PSG Konsult releases its results

By Janice Roberts


Independent financial services provider PSG Konsult (KST) has reported a commendable second set of full-year financial results.

Recurring headline earnings increased by 20% to R409 million for the year to 29 February 2016, up from R341 million for the same period in 2015. Funds under management grew by a healthy 16% to R154 billion.

“Our 20% growth in headline earnings are particularly pleasing when you take into account that the FTSE/JSE All Share Index recorded a negative total return of 7.4% this financial year,” said CEO Francois Gouws.

“This bears testament to our portfolio of fast-growing businesses. Over the past three years, the business has delivered compound earnings growth of 33%, with all three revenue-generating divisions growing above 28%. This is in line with our long-term growth track record of over 22% for the last 10 years,” Gouws said.

PSG Wealth remains a key revenue driver for the group through its formidable adviser base and expanding product and platform business offering. Continued positive client inflows resulted from strengthening the division’s competitive position by expanding its adviser network through both organic growth and selected adviser acquisitions. The division attracted net managed asset inflows of R12.1 billion during the year under review.

PSG Asset Management, which remains a high-growth area and a key focus for the group, attracted net inflows of R4.1 billion during the year. “Performance fees contributed 3.8% to group headline earnings. The investment team continues to generate solid returns for investors in line with investment horizons of each fund,” said Gouws.

PSG Insure continued to make inroads into the highly competitive short-term insurance market, having achieved 17% growth in gross written premiums compared to 2015. Earnings are up 33% due to efficiencies gained from benefits of scale and improved focus on optimising and balancing profitable new business growth. “Our advisers managed to gain market share without compromising their overall client loss claim ratios. Against the backdrop of a particularly difficult industry environment, this is an achievement that the group is especially pleased with,” Gouws said.

The nature of the business enabled PSG Konsult to make a substantial investment in IT infrastructure and systems. The primary objective of this investment was to enhance the overall client experience and to improve the scalability and efficiency of the group’s core IT-dependent business processes.

In addition, it afforded the group the opportunity to make strategic acquisitions such as a 70% shareholding in one of the leading independent private wealth management businesses in Mauritius, implement select adviser revenue-sharing buyback transactions, and reduce operational risk by disinvesting from certain legacy non-core business activities. The business also increased its marketing spend to improve brand awareness.

The board approved and declared a final gross dividend of 8.8 cents per share (2015: 8.0 cents per share). This follows the gross interim dividend of 4.4 cents per share (2015: 4.0 cents per share) declared in October 2015, which brings the total gross dividend declared for the 2016 financial year to 13.2 cents per share (2015: 12.0 cents per share). This is in accordance with the group’s dividend pay-out policy as approved by the board of directors at the time of listing.

Looking forward, Gouws says that despite the current uncertain economic circumstances and ongoing market volatility, he is confident that PSG will continue to build its client franchise.

“A number of initiatives are in place to ensure this happens. The group’s focus on products, platforms and client service excellence through the quality of its advice is proving to be a resilient strategy,” Gouws said.

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