PSG Group’s interim dividend boosts share price

THE PSG GROUP share price leapt by more than 4 percent on the JSE yesterday after the investment holding company declared an ad hoc interim dividend of 164 cents a share for the six months to end August, despite its investee companies taking a hit from the Covid-19 outbreak. The share later closed 3.16 percent higher at R49.30.

Chief executive Piet Mouton said all of the group’s investee companies were adequately capitalised to weather the trying economic conditions.

“We have invested in quality and resilient companies and we are confident that they will bounce back from the impact of the Covid-19. Our focus hasn’t changed, and it is growing these companies despite the uncertainties in our economy,” Mouton said.

However, he added that given the current uncertainties, it was difficult to ascertain the real state of the economy, how weak it truly was and how resilient the country is to bounce back.

“A clearer picture will only emerge in the next year or two,” he said.

PSG consists of underlying investments that operate across a diverse range of industries, which include financial services, banking, education, food and related business and early stage investments in select growth sectors. The group released its first financial results after unbundling an effective 26.4 percent stake in Capitec Bank and disposing of 1.9 million Capitec shares for R1.7 billion. The group now has a minority stake of 2.8 percent in Capitec.

In the six months to end August, Capitec reported a 78 percent decline in headline earnings per share, hurt by an increase in expected credit losses and decreased trading activity with consumer liquidity constrained following the Covid-19-induced national lockdown and current state of the economy. During this period PSG accounted for a fair value loss of R2.3bn in respect of its retained interest in Capitec following a decline in its listed share price since the end of February.

Following the unbundling of Capitec, PSG Konsult, a financial services group, is now PSG Group’s largest investment and represents 34 percent of its sum-of-the-parts (SOTP) value.

PSG Konsult reported a 7 percent increase in recurring earnings per share, mainly driven by its Wealth and Insure divisions.

PSG Group’s SOTP value a share declined by 20 percent to R75.86 at the end of August compared to R94.44 at the end February if the unbundled Capitec shares are excluded from the group’s SOTP value for comparative purposes. Mouton said the decline was an indication of the depressed equity markets and the challenging trading conditions brought about by the Covid-19 pandemic and associated national lockdown.

PSG Group has also invested in other listed companies like Curro Holdings and Zeder Investments. The unlisted entities include PSG Alpha and Dipeo, a black economic empowerment investment holding company.