Psg Financial Services Limited · JSE:KST
Psg Financial Services — PSG Konsult — H1 2017 Earnings Presentation
32 slides from Psg Financial Services's earnings presentation, Nov 10, 2016
Slide 1: Investor Presentation: 2016 interim results
Investor Presentation 2016 interim results For the six months ended 31 August 2016
Slide 2: Contents
Contents 1. Overview 2. H1 2017 results 3. H1 2017 divisional performance 4. Highlights & focus 5. Conclusion 6. Appendices 2
Slide 3: Overview
01 Overview 3
Slide 4: PSG Structure
PSG Structure PSG Group Other 61.3% 38.7% PSG Wealth* PSG Asset Management PSG Insure** 100% 100% 100% * Includes PSG Employee Benefits ** Includes Western National Insurance As at 31 August 2016 4 Copyright © PSG
Slide 5: A great company
A great company Wealthy clients serviced where they reside 207 Adviser offices 738 Advisers • 193 offices • 618 advisers • 150 000+ clients No. of advisers H1 2014 H1 2015 H1 2016 H1 2017 PSG Wealth 391 419 443 505 Source: PSG Distribution 5 PSG Insure 219 210 224 233 Total 610 629 667 738
Slide 6: Business characteristics
Business characteristics • Equity market dependent • Administration businesses people / systems dependent • Not very balance sheet intensive • Free cash flow generative • Vulnerable to regulatory change 6
Slide 7: H1 2017 Results
02 H12017 Results ©O®PsSG
Slide 8: Key macro indicators
Key macro indicators Weakening economic environment H1 H1 H1 H1 Key indicators %∆ %∆ %∆ 2014 2015 2016 2017 Rand / US$ 10.3 3.8% 10.7 24.5% 13.3 10.9% 14.7 Cash Index – STeFI Call 289 5.5% 305 6.4% 325 7.0% 348 All Bond Index 420 11.7% 469 5.4% 494 4.5% 516 SA Property Index 479 12.3% 538 20.1% 646
Slide 9: H1 2017 financial results overview
H1 2017 financial results overview H1 2014 H1 2015 H1 2016 H1 2017 Consolidated results %Δ %Δ %Δ Rm Rm Rm Rm Headline earnings 109 34% 145 28% 187 15% 214 Recurring headline earnings 109 36% 147 27% 187 15% 214 Weighted average no. of shares (millions) 1 221 3% 1 260 1% 1 267 2% 1 290 HEPS (Cents) 8
Slide 10: Core business results
Core business results Financial results analysis – IFRS vs Core H1 2014 H1 2015 H1 2016 H1 2017 IFRS results (Core & Linked) %∆ %∆ %∆ Rm Rm Rm Rm Total income 1 210 26% 1 530 14% 1 740 71% 2 967 Total expense -957 29% -1 235 14% -1 403 86% -2 606 Profit before tax 161 45% 232 25% 290 17% 338 Linked
Slide 11: Headline earnings by division
Headline earnings by division H1 2014 H1 2015 H1 2016 H1 2017 Headline earnings* %∆ %∆ %∆ Rm Rm Rm Rm Wealth 71 32% 94 28% 120 17% 141 Asset Management 21 63% 34 37% 46 2% 47 Insure 17 4% 17 16% 21 29% 26 Total 109 34% 145 28% 187 15% 214 * Includes amortisation of intangibles of H1 2017: R21m (H1 2
Slide 12: Financial trend
Financial trend We always look at our historical rolling track record YoY FY FY FY FY FY FY FY FY FY FY FY CAGR H1 H1 Gwth 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 % 2016 2017 % AUA (Rbn) 21 43 53 44 72 97 139 180 233 309 327 32% 321 354 10% AUM (Rbn) 9 16 21 21 28 36 51 71 99 133 154
Slide 13: H1 2017 divisional performance
03 H1 2017 divisional performance 13
Slide 14: Wealth plans
Wealth plans Growing and protecting client wealth Excellence in Wealth assets split (Rm) FY 2016 Market Net flows H1 2017 % movement products & services Third party funds * 43 120 1 410 3 580 48 110 12% PSG Multi Managed ** 47 569 1 831 2 752 52 152 10% Discretionary 35 709 1 316 1 844 38 869 9% Top
Slide 15: Wealth
Wealth Excellence in products and services Net Flows (Rm) Year-on-year Wealth managed asset net flows ALSI Independent process %∆ -13% 39% -23% -10% 19% 25% with advisers’ 9 000 7 971 8 176 oversight 8 000 55 000 7 000 6 580 2 256 6 553 6 154 3 580 45 000 5 744 6 000 5 516 991 1 853 1 138 Rapid grow
Slide 16: Top advisers
Top advisers We continue to add top advisers to our PSG Wealth distribution business Wealth advisers (incl. EB) H1 2014* H2 2014* H1 2015* H2 2015* H1 2016 H2 2016 H1 2017 Balance – opening 384 391 406 419 434 443 480 Net movement 7 15 13 15 9 37 25 Balance – closing 391 406 419 434 443 480 505 Grow
Slide 17: Asset management plans
Asset management plans Net new money at acceptable margin Market AM assets split (Rbn) FY 2016 Net flows H1 2017 % movement Focused marketing PSG Single manager ** 20 584 1 317 -219 21 682 5% PSG Money market and 5 187 - -597 4 590 -12% related assets *** Investment PSG Segregated Portfolios **** 1
Slide 18: Asset management
Asset management ‘Brick by Brick’ strategy Net Flows (Rm) Year-on-year single managed net flows ALSI %∆ 128% 137% -93% 591% -40% -166% Long-term assets 6 000 5 658 (retail emphasis) 5 000 930 55 000 1 028 4 000 45 000 2 599 3 000 2 390 625 1 548 Getting adequate 1 048 201 35 000 2 000 3 700 376 marg
Slide 19: Asset management
Asset management Solid long-term track record Single manager 1-month 3-months 6-months 1-year 3-year 5-year 10-year Performance funds rank rank rank rank rank rank rank Rank 11 13 10 6 8 13 5 PSG Flexible Return 2.0% 1.1% 9.2% 11.0% 13.4% 16.2% 14.7% Rank 21 8 11 67 29 10 21 PSG Equity A Return 1.5%
Slide 20: Gross written premium
Insure Grow gross written premium income PSG Insure gross written premium (Rm) %∆ 10% 4% 10% 7% 7% 4% 2 000 1 763 Top advisers 1 800 1 587 1 693 Gross written premium 1 600 1 483 482 1 400 1 325 478 1 299 463 1 186 432 1 200 363 347 271 415 1 000 405 Excellence in 362 386 342 underwriting 800 314 32
Slide 21: Top advisers
Top advisers We continue to add top advisers to our PSG Insure distribution business Insure advisers H1 2014* H2 2014* H1 2015* H2 2015* H1 2016 H2 2016 H1 2017 Balance – opening 229 219 212 210 225 224 231 Net movement -10 -7 -2 15 -1 7 2 Balance – closing 219 212 210 225 224 231 233 Growth -4% -3%
Slide 22: Underwriting margin
Western National Insurance Insurance results %∆ -12% 37% -28% 69% -5% 31% 40.0 15.0% Key differentiators • Personalised service to 35.0 10.0% 6.8 10.0% brokers 7.8% 7.3% Focus on commercial 30.0 6.6% • 5.7% business 6.2% 5.0% 25.0 Underwriting margin 6.6 Net insurance result 3.7% 6.7 4.1 20.0 0.0% 1
Slide 23: Reducing risk, recurring revenues, margin enhancing
Reducing risk Recurring Margin Risk vs return revenues enhancing H1 14 H1 15 H1 16 H1 17 H1 14 H1 15 H1 16 H1 17 H1 14 H1 15 H1 16 H1 17 Perf fees/HE 10.2% 7.0% 7.5% 6.6% Op margin 13.0% 14.1% 14.2% 14.3% ROE 23.8% 24.0% 23.9% 22.9% Recurring HEPS 8.9c 11.7c 14.7c 16.6c Op margin 11.8% 13.5% 13.4% 1
Slide 24: Highlights & focus
04 Highlights & focus ©O®PsSG
Slide 25: Top line focus
Top line focus Core operations (excl. IFRS consolidated fund and policyholder related income) 2 000 1 855 1 654 Top line revenue (R’m) 1 500 1 394 672 (36%) 579 (35%) 1 076 484 (35%) 201 (11%) 1 000 200 (12%) 353 (33%) 173 (12%) 128 (12%) 500 982 (53%) 876 (53%) 736 (53%) 595 (55%) 0 H1 2014 H1 2015
Slide 26: Key achievements
Key achievements Significant progress on top priorities • Profitable strategic acquisitions (Mauritius Stockbroker) • Growth in number and profitability of PSG Advisers (organic and acquisitions growth) • Disposed of non-core operations • Marketing Improvements (incl. TV campaign) • PSG Wealth Platf
Slide 27: Conclusion
05 Conclusion — OS PSG
Slide 28: Conclusion
Conclusion Business features underpinning our expectations for future success • Largest independent adviser network in South Africa, with a broad geographic footprint that continues to expand • Strong governance structures • Clear growth opportunities for our businesses • History of superior shareho
Slide 29: END | thank you
END | thank you Affiliates of the PSG Konsult Group are authorised financial services providers. Copyright © PSG Konsult Ltd
Slide 30: Appendix
Appendix O®PSG
Slide 31: TRI of PSG Konsult
TRI of PSG Konsult PSG Konsult performed better than JSE ALSI during tough times (in USD terms) Investment of R100 000 in PSG Konsult shares on 11 April 2005, and reinvesting all dividends received (net of DWT) and other distributions over period vs R100 000 invested on JSE ALSI Annual Annual JSE AL
Slide 32: Trading statistics
Trading statistics Creating shareholder value Statistic FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 H1 17* No. of shares in issue 733 730 733 1 072 1 210 1 222 1 262 1 279 1 321 (millions) No. of shares traded 1.7 6.7 9.5 14.9 21.2 31.4 61.8 113.9 160.4 (millions) % of shares traded 0.2% 0.9% 1.