INVESTMENT HOLDINGS

Sum-of-the-parts value rises as PSG Group goes forth after setbacks

INVESTMENT holding company PSG Group said that the drawbacks it suffered in Zeder Investments and Pioneer Foods as a result of the drought did little to dampen its sum-of-the-parts (SOTP) value, which was up by 8.38 percent for the six months to end August.

The SOTP value, 91 percent of which is calculated using JSElisted share prices, rose 8.38 percent to R261.05 per share at the end of August from R240.87 recorded in February.

The group said growth had been achieved despite weaker earnings performance from Zeder’s investment in food and related businesses, including Pioneer Foods, that came under severe pressure because of the drought and other challenges.

The group reported a decline in income to R3.2 billion, down from R3.6bn while profit fell to R833 million, down from R1bn reported last year.

Headline earnings per share took a knock to 362.6 cents a share, down from 470.5c compared to last year.

It said Zeder experienced strong head winds with a 75 percent decrease in recurring headline earnings per share. But the group’s other core investments in Capitec, Curro, PSG Konsult and PSG Alpha all delivered strong earnings growth.

Chief Mouton said the growth enabled the group to increase its consolidated recurring headline earnings per share to 412.1c compared to 411.8c reported a year ago.

Mouton said: “We believe PSG Group’s investment portfolio should continue yielding above-average returns. Of particular interest, are two significant transactions concluded since August.

PSG boasts investments in banking, education, financial services and food and related business, as well as early-stage investments in growth sectors. It maintained a strong position with R1.2bn in cash for further investment opportunities.

PSG Alpha, its subsidiary, concluded an agreement to obtain a 50 percent interest in Evergreen Lifestyle – one of South Africa’s leading providers of retirement living – for R675m. Mouton said

the investment consisted of 500 units and the group wanted to increase it to 3 000 units in the next three years.

PSG Group continued to invest in PSG Alpha’s portfolio of early-stage investments. PSG Alpha reported a 23 percent increase in recurring headline earnings per share.

Stadio, the private tertiary education provider, will undertake a rights offer of R640m later in October to fund growth. The rights offer will be fully underwritten by PSG.

Capitec remains PSG Group’s largest investment comprising 54 percent of the total SOTP assets, and the major contributor to PSG’s recurring headline earnings. It reported a 17 percent increase in headline earnings per share while PSG Konsult reported a 10 percent increase in recurring headline earnings per share.

As the largest provider of private school education in Southern Africa, Curro reported a 22 percent increase in headline earnings per share and this made it possible for the group to declare an interim dividend of 138c a share, representing 10 percent increase from last year’s 125c.

“PSG Group believes in the future of South Africa and continues to invest significantly in the country’s economy,” Mouton said.

PSG shares rose 5.35 percent on the JSE yesterday to close at R259.89.