PSG Konsult posts double-digit growth in earnings despite Covid-19 challenges

PSG KONSULT delivered a double-digit growth in earnings for the year to end February despite a difficult year, boosted by the contribution of PSG Insure and PSG Wealth divisions.

The financial services group yesterday reported a 10 percent increase in recurring headline earnings per share to 52.7 cents and a return on equity of 20 percent.

PSG Konsult declared a final gross dividend of 16.5c, in line with its dividend policy, taking the total dividend to 24.5c, up by 9 percent compared to last year’s 22.5c.

Chief executive Francois Gouws said the dividend declaration demonstrated the group’s strong financial position and confidence in its future prospects.

“PSG Konsult remains strongly capitalised, with a capital cover ratio of 213 percent and we always aim to declare a dividend of between 40 to 50 percent of our earnings,” he said.

PSG Konsult said all key financial and operational metrics were positive, during the period and once again demonstrated the resilience of its franchise despite the Covid-19 outbreak, which knocked on the economy.

Gouws said their strong financial position and cash flow, together with years of investing in their systems and enhancing their digital capabilities had enabled them to operate successfully in a challenging environment, and still generate commendable returns for their shareholders.

“Our investment approach is prudent and grounded in risk management. Decisions are made by continually evaluating return versus risk. This approach ensures the group has a strong balance sheet and excellent liquidity,” Gouws said.

PSG Insure was the strongest performer and grew its recurring headline earnings by 24 percent during the period.

The division continued to focus on profitable growth with an emphasis on commercial lines’ type of business which requires adviser expertise.

“PSG Insure worked closely with insurers to provide relief to clients during the Covid-19 level 5 lockdown period and Western National Insurance supported qualifying policyholders through premium relief measures and Covid-19-related business interruption relief payments,” the group said.

PSG Wealth reported a 19 percent increase in recurring headline earnings, despite the uncertainty and volatile market conditions.

Its clients’ assets managed by their wealth advisers increased by 20 percent to R232.6 billion which included R14bn of positive net inflows.

Gouws said the Insure and Wealth divisions contributed approximately 85 percent of the group’s recurring headline earnings, with PSG Asset Management contributing around 15 percent.

PSG Asset Management reported a 28 percent decline in recurring headline earnings, adversely impacted by challenging market conditions.

However, the group said the recent, shorter-term performance showed encouraging early signs of improvement, with several funds performing in the top quartile over a one-year period.

Its client assets under management decreased by 4 percent to R35.3bn during the current year, due to a combination of market movements and net client outflows while assets administered by the division increased by 19 percent to R142.9bn, supported by R11.1bn of multi-managed net inflows.

PSG Konsult’s share price closed 1.39 percent higher at R9.50 on the JSE yesterday.