Capitec and Curro Holdings boost PSG Group recurring earnings

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Johannesburg Stock Exchange listed investment holding company PSG Group recently reported a 9 percent increase in recurring earnings per share for the year to end February, boosted by the performance of Capitec and Curro Holdings.

As a result, recurring earnings per share increased to R10.86 a share, up from R9.94 compared to last year.

PSG Group chief executive Piet Mouton said while conditions were particularly demanding in the second half of the year with the consumer under continued pressure and the equities market yielding negative returns, PSG Group was generally satisfied with the underlying investments’ performance.

“PSG Group remains well positioned for any recovery in the economy. However, what is now needed is stability and clarity about policy to stimulate sustained growth, which will particularly help companies in their start-up phase,” Mouton said.

Mouton said despite obvious challenges, PSG Group remained positive about South Africa and the opportunities it presented.

“We believe PSG Group’s investment portfolio is suitably positioned to continue yielding above-average returns,” Mouton said.

The PSG Group said that it used two key benchmarks to measure its performance, the sum-of-the-parts (SOTP) value and recurring earnings per share.

During the period the group’s SOTP, of which more than 90percent is calculated using JSE-listed share prices while other investments are included at market-related valuations, increased by 22 percent to R311.45 per PSG Group share as at the end of February, up from R255.17 compared to last year.

Capitec, which remains the group’s largest investment comprising 66 percent of its total SOTP assets and the major contributor to PSG Group’s recurring earnings, reported a 19 percent increase in headline earnings per share during the year.

Curro, the provider of private school education in Southern Africa, reported a 23 percent increase in headline earnings per share for the year to end December.

The group’s other investments in PSG Konsult reported a 4 percent increase in recurring earnings per share while PSG Alpha reported a 7percent decline in recurring earnings per share following the dilutionary effect of investments in initially low earnings-yielding start-up businesses such as Stadio and Evergreen.

PSG consists of underlying investments that operate across a diverse range of industries.

Revenue declined to R13 billion, down from R14bn compared to last year while headline earnings per share increased to 1011 cents, up from 908c.

The group declared a final dividend of 304c a share, up by 10 percent compared to last year’s 277c.

Source: Sandile Mchunu

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