Cape Town - PSG Group, the JSE-listed investment holding company with a range of diverse underlying investments which include banking, education, financial services, food and related business, and private equity, said on Wednesday it has achieved satisfactory results for the six months to August.
Recurring headline earnings and the SOTP value per share are the two key benchmarks to measure PSG Group’s performance by.
Consolidated recurring headline earnings, which reflect the sum of PSG Group’s effective interest in the recurring headline earnings of each of its underlying investments, increased by 16% to 411.8 cents per share (2015: 354.5 cents).
PSG Group’s sum-of-the-parts (SOTP) value, of which 90% is calculated using JSE-listed share prices while other investments are included at market-related valuations, amounted to R206.01 (29 February 2016: R186.67) per PSG Group share. At 7 October 2016, the SOTP value was R228.32 per share.
The PSG Group has declared an interim dividend of 125 cents (2015: 100 cents) per share, representing a 25% increase.
Announcing the results PSG Group CEO, Piet Mouton, said the results are satisfactory considering the current challenging economic conditions.
Capitec reported strong results with a 19% increase in headline earnings per share for the period under review. It remains PSG’s largest investment comprising 44% (29 February 2016: 39%) of the total SOTP assets as at 31 August 2016. Capitec is also the major contributor to PSG Group’s recurring headline earnings.
PSG Konsult reported a commendable 13% increase in recurring headline earnings per share for the period under review, while Curro achieved a 51% increase in headline earnings per share for its six months to June 2016.
Zeder reported a 3% decrease in recurring headline earnings per share for the period under review, mainly as a result of the drought conditions, affecting agri-businesses in particular.
PSG Private Equity reported encouraging results for the period under review with a 13% increase in recurring headline earnings per share.
During the period under review, PSG Group initiated the Zeder management fee internalisation transaction whereby PSG Group exchanged its rights to the Zeder management agreement for the issue of 207.7 million new Zeder shares, representing a 12% equity interest.
All conditions precedent were satisfied during September 2016 and the implementation of the transaction finalised. PSG Group’s shareholding in Zeder consequently increased from 34.5% to 42.4%, remaining the largest shareholder. PSG Group representatives will continue to serve on the Zeder Exco and Board in order to assist in determining strategy and making investment decisions.
When asked about the impact of a potential credit downgrade of South Africa, Mouton said: “PSG Group is well positioned with a prudent approach to debt. Gearing throughout the group is at conservative levels, and a significant portion of interest rate exposure has been fixed. We are therefore somewhat protected in the event of such downgrade and a rise in interest rates.
“All our companies have set ambitious growth targets and plans, being integral to PSG Group’s DNA. We currently have R1.7 billion cash available for further investments in our existing portfolio and one or two smaller green field businesses, but the timing thereof remains uncertain.
“Our core investee companies have relatively low market shares in their respective industries, with ample scope for further growth in South Africa. Coupled with strong management and ambitious growth targets, we believe PSG Group’s investment portfolio should continue yielding above average returns for its shareholders,” Mouton said.