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Short-Form Announcement: Reviewed Results For The Year Ended 29 February 2020 And Dividend Declaration
PSG KONSULT LIMITED
(Incorporated in the Republic of South Africa)
Registration Number: 1993/003941/06
JSE Share Code: KST
NSX Share Code: KFS
SEM Share Code: PSGK.N0000
ISIN Code: ZAE000191417
LEI Code: 378900ECF3D86FD28194
(“PSG Konsult” or “the Company”)
SHORT-FORM ANNOUNCEMENT: REVIEWED RESULTS FOR THE YEAR ENDED 29
FEBRUARY 2020 AND DIVIDEND DECLARATION
1. INTRODUCTION
Shareholders are reminded that the financial results are based on the actual results for
the year ended 29 February 2020, as required in terms of International Financial
Reporting Standards (IFRS). Therefore, these financial results do not reflect the current
market conditions and must be read in that context. The directors, while complying with
IFRS, have also chosen to comment on the impact of the developing COVID-19
pandemic.
2. FINANCIAL RESULTS
• Recurring headline earnings per share increased by 8% to 48.1 cents per share
• Total dividend per share for the year increased by 10% to 22.5 cents per share
• Total assets under management increased by 3% to R230bn
• Gross written premium increased by 22% to R5.5bn
PSG Konsult produced a solid 8% recurring headline earnings per share growth and
20.5% return on equity for 2020, despite longer-term structural deficits in the South
African economy.
We continued to invest in long-term growth initiatives, given the attractive opportunities
we see for our businesses. During the current year we maintained investment momentum
in systems and processes (+17% in non-personnel costs) while also continuing to hire
top talent (+8% in personnel costs).
It’s a salutary reminder that the benefits from long-term investments take time and require
both confidence and patience. Over the past five years we invested circa R1bn (fully
expensed) in systems and processes, and it’s only during the current year that we started
to see the benefits of lower marginal costs related to client service. Consequently, we
expect that the growth in future costs will be at a lower rate.
The Insure division’s growth in recurring headline earnings was supported by the Absa
Insurance and Financial Advisers acquisition concluded in the prior year.
No performance fees were earned during the current year, compared to the prior year
where performance fees constituted 2.9% of headline earnings.
PSG Konsult’s key financial performance indicators for the year ended 29 February 2020
are shown below.
29 Feb 2020 Change 28 Feb 2019
R’000 % R’000
Core income 5 068 869 10 4 603 577
Recurring headline earnings 644 408 9 591 099
Non-recurring items - 12 789
Headline earnings 644 408 7 603 888
Non-headline items 2 549 (1 714)
Earnings attributable to ordinary shareholders 646 957 7 602 174
Divisional recurring headline earnings
PSG Wealth 376 384 11 338 594
PSG Asset Management 146 420 (12) 167 279
PSG Insure 121 604 43 85 226
644 408 9 591 099
Weighted average number of shares in issue
(net of treasury shares) (millions) 1 340.9 1 1 325.1
Earnings per share (basic) (cents)
– Recurring headline 48.1 8 44.6
– Headline 48.1 5 45.6
– Attributable 48.2 6 45.4
– Recurring headline (excluding intangible asset amortisation cost) 52.2 8 48.4
Dividend per share (cents) 22.5 10 20.5
– Interim 7.5 7 7.0
– Final 15.0 11 13.5
Return on equity (ROE) (%) 20.5 21.5
Capital management
PSG Konsult remains strongly capitalised, with a capital cover ratio of 191% (2019: 182%)
based on the latest insurance group return. PSG Konsult’s strong cash flow enables us
to continue to invest in long-term growth opportunities, systems and processes, while
optimising risk-adjusted returns for shareholders.
The group negotiated the early redemption of the R100.0 million notes issued under the
Domestic Medium-Term Note Programme. The notes were redeemed on 12 July 2019,
utilising surplus cash, and the group therefore had no remaining interest-bearing debt at
year-end.
Shareholders were advised on 4 December 2019 that the rating agency Global Credit
Rating Company upgraded the group’s credit rating. PSG Konsult’s long-term South
African national scale rating was upgraded to A(ZA) from A-(ZA), while the short-term
South African national scale rating was revised to A1(ZA), from A1-(ZA) with a stable
outlook.
To minimise the impact of share issue dilution, the PSG Konsult Group Share Incentive
Trust purchased 12 585 068 PSG Konsult shares, at a cost of R122.1 million, during the
first half of the year to satisfy certain of its obligations in terms of the Share Incentive
Scheme. In addition, PSG Konsult repurchased and cancelled a further 1 551 139 shares
at a cost of R13.7m during the second half of the year.
COVID-19
Our first priority is to ensure staff safety and business continuity for our clients. We are
able to report that most of PSG Konsult’s operations have been classified as an essential
service, but that 99% of our staff and advisers are working remotely. Despite recent
market volatility caused by COVID-19, PSG Konsult remains resilient. Assets under
management at 31 March 2020 amounted to R207.9 billion, a decrease of circa 10%
compared to a 13% decrease in the JSE All Share Index during March 2020. The group
has a strong balance sheet and excellent liquidity. We take a prudent approach when
investing assets backing our regulatory capital requirements; as such circa 90% of
investable shareholder assets are invested in cash, money market or related instruments.
The aim is to limit market volatility on our shareholders’ equity and regulatory capital; by
way of example, the shareholders’ assets declined by less than 1% for the month ended
31 March 2020. PSG Konsult is working with various authorities and regulators to help
minimise the impact of COVID-19 on society as a whole, which among other initiatives
shall include a R10.0 million donation into the South African Solidarity Fund.
3. DIVIDEND DECLARATION
Given its continued confidence in the group’s prospects, the board decided to approve
and declare a final gross dividend of 15.0 ZAR cents per share from income reserves for
the year ended 29 February 2020 (2019: 13.5 ZAR cents per share). The group’s dividend
payout ratio remains consistent with the dividend policy communicated at the time of
listing. The dividend amount, net of South African dividend tax of 20%, is 12.0 ZAR cents
(2019: 10.8 ZAR cents) per share for those shareholders who are not exempt from
dividend tax or are not entitled to a reduced rate in terms of the applicable double-tax
agreement. The number of ordinary shares in issue at the declaration date is 1 356 922
600 and the income tax number of the Company in South Africa is 9550/644/07/5.
The salient dates of the dividend declaration are:
Declaration date Tuesday, 14 April 2020
Last day to trade cum dividend Tuesday, 5 May 2020
Trading ex-dividend commences Wednesday, 6 May 2020
Record date Friday, 8 May 2020
Date of payment Monday, 11 May 2020
As the dividend has been declared and denominated in Rand, it will be paid (in Rand) into
the bank accounts of shareholders appearing on the Mauritian register.
Share certificates may not be dematerialised or rematerialised between Wednesday, 6
May 2020 and Friday, 8 May 2020, both days inclusive.
4. SHORT-FORM ANNOUNCEMENT
This short-form announcement is the responsibility of the directors of the Company. It
contains only a summary of the information in the full announcement (“Full
Announcement”) and does not contain full or complete details.
The Full Announcement can be found at:
https://senspdf.jse.co.za/documents/2020/JSE/ISSE/KST/PSGKFY2020.pdf
A copy of the Full Announcement is also available for viewing on the Company’s website
at https://www.psg.co.za/files/investor-relations/financial-information/PSGKFY2020.pdf.
In addition, electronic copies of the Full Announcement may be requested and obtained,
at no charge, from the Company at company.secretary@psg.co.za and from PSG Capital.
Any investment decisions by investors and/or shareholders should be based on
consideration of the Full Announcement, as a whole.
The Company has based this short-form announcement on the financial results for the
year ended 29 February 2020 which have been reviewed by the Company’s auditors,
PricewaterhouseCoopers Inc., who expressed an unmodified review conclusion.
Tyger Valley
14 April 2020
JSE Sponsor: PSG Capital Proprietary Limited
NSX Sponsor: PSG Wealth Management (Namibia) Proprietary Limited, member of the
Namibian Stock Exchange
SEM authorised representative and SEM Sponsor: Perigeum Capital Ltd
This notice is issued pursuant to the JSE Limited Listings Requirements, the SEM Listing
Rules and the Mauritian Securities Act 2005. The board of directors of PSG Konsult accepts
full responsibility for the accuracy of the information contained in this communiqué.
Date: 14-04-2020 12:30:00
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