PSG Konsult maintains profitability

PSG Konsult, the independent financial services provider, managed to increase turnover by a solid 17%, from R833 million to R979 million for the financial year ending February 2011. A significant decrease in investors’ appetite for stocks, specifically derivative investment instruments, slowed growth in headline earnings down somewhat.

Headline earnings increased by 2,4% from R89,4 million to R91,5 million and headline earnings per share by 2,5% from 12,2 cents to 12,5 cents per share. Adjusted headline earnings - before amortisation - rose by 5% from 13,8 cents to 14,7 cents per share.

The diversified nature of the group’s income stream contributed significantly in neutralising the softer trading environment. Profitability was maintained due to satisfactory performances from the financial planning, portfolio management and short term insurance arms of the business. Funds under administration increased from R72,4 billion to R97,3 billion, mainly as a result of improving markets and a net inflow of funds. The collection of short term insurance premiums on behalf of product suppliers increased from R1,45 billion to R1,6 billion on an annual basis.

A final dividend of 6,0 cents per share (2010: 5,5 cents) is declared which, together with the interim dividend of 2,8 cents per share, brings the total for the period under review to 8,8 cents per share (2010: 8,3 cents).

PSG Konsult’s countrywide office network was extended from 209 to 216 offices, while the number of financial planners, stockbrokers and short term insurance brokers increased significantly from 548 to 642.

On 1 March 2011 an amalgamation, via a share swap between PSG Fund Management, PSG Alphen, PSG Tanzanite, PSG Absolute Investments and PSG Future Wealth, became effective under the PSG Konsult banner. This transaction, culminating into a newly incorporated company PSG Asset Management, brought the group’s total issued shares to more than one billion, with the market capitalisation, at R1,60 per share, to R1,7 billion.

PSG Konsult CEO, Willem Theron, said the addition of these expert asset management teams will add value to existing PSG Konsult clients. The amalgamation also brings all the financial services within the PSG Group under one banner, with the focus firmly on service delivery.

PSG Konsult’s distribution channels are thus focused on three areas, with PSG Konsult Financial Planning focussing on the individual client by means of personal face to face relationships, while PSG Konsult Corporate concentrates on the institutional market, including medical insurance and employee benefits, and PSG Online providing an electronic platform for share trading, unit trusts, as well as life- and short-term insurance products.

Referring to the operating environment, Theron said it is evident that inflation is becoming a worldwide reality and that the local interest rate cycle is currently at its lowest turning point.

“It is important that people do not look at the short term, but rather direct their investment horizons to the medium and long term. Only shares of high quality should be considered, while also making provision for liquidity. Simultaneously clients should plan for longer periods of retirement,” said Theron.