Psg Financial Services Limited · JSE:KST
Psg Financial Services — PSG Konsult — H1 2020 Earnings Presentation
28 slides from Psg Financial Services's earnings presentation, November 2019
Slide 1: Investor Presentation 2020 Interim Results
Investor Presentation 2020 Interim Results For the six months ended 31 August 2019 Copyright © PSG
Slide 2: Contents
Contents 1. H1 2020: financial results 2. H1 2020: divisional performance 3. 2020: Focus 4. Return and Trading Statistics 5. Conclusion 2 Copyright © PSG
Slide 3: PSG Structure
PSG Structure PSG Group Other 59.2% 40.8% PSG Wealth* PSG Asset Management PSG Insure** 100% 100% 100% * Includes PSG Employee Benefits ** Includes Western National Insurance PSG Group’s holding net of treasury shares = 60.5% As at 31 August 2019 Copyright © PSG 3
Slide 4: A great company
A great company Wealthy clients serviced where they reside 261 Adviser offices 928 Advisers FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 H1 2020 No. of 659 711 744 784 932 928 advisers PSG Wealth 434 480 515 539 546 549 PSG Insure 225 231 229 245 386 379 No. of 193 206 208 211 254 261 offices Source: PSG
Slide 5: 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 5 Copyright © PSG
Slide 6: H1 2020: financial results
01 | H1 2020: financial results 6 Copyright © PSG
Slide 7: Key macro indicators
Key macro indicators Weakening economic environment Key indicators H1 2015 %∆ H1 2016 %∆ H1 2017 %∆ H1 2018 %∆ H1 2019 %∆ H1 2020 Rand / US$ 10.66 25% 13.27 11% 14.69 -12% 13.01 13% 14.68 3% 15.19 All Bond Index 469 5% 494 5% 516 10% 569 8% 614 11% 683 Cash Index - STeFI Call 288 6% 305 7% 324 7% 34
Slide 8: H1 2020 financial results overview
H1 2020 financial results overview Recurring HEPS grew by 8% for H1 2020 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019 H1 2020 Consolidated results %Δ %Δ %Δ %Δ %Δ Rm Rm Rm Rm Rm Rm Headline earnings 145 28% 187 15% 214 12% 239 18% 283 10% 311 Recurring headline earnings 147 27% 187 15% 214 12% 239 18% 283
Slide 9: Recurring headline earnings by division
Recurring headline earnings by division Total recurring headline earnings growth of 10% for H1 2020 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019 H1 2020 CAGR Recurring Headline Earnings * %∆ %∆ %∆ %∆ %∆ Rm Rm Rm Rm Rm Rm % Wealth 95 27% 120 17% 141 7% 150 7% 160 10% 176 13% Asset Management 34 36% 46 2%
Slide 10: Financial trend
Financial trend We always look at our 10 year rolling track record YoY FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 CAGR % H1 2019 H1 2020 Gwth % AUA (Rbn) 44 72 97 139 180 233 309 327 371 402 422 25% 426 401 -6% AUM (Rbn) 21 28 36 51 71 99 133 154 175 205
Slide 11: H1 2020: divisional performance
02 | H1 2020: divisional performance 11 Copyright © PSG
Slide 12: Wealth plans
Wealth plans Growing and protecting client wealth Market Wealth assets split (Rm) Feb-19 Net flows Aug-19 % Growth Excellence in movement products & services PSG Multi Managed * 70 681 2 530 4 347 77 558 10% Third party funds ** 60 374 730 1 748 62 852 4% Discretionary 43 788 1 049 -777 44 060 1% To
Slide 13: Wealth
Wealth Excellence in products and services Independent Net Flows (Rm) ALSI process with %∆ -23% -10% 19% 25% -36% -2% 31% 6% -59% 83% 9 000 advisers’ oversight 7 971 8 208 8 000 55 000 1 876 7 048 7 000 6 676 425 2 312 6 553 6 154 787 5 318 6 000 5 516 45 000 5 516 2 237 5 213 5 095 Rapid growth in
Slide 14: Top advisers
Top advisers We continue to add top advisers to our PSG Wealth distribution business H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 Wealth advisers (incl. EB) 2015* 2015* 2016 2016 2017 2017 2018 2018 2019 2019 2020 Balance – opening 406 419 434 443 480 505 515 527 539 546 546 Net movement 13 15 9 37 25 10 12 12
Slide 15: Asset management plans
Asset management plans Net new money at acceptable margin Market AM assets split (Rm) Feb-19 Net flows Aug-19 % Growth movement Focused marketing PSG Single manager * 42 316 -3 612 -82 38 622 -9% PSG Money market and 3 432 0 690 4 122 20% related assets* Investment PSG Segregated Portfolios*** 1 561
Slide 16: Asset management
Asset management ‘Brick by Brick’ strategy Net Flows (Rm) ALSI Long-term assets %∆ -93% 591% -40% -166% 461% -23% 81% -20% - 54% -102% (retail emphasis) 6 000 5 658 5 079 449 55 000 930 5 000 4 077 1 028 3 669 4 000 Getting adequate 2 599 2 807 45 000 margins 3 000 625 1 548 1 870 5 130 35 000 4 286
Slide 17: Asset management
Asset management Solid long-term track record 1-year 3-year 5-year 10-year Rank since Inception Single manager funds Performance Rank Rank Rank Rank inception date Rank 55 27 12 5 2 PSG Flexible 01-Nov-04 Return -11.80% 1.90% 5.50% 12.10% 13.90% Rank 157 86 64 15 4 PSG Equity 01-Mar-02 Return -19.40
Slide 18: Insure gross written premium
Insure Grow gross written premium income PSG Insure gross written premium (Rm) Top advisers %∆ 10% 7% 7% 4% 9% 6% 5% 16% 20% 11% 3 500 3 341 3 013 3 000 731 2 501 652 2 500 Gross written premium Excellence in 2 153 623 2 041 605 2 000 1 931 556 underwriting 1 696 1 767 587 1 588 528 597 488 1 483 48
Slide 19: Top advisers
Top advisers We continue to add top advisers to our Insure Distribution business Insure advisers H1 2015* H2 2015* H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 ** ** Balance – opening 212 210 225 224 231 233 229 226 245 316 386 Net movement -2 15 -1 7 2 -4 -3 19 71 70 -7 B
Slide 20: Underwriting margin
Western National Insurance Net insurance result & shareholders income %∆ -15% 59% 3% 32% 51% -22% 22% 0% -29% 40% 80,0 76.9 15,0% 72.6 72.8 73.0 70,0 11,5% 19.2 12.5 24.4 10.4% 10,5% 60,0 59.7 10,0% 24.6 9,2% 7.8% 8.0 52.0 Underwriting margin 7,3% 50.9 17.7 50,0 6,6% 6.0 7.5 7,3% 5.7% 7.4% 8.0 11.7
Slide 21: 2020 Focus
03 | 2020 Focus 21 Copyright © PSG
Slide 22: Top line focus
Top line focus Core operations (excl. IFRS consolidated fund and policyholder related income) 3 000 2 525 2 500 2 278 2 062 Top line revenue (R’m) 2 000 1 855 1 035 1 655 867 786 1 500 1 393 672 579 278 290 484 220 1 000 201 200 173 1 121 1 213 500 982 1 056 736 876 0 H1 2015 H1 2016 H1 2017 H1 2018
Slide 23: Reducing risk
Reducing risk Recurring revenues Margin enhancing Risk vs return H1 16 H1 17 H1 18 H1 19 H1 20 H1 16 H1 17 H1 18 H1 19 H1 20 H1 16 H1 17 H1 18 H1 19 H1 20 Perf fees/HE 7.5% 6.6% 4.4% 4.6% 0.0% Op margin 14.2% 14.3% 14.4% 15.9% 15.2% ROE 23.9% 22.9% 21.4% 21.9% 20.2% Recurring HEPS 14.7c 16.6c 18.2c
Slide 24: Return and Trading Statistics
04 Return and Trading Statistics 24 Copyright © PSG
Slide 25: TRI of PSG Konsult
TRI of PSG Konsult PSG Konsult performed better than JSE ALSI since 2005 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 Number of PSG PSG Konsult PSG Konsult Annua
Slide 26: Trading statistics
Trading statistics Creating shareholder value Statistic FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 H1 20* No. of shares in issue (millions) 730 733 1 072 1 210 1 222 1 262 1 279 1 322 1 342 1 365 1 367 No. of shares traded (millions) 6.7 9.5 14.9 21.2 31.4 61.8 113.9 111.7 91.9 83.5
Slide 27: 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 28: FAIS Affiliates of the PSG Konsult Group
FAIS Affiliates of the PSG Konsult Group are authorised financial services providers. Copyright © PSG