PSG interim earnings spurred by Capitec
JSE-listed investment holding company, PSG Group, said it weathered difficult trading conditions during the six months to August 2019, thanks mostly to its investment in banking group, Capitec.
PSG Group said that earnings per share increased by 16% to R5.84 against R5.03 in the previous comparative period.
With underlying investments that operate across a diverse range of industries, which include banking, financial services, education and food and related business, as well as early-stage investments in select growth sectors, commendable performances were achieved by core investee companies Capitec, PSG Konsult, PSG Alpha and Curro during the period under review.
However, this was offset by Zeder’s performance, it said.
The group’s sum-of-the-parts (SOTP) value, of which more than 90% is calculated using JSE-listed share prices while other investments are included at internal valuations, amounted to R259.56 (28 February 2019: R311.45) per PSG Group share, whilst at 11 October 2019 it was R299.57 per share.
The five-year compound annual growth rate (CAGR) of PSG Group’s SOTP value per share and share price at 31 August 2019 was 19% and 17%, respectively, whereas that of the JSE All Share index was 2%.
An interim dividend of R1.64 was declared, representing an increase of 8%, PSG Group said.
Chief executive officer, Piet Mouton said the results are pleasing considering that the group is operating in an economy showing virtually no growth. “When an upswing can be expected, is still not clear. There are also global factors outside our control pressuring sentiment.
“Despite obvious challenges, PSG Group remains cautiously optimistic about South Africa and the opportunities it presents. Whilst we assist and look to investee companies to run operations optimally, we are at the same time continuously on the lookout for new opportunities,” Mouton said.
Capitec, a JSE-listed South African retail bank focused on delivering simplified and affordable banking solutions, remains PSG Group’s largest investment comprising 65% of its total SOTP assets as at 31 August 2019 and the major contributor to PSG Group’s recurring earnings.
Capitec reported a 20% increase in headline earnings per share for the period under review.
PSG Konsult reported an 8% increase in recurring headline earnings per share for the period under review.
PSG Alpha reported an 88% increase in recurring earnings per share for the period under review, with most of its investments performing to expectation. Its major investments include shareholdings in Stadio (private higher education – 44%), CA Sales (FMCG distribution – 47.7%), Evergreen (developer and operator of retirement lifestyle villages – 50%) and Energy Partners (manufacturer, owner and operator of energy assets – 54.1%).
Curro, listed on the JSE and being the largest provider of private school education in Southern Africa, reported a 7% increase in recurring headline earnings per share for its six months ended 30 June 2019.
Zeder, an investor in the broad agribusiness industry with a 28.6% interest in Pioneer Foods as its largest investment, reported a 63% decline in recurring headline earnings per share for the period under review.
Pioneer Foods recently received an all-cash offer from PepsiCo to acquire all of the issued ordinary shares in Pioneer Foods for a purchase consideration of R110 per share plus certain dividend(s). The intended disposal was approved by both Zeder and Pioneer Foods shareholders at general meetings held on 30 September 2019 and 15 October 2019, respectively.
The transaction remains subject to various conditions precedent, said PSG Group.
“We believe the group’s investment portfolio is suitably positioned to capitalise on an improvement in trading conditions,” Mouton said.
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