PSG Group deliver strong results amid uncertain markets

Piet Mouton, PSG Group CEO.

PSG Group, the JSE-listed investment holding company with a range of diverse underlying investments which include banking, education, financial services, food and related businesses, and private equity, delivered a strong set of results amid uncertain market conditions in the financial year ended February 2016.

Consolidated recurring headline earnings per share, reflecting the sum of its effective interest in that of each of its underlying investments, increased by 33% to 787.8 cents per share.

The sum-of-the-parts (SOTP) value, whereby 83% is calculated by using JSE-listed share prices and other investments included at market-related valuations, amounted to R186.67 (2015: R163.28) per PSG share at 29 February 2016. At 13 April 2016 the SOTP value was R208.21 per share.

The recurring headline earnings and the SOTP value per share are the two key benchmarks to measure PSG Group’s performance by.

A final dividend of 200 cents (2015: 145 cents) per share was declared for a total dividend of 300 cents (2015: 200 cents) per share for the year, representing an increase of 50%.

Announcing the results PSG Group CEO, Piet Mouton, said the results are very pleasing considering the uncertain market conditions. “Each of the underlying investment companies contributed to the results.

“Of note is that this growth was achieved with very little gearing, delivering mostly unlevered returns to shareholders. Where there is gearing in the group, it is in most cases at fixed interest rates. Having low or no gearing gives our underlying investments the ability to react quickly to new opportunities.

“Further growth is also supported by the fact that the core underlying companies have a relative low market share, leaving them with ample room for further growth,” Mouton said.

Capitec, with a market share of about 2.5% of the consumer credit book, remained PSG Group’s largest investment, comprising 39% (2015: 41%) of the total SOTP assets as at 29 February 2016. Capitec is also the major contributor to PSG Group’s recurring headline earnings.

The retail bank reported stellar results for the year under review with 26% increase in headline earnings per share.

PSG Konsult has a market share of less than 5% in wealth management, about 2% in asset management and about 1% in short-term insurance. The company’s recurring headline earnings per share increased by 19% in the year under review.

Curro currently has a market share of about 0.3% of school going learners. The independent school group reported an increase of 67% in headline earnings per share for its financial year ended 31 December 2015.

Zeder, with its largest investment a 27.2% interest in Pioneer Foods, increased its recurring headline earnings per share by 20% in die year under review.

PSG Private Equity reported encouraging results for the year under review with a 75% increase in recurring headline earnings per share, albeit from a low base.

Dipeo, a BEE investment holding company, is 51%-owned by the Stellenbosch BEE Education Trust of which all beneficiaries are black individuals. Dipeo’s most signi?cant investments include shareholdings in Curro (6%), Pioneer Foods (4.4%), Quantum Foods (4%) and Kaap Agri (20%). These are all subject to BEE lock-in periods. The Stellenbosch BEE Education Trust will use its share of the value created from these investments to fund gifted but needy black students’ education.

“All the companies are positioned for further growth and are equipped with excellent management teams. We believe the group’s investment portfolio should continue yielding above average returns in future,” Mouton said.