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Cape Town - PSG Group, the JSE-listed investment holding company with underlying investments in financial services, banking, private equity, agriculture and education, has achieved milestone results for the financial year ended February 2015.
Consolidated recurring headline earnings exceeded R1bn for the first time.
The sum-of-the-parts (SOTP) value and recurring headline earnings per share are considered by PSG Group as the two key benchmarks to measure performance.
The SOTP value per PSG share has increased by 72% to R163.28 as at February 28 2015, compated to R95.01 in 2014. As at April 7 2015 the SOTP value was R195.02 per share. Nearly 88% of the SOTP value is calculated using JSE-listed share prices, while other investments are included at market-related valuations.
Recurring headline earnings increased by 39% to R1.14bn, compared to R821m in 2014, with strong performances by all of the group’s key underlying investments. Recurring headline earnings per share increased by 32% to 593.6 cents, compared to 448.8 cents in 2014.
A final dividend of 145 cents per share - compared to 90c per share in 2014 - was declared for a total dividend of 200c per share for the year, representing an increase of 50%.
Announcing the results PSG Group CEO, Piet Mouton, said the group’s assets are now solidly underpinned by strong cash flows from underlying investments, paving the way for the 50% increase in dividend.
“We are now in the fortunate position that all the key assets are performing well with exciting prospects. The group’s investment portfolio should continue to yield above average returns in future," said Mouton.
“The focus will for now remain on existing investments for growth.”
Capitec remains PSG Group’s largest investment, comprising 41% of the SOTP value’s total assets at year-end. The higher contribution follows a 123% increase in Capitec's share price and an increase in PSG Group’s direct interest in Capitec.
Capitec also continues to be the major contributor to PSG Group’s recurring headline earnings per share with growth of 26% in the period under review.
The higher direct interest in Capitec follows the merger of Thembeka Capital and PSG Group in a transaction amounting to R1.5bn. Following the merger, PSG Group [JSE:PSG] holds a 49% interest in a new BEE investment holding company and PSG Group’s interest in Capitec and Curro Holdings increased to 30.7% and 58.5% respectively.
The new BEE investment holding company is 51%-owned by the Stellenbosch BEE Education Trust of which all beneficiaries are black individuals.
PSG Group provided the new BEE investment holding company with R800m in preference share funding to acquire select investments from Thembeka, the most significant being interests of 6.6% in Curro, 4.4% in Pioneer Foods and 20% in Kaap Agri. These investments are all subject to BEE lock-in periods.
The value created will be used by the Stellenbosch BEE Education Trust to fund gifted, but needy black students’ education.
Although Curro reported a 38% increase in recurring headline earnings per share for the year ended December 31 2014, its earnings contribution to the PSG Group remains relatively small. This investment is, however, expected to contribute significantly to PSG Group’s earnings in years to come.
PSG Konsult achieved growth of 31% in recurring headline earnings per share in the period under review after a strong performance by PSG Wealth and PSG Asset Management in particular.
Zeder achieved a 15% increase in recurring headline earnings per share having increased its direct interest in Pioneer Foods to 27.3% through the issue of Zeder shares in a transaction valued in excess of R2.5bn. This constituted the single largest transaction in PSG Group’s history.
Following the share issue, PSG Group’s interest in Zeder diluted to 29.1%. PSG Group subsequently increased its shareholding to 33.8% for a cash consideration of R447m.
PSG Private Equity reported a 10% decrease in recurring headline earnings per share following challenging trading conditions at certain investments.
