The PSG Group which recently unbundled its stake in Capitec has warned shareholders to expect a mixed bag of results when it presents its interim financial statements on Thursday.
The company led by the Mouton family will present results that are no longer comparable to previous years after the unbundling of its stake in Capitec which necessitated a change in its accounting policy.
The unbundling of PSG's 26.4% stake in Capitec, which left the investment holding company with 4.3% of Capitec shares necessitated a reassessment of PSG's "Investment Entity status", said the company in a trading update on Tuesday.
As a result, it now uses its sum-of-the-parts – the method that assesses the value of each of its investee companies to measure profits – as opposed to recurring earnings.
For this reason, PSG has warned that its headline earnings could decline by as much as 351% primarily because of the decrease in the share prices of its listed investments which include PSG Konsult, Curro and Zeder Investments.
PSG expects headline loss of between R14.00 and R14.30 compared to a headline profit of R5.68 in August 2019. On the other hand, the company's earnings per share will be up by more than 17-folds, rising to between R118.00 and R119.00, as opposed to the R6.39 in August 2019.
The earnings per share benefited from the fact that the unbundled Capitec stake was valued much higher when the unbundling was finalised.