PSG Financial Services Limited (JSE:KST) today announced its annual results for the year ended 28 February 2025.

PSG Financial Services (the group) delivered a 24.7% increase in recurring headline earnings per share and a return on equity of 26.6%. According to Chief Executive Officer Francois Gouws, operating conditions remained challenging, but more favourable equity market conditions impacted positively on the group’s results during the year. “Our key financial metrics under these conditions highlight the competitive advantage of our advice-led business model,” Gouws noted.

Total assets under management increased by 15.7% to R470.7 billion, comprising assets managed by PSG Wealth of R410.0 billion (15.5% increase) and PSG Asset Management of R60.7 billion (17.2% increase), while performance fees constituted 3.7% (2024: 2.8%) of headline earnings.

PSG Insure’s gross written premium increased by 9.2% to R7.6 billion, and our comprehensive reinsurance programme and quality underwriting practices, risk selection and pricing allowed us to achieve a net underwriting margin of 12.7%.

PSG Asset Management’s 17.2% increase in AUM was driven by R4.5 billion of inflows and R4.4 billion of market movement, reflecting the business’ long-term investment track record and stronger equity markets during the year under review. Increased AUM and higher performance fees resulted in PSG Asset Management increasing its recurring headline earnings by 36.9% over prior year.

Gouws continues, “The firm remains confident about its long-term growth prospects, and we therefore continue to invest in both technology and people. Compared to the prior year, our technology and infrastructure spend increased by 18.6% (these costs continue to be fully expensed), while our fixed remuneration cost grew by 6.1%. We are proud of the progress made in growing our own talent, with 150 newly qualified graduates having joined during the financial year.”

Capital management and dividend declaration

PSG’s capital cover ratio remains strong at 257% based on the latest insurance group return (29 February 2024: 286%). This comfortably exceeds the minimum regulatory requirement of 100%. In August 2024, Global Credit Rating Company (GCR) affirmed the group’s long-term and short-term credit ratings at A+_(ZA) and A1_(ZA) respectively, with a Positive Outlook. The group’s capital cover ratio and the credit rating affirmation are testament to the group’s strong financial position and excellent liquidity.

PSG continues to generate strong cash flows, which provides the group with various options to optimise its capital structure and risk-adjusted returns for the benefit of shareholders. The group repurchased and cancelled 19.1 million shares at a cost of R330.3 million during the year as part of shareholder capital optimisation. Our shareholder investable asset’s exposure to equity remains at 9%. We continue to monitor investment markets and will gradually increase our value at risk exposure to align with our long-term target.

Final dividend

Considering the group’s strong cash position, the board declared a final gross dividend of 35.0 cents per share from income reserves for the year ended 28 February 2025 (2024: 28.5 cents per share). This brings the total dividend distribution to shareholders to 52.0 cents per share (2024: 42.0 cents per share) for the full year, reflecting the group’s sound financial position and confidence in its prospects. The group’s dividend pay-out ratio remains between 40% to 60% of full year recurring headline earnings, excluding intangible asset amortisation.

Looking ahead

The inaugural PSG Think Big SA competition 2024, run in collaboration with Economic Research South Africa (ERSA), demonstrated the eagerness of South Africans to engage with complex economic issues facing the country. Building on its success, we have launched the second iteration of the annual competition which aims to broaden the discussion on the role of capital markets in enhancing economic growth and job creation in South Africa. The competition offers prize money amounting to R1 million for the winning submissions.

Gouws concludes, “PSG is a proudly South African firm that believes in harnessing the power of South Africans’ knowledge base to drive economic progress, and in their ability to ignite its untapped potential. Nevertheless, continued low levels of economic growth, South Africa’s debt and fiscal position and heightened geopolitical tensions remain seemingly intractable problems.

“We understand that our economic and societal challenges will not be resolved quickly. Therefore, we will continue to monitor local and global events, and the associated impact on the group’s clients and other stakeholders, and will adjust our approach if required. Irrespective of the short-term challenges, we remain confident in our long-term strategy and will continue to invest in our businesses, thereby securing prospects for growth.”