By: PSG Group
PSG Group achieves good results in unsettling environment
PSG Group, the JSE-listed investment holding company consisting of underlying investments that operate across a diverse range of industries which include banking, education, financial services and food and related businesses, as well as early-stage investments in growth sectors, achieved strong results amid unsettling market conditions in the financial year ended February 2017.
Both key performance benchmarks of the group reflected resilience, with the sum-of-the-parts (SOTP) value per share increasing by 29% and recurring headline earnings per share by 18%.
The SOTP value, whereby 90% of the value is calculated using JSE-listed share prices and other investments are included at market-related valuations, amounted to R240.87 (2016: R186.67) per PSG Group share at 28 February 2017. At 11 April 2017, the SOTP value was R240.53 per share.
PSG Group’s consolidated recurring headline earnings, reflecting the sum of its effective interest in that of each of its underlying investments, increased to R9.27 (2016: R7.88) per share.
A final dividend of 250 cents (2016: 200 cents) per share was declared for a total dividend of 375 cents (2016: 300 cents) per share for the year, representing an increase of 25%.
Announcing the results PSG Group CEO, Piet Mouton said that the results are very pleasing considering prevailing uncertain market conditions.
Commenting on the recent credit downgrade of South Africa which could see debt becoming more expensive with a rise in interest rates, Mouton said that PSG Group was well positioned with low gearing at all of the group’s companies and a significant portion of the interest rate exposure fixed.
“The historic growth achieved by group companies stems largely from business growth as we have generally not relied on gearing to enhance returns. Furthermore, PSG Group as well as its underlying investments, all have strong balance sheets to weather any potential economic decline. With R1.3 billion in cash at PSG Group level, we rather look to new investment opportunities that might present itself,” Mouton said.
Capitec reported an 18% increase in headline earnings per share for the year under review. The bank remains PSG Group’s largest investment, comprising 47% (2016: 39%) of the total SOTP assets, and also the major contributor to the group’s recurring headline earnings.
PSG Konsult reported a 16% increase in recurring headline earnings per share for the year under review.
Curro reported a 55% increase in headline earnings per share for its financial year ended 31 December 2016.
Zeder reported a 0.5% increase in recurring headline earnings per share for the year under review following tough trading conditions experienced at select investments.
PSG Alpha, formerly known as PSG Private Equity, serves as incubator to find the businesses of tomorrow and has no exit strategy. It reported a 25% increase in recurring headline earnings per share for the year under review. PSG Group invested a further R134 million in PSG Alpha’s portfolio of early-stage investments during the year under review.
Dipeo, a BEE investment holding company, is 51%-owned by the Dipeo BEE Education Trust of which all beneficiaries are black individuals. Dipeo’s most signiﬁcant investments include shareholdings in Curro (5.3%), Pioneer Foods (4.3%), Quantum Foods (4%) and Kaap Agri (20%). The Dipeo BEE Education Trust will use its share of the value created from these investments to fund black students’ education.
“PSG Group’s core investments are all leaders in their respective niche markets and we believe that our investment portfolio should continue yielding above-average returns,” Mouton said.