PSG Konsult results above industry average

PSG Konsult, the independent financial services company focusing on financial planning, short-term insurance and stockbroking, achieved reasonable financial results for the six months to August this year.

Headline earnings declined by 16,8% to R39,5 million and the headline earnings per share by 16,9% to 5,4 cents per share. After taking into account a once-off tax credit, as well as an accounting reclassification of Contracts for Difference (CFD’s) over the corresponding period last year, operational headline earnings were only 7% lower.

Total income, consisting of commissions and fees, increased by 3% to R373 million. Funds under administration increased to R63 billion from R50 billion, after the acquisition of T-Sec’s private client stockbroking division earlier this year.

An interim dividend of 2,8 cents per share (2008: 2,8 cents per share) was declared for the period under review.

PSG Konsult CEO, Willem Theron, said the results should be seen relative to the corresponding period last year when the stock market was at record levels and the company had its best six months period in its history. Given the subsequent changes in the economy, an effective decrease of 7% in operational headline earnings can be considered as reasonable.

The company’s income stream is well diversified between financial planning and investments, short-term insurance broker services and stockbroking, with a strong focus on creating a sustainable annuity income.

“As a result of the economic environment during the period under review, it was particularly financial planning and investments which came under pressure with investment values shrinking. With the stock market recovering somewhat in the last two months, we did see some improvement in these values.

“Consumer’s disposable income, nevertheless, is still under pressure with little surplus funds for investments. Whilst interest rates and inflation did decline, electricity tariffs and other costs like property taxes have increased to retain pressure on disposable income,” Theron said.

“It is expected that stock markets will still be volatile this year, but with more liquidity and better company results next year, a more sustainable revival is possible”.

Theron said that if the markets maintain present levels for the current financial year, PSG Konsult should be able to sustain the profit levels of the first six months.