed investment holding company with underlying investments in financial services, banking, private equity, agriculture and education, achieved strong financial results for the six months to Augustus 2013.

This was accomplished on the back of its latest strategy, Project Internal Focus, yielding a positive outcome, whereby management’s focus is primarily directed at the optimisation, refinement and growth of PSG’s existing investment portfolio.

PSG Group’s sum-of-the-parts (SOTP) value increased from R72,67 per share at the end of February 2013 to R79,20 per share as at 31 August 2013, which equated to a 29% compound annual growth rate over the last three years. About 82% of this value is calculated using listed share prices, while the unlisted investments are valued using market-related multiples. The SOTP value as at 4 October 2013 amounted to R85,03 per share.

Management uses the recurring headline earnings per share concept to evaluate PSG’s performance from an earnings perspective. Recurring headline earnings per share grew by 19,6% to 194,3 cents for the six months ended 31 August 2013.

The results were primarily due to strong performances by Capitec and PSG Konsult, while the majority of the group’s remaining investments also reported improved earnings. An interim dividend of 43,0 cents was declared in respect of the period under review.

Announcing the results, PSG Group CEO, Piet Mouton, said that with Project Internal Focus fully operational, the group is now optimally positioned with all the building blocks in place for further growth.

"Project Internal Focus basically consists of proper management and a tailored strategy and plan for each of our investments, with Zeder and PSG Konsult being good examples. The focus has now shifted from a large number of smaller investments in the past, to larger investments in a smaller number of companies going forward.

"Our investment portfolio is now more balanced. While Capitec represented 55% of PSG’s total assets in February 2011, it now constitutes about 35%. This is mainly due to strong growth in the share prices of Curro representing 19,3% of total assets, PSG Konsult 15,9% and Zeder 9,8%,” Mouton said.

Capitec remains PSG’s largest investment and continued to deliver sustained growth and performance amidst challenging conditions in the unsecured credit market. PSG remains positive about Capitec, its business and its management and believes that the investment will continue to be a significant contributor to the future success of the Group for years to come.

With the support of PSG since 2009, Curro has become the largest private school company in South Africa with 21 908 (2012: 12 473) learners across 26 (2012: 22) campuses. Ample opportunities exists for Curro to continue with its growth path and PSG remains fully supportive of the company’s vision to achieve 80 schools by 2020.

PSG Konsult has, under the leadership of Francois Gouws as new CEO, refocused itself into three distinct business segments: Wealth, Asset Management and Insure. It delivered excellent results for the six months ended 31 August 2013, with a 31% increase in recurring headline earnings per share.

Zeder has in line with Project Internal Focus refined its strategy to seek larger, strategic stakes in entities that allow it to play a more active role in its underlying portfolio companies and assist with the determination of appropriate long-term strategies to help expand the respective businesses. Significant progress has been made in this regard. Zeder remains optimistic about the agri business sector.

"The underlying investments of PSG are optimally geared for growth. We remain optimistic and believe our strategy will continue to deliver superior returns for shareholders,” Mouton said.

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