PSG Financial Services, which changed its name in July from PSG Konsult, said yesterday that it had increased its interim dividend by 23% due to double-digit earnings growth despite challenging operating conditions.
In its interim results for the six months that ended August 31, 2023, the group said it achieved robust earnings growth across its three main business units, which span investment advice, insurance, and asset management.
Recurring headline earnings per share per share rose 21% to 37.6 cents per share following net inflows into managed assets of R9.5bn.
The group declared an interim gross dividend of 13.5 cents per share from income reserves, compared to last year’s 11 cents per share, up 23%.
PSG Financial Services said this reflected its sound financial position and confidence in its prospects.
CEO Francois Gouws said the group’s performance in a challenging economic environment showcases the competitive advantage of its advice-led business model and management’s strength in executing its strategic plans consistently over multiple years, which has repeatedly paid off for shareholders.
“We remain confident of the group’s long-term growth prospects and, therefore, continue to invest in both technology and our people. Compared to the prior six-month period, our technology and infrastructure spending increased by 12%. These costs continue to be fully expensed, while our fixed remuneration costs grew by 12%.
“The group’s success is a testament to our advice-led business model and robust network of advisers, which continues to expand and provide excellent client service, which, in turn, has generated outstanding value for our shareholders.
‘’Total assets under management increased by 19% to R375.9bn over the prior period, a considerable performance considering the challenging operating environment, with some industry players facing considerable client outflows.”
The group said the 19% increase comprised of assets managed by PSG Wealth increasing by 18% to R325.6 billion, PSG Asset Management by 20% to R50.3bn, while PSG Insure’s gross written premium amounted to R3.4bn, a 12% increase. Performance fees earned constituted 2.5%, 2022: 3.7% of headline earnings.
From a cost perspective, the group’s Insure division was adversely impacted by the Boksburg earthquake and Western Cape storms during June 2023. However, Western National’s comprehensive reinsurance programme cushioned the effect on underwriting results, it said.
The group said it continud to generate strong cash flows, which provides the group with options to optimise its capital structure and risk-adjusted returns to shareholders.
‘’In line with this strategy, the group repurchased 9.7 million shares at a cost of R120.6m,’’ it said.
During August 2023, PSG Financial Services reported that the Global Credit Rating Company affirmed the group’s long-term and short-term credit ratings at A+ (ZA) and A1(ZA), respectively, with a stable outlook.
Looking ahead, Gouws said the group remained confident about its strategy and it would continue to invest in the business to secure its prospects for long-term growth.
“We have always been confident that resourceful South Africans will build a better future for themselves and future generations. The recent collaborative efforts between the government and the private sector to alleviate energy supply issues, improve the country’s logistics performance, and address the high crime and corruption levels are welcomed by the group.
‘’Urgent action in resolving these three core challenges needs to remain a priority to support a recovery in South Africa’s economic growth rate that will ultimately lead to much-needed job creation,’’ he said.
Gouws said irrespective of the short-term challenges, the group remained confident in its long-term strategy and will continue to invest in its businesses, thereby securing prospects for growth.
‘’We will, however, continue to monitor local and global events and the associated impact on the group’s clients and other stakeholders,” he said.