PSG declares ad hoc dividend after Capitec unbundling


PSG declares ad hoc dividend after Capitec unbundling

Published Date: 2020-10-16 | Source: Stephen Gunnion | Author: Stephen Gunnion

PSG declares ad hoc dividend after Capitec unbundling

The group reported a headline loss following a decline in the share prices of its listed investments.

A slimmed down PSG Group has reported a first-half headline loss following a decline in the share prices of a number of its listed investments. However, it's paying an interim dividend and says results for the six months to end-August were skewed by a change in its accounting methodology after unbundling most of its investment in Capitec in August.

Under International Financial Reporting Standards (IFRS), PSG now reports as an investment entity and the performance of its remaining investment portfolio is measured on the fair value of each of its underlying investments rather than consolidated profitability at group level, reflected in recurring earnings. As a result, it said its half-year results weren't comparable to prior periods.

For the six months to end-August, it swung to a headline loss of R14.14 per share from earnings of R5.68 last year. The headline loss reflected the decrease in the share price of listed investments including PSG Konsult, Capitec, Curro and Zeder. However, earnings per share rose to R118.62, up from R6.39 previously, boosted by a big headline gain because the fair value of the stake it unbundled in Capitec exceeded its carrying value at the end of July when shareholders approved the move.

PSG unbundled a 28.1% stake in Capitec in August, reducing its holding to 2.8%, with a further small stake held by PSG Financial Services following the unbundling.

At the end of August, PSG's sum-of-the-parts (SOTP) value per share amounted to R75.86, down 20% from six months earlier if Capitec was excluded from the February calculation. It's net asset value per share of R73.27 was down 16% from February's level and 14% from a year earlier.

Following the bundling of Capitec, PSG said its policy was to pay ad hoc dividends as and when circumstances allowed. It's declared an interim dividend of R1.64 per share for the period.

With a share price of R45 at the end of August representing a 41% discount to its SOTP, CEO Piet Mouton told investors on a results call that the group would consider buying back its own shares after it was given authority at its annual general meeting to repurchase up to 20% of its stock.

PSG's shares rose 3.2% to R49.30 yesterday.

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