PSG KONSULT LIMITED - Short-Form Announcement: Reviewed Results For The Year Ended 29 February 2020 And Dividend Declaration
14 April, 2020 - Posted at - 12:30:32
<BR>
Short-Form Announcement: Reviewed Results For The Year Ended 29 February 2020 And Dividend Declaration: https://senspdf.jse.co.za/documents/2020/jse/isse/kst/PSGKFY2020.pdf<BR>
Short-Form Announcement: Reviewed Results For The Year Ended 29 February 2020 And Dividend Declaration<BR>
<BR>
PSG KONSULT LIMITED<BR>
(Incorporated in the Republic of South Africa)<BR>
Registration Number: 1993/003941/06<BR>
JSE Share Code: KST<BR>
NSX Share Code: KFS<BR>
SEM Share Code: PSGK.N0000<BR>
ISIN Code: ZAE000191417<BR>
LEI Code: 378900ECF3D86FD28194<BR>
(“PSG Konsult” or “the Company”)<BR>
<BR>
<BR>
SHORT-FORM ANNOUNCEMENT: REVIEWED RESULTS FOR THE YEAR ENDED 29<BR>
FEBRUARY 2020 AND DIVIDEND DECLARATION<BR>
<BR>
1. INTRODUCTION<BR>
<BR>
Shareholders are reminded that the financial results are based on the actual results for<BR>
the year ended 29 February 2020, as required in terms of International Financial<BR>
Reporting Standards (IFRS). Therefore, these financial results do not reflect the current<BR>
market conditions and must be read in that context. The directors, while complying with<BR>
IFRS, have also chosen to comment on the impact of the developing COVID-19<BR>
pandemic.<BR>
<BR>
2. FINANCIAL RESULTS<BR>
<BR>
• Recurring headline earnings per share increased by 8% to 48.1 cents per share<BR>
• Total dividend per share for the year increased by 10% to 22.5 cents per share<BR>
• Total assets under management increased by 3% to R230bn<BR>
• Gross written premium increased by 22% to R5.5bn<BR>
<BR>
PSG Konsult produced a solid 8% recurring headline earnings per share growth and<BR>
20.5% return on equity for 2020, despite longer-term structural deficits in the South<BR>
African economy.<BR>
<BR>
We continued to invest in long-term growth initiatives, given the attractive opportunities<BR>
we see for our businesses. During the current year we maintained investment momentum<BR>
in systems and processes (+17% in non-personnel costs) while also continuing to hire<BR>
top talent (+8% in personnel costs).<BR>
<BR>
It's a salutary reminder that the benefits from long-term investments take time and require<BR>
both confidence and patience. Over the past five years we invested circa R1bn (fully<BR>
expensed) in systems and processes, and it's only during the current year that we started<BR>
to see the benefits of lower marginal costs related to client service. Consequently, we<BR>
expect that the growth in future costs will be at a lower rate.<BR>
<BR>
The Insure division's growth in recurring headline earnings was supported by the Absa<BR>
Insurance and Financial Advisers acquisition concluded in the prior year.<BR>
<BR>
No performance fees were earned during the current year, compared to the prior year<BR>
where performance fees constituted 2.9% of headline earnings.<BR>
<BR>
PSG Konsult's key financial performance indicators for the year ended 29 February 2020<BR>
are shown below.<BR>
<BR>
29 Feb 2020 Change 28 Feb 2019<BR>
R'000 % R'000<BR>
<BR>
Core income 5 068 869 10 4 603 577<BR>
<BR>
Recurring headline earnings 644 408 9 591 099<BR>
Non-recurring items - 12 789<BR>
Headline earnings 644 408 7 603 888<BR>
Non-headline items 2 549 (1 714)<BR>
Earnings attributable to ordinary shareholders 646 957 7 602 174<BR>
Divisional recurring headline earnings<BR>
PSG Wealth 376 384 11 338 594<BR>
PSG Asset Management 146 420 (12) 167 279<BR>
PSG Insure 121 604 43 85 226<BR>
644 408 9 591 099<BR>
Weighted average number of shares in issue<BR>
(net of treasury shares) (millions) 1 340.9 1 1 325.1<BR>
Earnings per share (basic) (cents)<BR>
– Recurring headline 48.1 8 44.6<BR>
– Headline 48.1 5 45.6<BR>
– Attributable 48.2 6 45.4<BR>
– Recurring headline (excluding intangible asset amortisation cost) 52.2 8 48.4<BR>
Dividend per share (cents) 22.5 10 20.5<BR>
– Interim 7.5 7 7.0<BR>
– Final 15.0 11 13.5<BR>
Return on equity (ROE) (%) 20.5 21.5<BR>
<BR>
<BR>
Capital management<BR>
PSG Konsult remains strongly capitalised, with a capital cover ratio of 191% (2019: 182%)<BR>
based on the latest insurance group return. PSG Konsult's strong cash flow enables us<BR>
to continue to invest in long-term growth opportunities, systems and processes, while<BR>
optimising risk-adjusted returns for shareholders.<BR>
<BR>
The group negotiated the early redemption of the R100.0 million notes issued under the<BR>
Domestic Medium-Term Note Programme. The notes were redeemed on 12 July 2019,<BR>
utilising surplus cash, and the group therefore had no remaining interest-bearing debt at<BR>
year-end.<BR>
<BR>
Shareholders were advised on 4 December 2019 that the rating agency Global Credit<BR>
Rating Company upgraded the group's credit rating. PSG Konsult's long-term South<BR>
African national scale rating was upgraded to A(ZA) from A-(ZA), while the short-term<BR>
South African national scale rating was revised to A1(ZA), from A1-(ZA) with a stable<BR>
outlook.<BR>
<BR>
To minimise the impact of share issue dilution, the PSG Konsult Group Share Incentive<BR>
Trust purchased 12 585 068 PSG Konsult shares, at a cost of R122.1 million, during the<BR>
first half of the year to satisfy certain of its obligations in terms of the Share Incentive<BR>
<BR>
Scheme. In addition, PSG Konsult repurchased and cancelled a further 1 551 139 shares<BR>
at a cost of R13.7m during the second half of the year.<BR>
<BR>
COVID-19<BR>
Our first priority is to ensure staff safety and business continuity for our clients. We are<BR>
able to report that most of PSG Konsult's operations have been classified as an essential<BR>
service, but that 99% of our staff and advisers are working remotely. Despite recent<BR>
market volatility caused by COVID-19, PSG Konsult remains resilient. Assets under<BR>
management at 31 March 2020 amounted to R207.9 billion, a decrease of circa 10%<BR>
compared to a 13% decrease in the JSE All Share Index during March 2020. The group<BR>
has a strong balance sheet and excellent liquidity. We take a prudent approach when<BR>
investing assets backing our regulatory capital requirements; as such circa 90% of<BR>
investable shareholder assets are invested in cash, money market or related instruments.<BR>
The aim is to limit market volatility on our shareholders' equity and regulatory capital; by<BR>
way of example, the shareholders' assets declined by less than 1% for the month ended<BR>
31 March 2020. PSG Konsult is working with various authorities and regulators to help<BR>
minimise the impact of COVID-19 on society as a whole, which among other initiatives<BR>
shall include a R10.0 million donation into the South African Solidarity Fund.<BR>
<BR>
<BR>
3. DIVIDEND DECLARATION<BR>
<BR>
Given its continued confidence in the group's prospects, the board decided to approve<BR>
and declare a final gross dividend of 15.0 ZAR cents per share from income reserves for<BR>
the year ended 29 February 2020 (2019: 13.5 ZAR cents per share). The group's dividend<BR>
payout ratio remains consistent with the dividend policy communicated at the time of<BR>
listing. The dividend amount, net of South African dividend tax of 20%, is 12.0 ZAR cents<BR>
(2019: 10.8 ZAR cents) per share for those shareholders who are not exempt from<BR>
dividend tax or are not entitled to a reduced rate in terms of the applicable double-tax<BR>
agreement. The number of ordinary shares in issue at the declaration date is 1 356 922<BR>
600 and the income tax number of the Company in South Africa is 9550/644/07/5.<BR>
<BR>
The salient dates of the dividend declaration are:<BR>
<BR>
Declaration date Tuesday, 14 April 2020<BR>
Last day to trade cum dividend Tuesday, 5 May 2020<BR>
Trading ex-dividend commences Wednesday, 6 May 2020<BR>
Record date Friday, 8 May 2020<BR>
Date of payment Monday, 11 May 2020<BR>
<BR>
As the dividend has been declared and denominated in Rand, it will be paid (in Rand) into<BR>
the bank accounts of shareholders appearing on the Mauritian register.<BR>
<BR>
Share certificates may not be dematerialised or rematerialised between Wednesday, 6<BR>
May 2020 and Friday, 8 May 2020, both days inclusive.<BR>
<BR>
4. SHORT-FORM ANNOUNCEMENT<BR>
<BR>
This short-form announcement is the responsibility of the directors of the Company. It<BR>
contains only a summary of the information in the full announcement (“Full<BR>
Announcement”) and does not contain full or complete details.<BR>
<BR>
The Full Announcement can be found at:<BR>
https://senspdf.jse.co.za/documents/2020/JSE/ISSE/KST/PSGKFY2020.pdf<BR>
<BR>
A copy of the Full Announcement is also available for viewing on the Company's website<BR>
at https://www.psg.co.za/files/investor-relations/financial-information/PSGKFY2020.pdf.<BR>
In addition, electronic copies of the Full Announcement may be requested and obtained,<BR>
at no charge, from the Company at company.secretary@psg.co.za and from PSG Capital.<BR>
<BR>
Any investment decisions by investors and/or shareholders should be based on<BR>
consideration of the Full Announcement, as a whole.<BR>
<BR>
The Company has based this short-form announcement on the financial results for the<BR>
year ended 29 February 2020 which have been reviewed by the Company's auditors,<BR>
PricewaterhouseCoopers Inc., who expressed an unmodified review conclusion.<BR>
<BR>
Tyger Valley<BR>
14 April 2020<BR>
<BR>
JSE Sponsor: PSG Capital Proprietary Limited<BR>
NSX Sponsor: PSG Wealth Management (Namibia) Proprietary Limited, member of the<BR>
Namibian Stock Exchange<BR>
SEM authorised representative and SEM Sponsor: Perigeum Capital Ltd<BR>
<BR>
This notice is issued pursuant to the JSE Limited Listings Requirements, the SEM Listing<BR>
Rules and the Mauritian Securities Act 2005. The board of directors of PSG Konsult accepts<BR>
full responsibility for the accuracy of the information contained in this communiqué.<BR>
<BR>
Date: 14-04-2020 12:30:00<BR>
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