Johannesburg - PSG Group has R2.9 billion cash available for further investment, the company said yesterday as it reported its annual results.
In the year to February, the investment holding company said consolidated recurring headline earnings a share rose 33 percent to 787.8 cents a share.
PSG Group chief executive Piet Mouton said part of the R2.9bn would be reinvested in its current investment portfolio to grow its existing businesses, such as private schools operator Curro Holdings.
In February Curro announced during its annual results presentation that it planned to raise R1bn in a rights issue this year and Mouton said R650 million of the R2.9bn would be used for Curro’s expansion.
“Hopefully one or two companies will also benefit from this cash injection as well,” he said.
The story of PSG is an interesting one in the country because most of its businesses are hardly 20 years old. Mouton puts it down to well-calculated investments.
“Overall we were fortunate to invest in a number of great businesses in South Africa. For one Capitec is a truly amazing story. There was nothing in the past 15 years and now the bank has 7.3 million clients and is still growing. Curro was started with three schools and now we are talking about more than 110 schools and PSG Konsult has a low market share but it has the potential to grow even bigger in the future.
“I can explain the group’s success in two scenarios: part of it was luck but I think the most important one is the hard work that we have put together to create this business in the past 20 years,” said Mouton.
The group said the sum-of-the-parts (SOTP) value and the recurring headline earnings per share are the two key benchmarks to measure PSG Group’s performance. The SOTP value, whereby 83 percent is calculated by using JSE-listed share prices while other investments included at market-related valuations, amounted to R186.67 (R163.28 last year) per PSG share as at February 29.
Capitec, with a market share of about 2.5 percent of the consumer credit book, remained PSG Group’s largest investment, comprising 39 percent (41 percent last year) of the total SOTP assets as at February 29. Capitec is also the major contributor to PSG Group’s recurring headline earnings.
The bank’s headline earnings per share increased by 26 percent while Zeder, with its largest investment a 27.2 percent interest in Pioneer Foods, increased its recurring headline earnings per share by 20 percent in die year under review.
The holding company has a range of diverse underlying investments which include banking, education, financial services, food and related businesses, and private equity.
PSG’s policy remains to pay up to 100 percent of free cash flow as an ordinary dividend, of which one third is payable as an interim and the balance as a final dividend at year-end.
The directors have resolved to declare a final gross dividend of R2, up from R1.45 as compared with last year’s income reserves for a total dividend of R3, up by 50 percent from last period.
The share price rose 0.73 percent yesterday to close at R208.
Mouton said that even though the group was operating under difficult trading conditions in the country because of slow economic growth and drought, he was happy PSG was operating in a growing market like South Africa.
“Of course I would have preferred a 5 percent growth in the country’s economy.
“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,” said Mouton.
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