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PSG Konsult annual results up 32% per share, marking a decade of uninterrupted growth

14 April 2022 PSG Konsult

Leading financial services group PSG Konsult Limited (JSE:KST) today announced its full-year results for the period ended 28 February 2022, delivering consistent uninterrupted sequential growth for ten years.

PSG Konsult (the group) delivered strong results over the period due to the steady improvement in its competitive market positioning and significant investments in technology and its people. It increased recurring headline earnings per share by 32% over the prior year, generating a 23.8% return on equity (2021: 20.4%), and bringing earnings growth to 45% per share above pre-COVID levels (2020).

According to CEO Francois Gouws, the group’s robust performance is the result of its core business strengths and its winning strategy that has paid off repeatedly for shareholders, despite ongoing industry challenges and the Covid-19 pandemic. He explains that this growth is testament of the business’s competitive advantage and the resilience of their advice-led business model, with technology at the foundation.

“Our strong results over the last decade highlight the benefits of being an advice-led firm. Our entrepreneurial culture, empowerment and accountability allow us to attract talent and grow client relationships through integrity, trust and transparency. The success of this approach is evidenced by the fact that our Wealth business generated R20.6 billion in net inflows during the year under review, even in a challenging environment.

“The group’s adviser network is formidable, and our high calibre adviser base continues to expand. In addition, our sustained investment in digital capabilities enables this adviser network to maintain excellent client service levels, resulting in a best-of-breed client experience. This provides clear growth opportunities for the business and underpins our ability to continue to generate value for shareholders.”

Capital management and credit rating

PSG Konsult’s capital cover ratio increased to 240% (2021: 213%), based on the latest insurance group return. This comfortably exceeds the 100% minimum regulatory requirement. In July 2021, the group’s long-term credit rating was upgraded by Global Credit Rating Company to A+ (ZA), while its short-term credit rating was affirmed at A1(ZA), with a stable outlook.

Gouws notes that the increase in the group’s capital cover ratio and the credit rating upgrade is testament to the group’s strong financial position and excellent liquidity.

“We continue to generate strong cash flows, which gives us various options to optimise our capital structure and risk adjusted returns to shareholders. Our strong financial performance and prudent approach to investing shareholder assets – with equity exposure below 5% - also ensures that PSG Konsult remains resilient.”

This is reflected by the fact that, during the reported period, PSG Konsult repurchased and cancelled 9.6 million shares at a cost of R110 million.

Dividend

In light of the group’s confidence in its prospects, it declared a final dividend of 22 cents per share. The overall dividend declared for the year of 32 cents per share is up 31% over the previous financial year. PSG Konsult’s dividend pay-out ratio remains between 40% to 50% of full year earnings.

Unbundling from the PSG Group

Commenting on the proposed unbundling from the PSG Group Gouws noted:

“We operate independently of the PSG Group, from operational, governance and financial support perspectives. We therefore believe that the implementation of the proposed unbundling and change in shareholder structure will not impact our business model, operations or financial position.”

Looking ahead

Gouws says that the group remains confident about its strategy and prospects for growth, despite the volatile trading environment:

“We have a clear strategy in place, which is being executed by an experienced management team. This team knows what is required to keep delivering expectation-beating growth for our shareholders, and remains focused and committed to the task.”

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