After the unbundling of the mighty Capitec, PSG Konsult is now the largest holding in the PSG group, and its interims show a workmanlike performance in clearly challenging market conditions. It is obviously fortunate that financial services are well suited to the new work from home environment, and it is remarkable how quickly and effectively most operations managed to adapt to the switch to remote and the tyranny of zooming.
The company’s wealth division put in the strongest performance of its three segments, with earnings growth of 25% as it reaped the benefits of its investment in technology over the past several years, and clients’ assets under management increased by 11% in the period. It believes that in times of unprecedented uncertainty, its clients come to depend on expert advice from advisers, and that this should underpin the prospects of the division into the future.
PSG Insure posted earnings growth of 17% despite the challenging operating environment and the need to implement a number of client relief measures.
The laggard in the group was PSG Asset Management, whose earnings dropped by 39% as a result of a disappointing investment performance that meant it earned no performance fees in the period. Market movements and net client outflows caused assets under management to fall by 14%, and it needs to sharpen up its performance double-quick to avoid more money walking out the door.
Overall, however, the company is in a strong financial position that should lead to further growth.
Disney: Reality hits Fantasyland
Things are far from well in the land of the mouse, with its regular soundtrack of laughter and joy replaced with wailing and gnashing of teeth as the company has announced it is to lay off about 28,000 employees, mostly at its theme parks in California and Florida. Visitor numbers in Florida have been hit by social distancing measures, while Disneyland in California has been closed since March despite intense pressure applied by the company to allow it to reopen.
The company’s cruise ships division has been equally hard hit, with harrowing media reports of the fate of passengers confined to cabins while the virus spread through the ship being enough to make even the most hardened of cruise fans think twice about booking their next trip. With movie theatres in the US closed for five months, then reopening and closing again, major releases have been delayed or switched straight to streaming. Here, Disney has seen some rare success with the performance of Disney Plus, which had 60.5-million global subscribers at the time of its last earnings report.
The pandemic cost Disney $4.7bn in lost revenue in the last quarter alone, and it is sitting somewhat precariously on a gigantic debt pile after paying $71bn for Fox Entertainment in March 2019. According to its balance sheet published in August, the company’s net debt is a cheeky $41.3bn, a number that is far from ideal given the many strains that various of its divisions are under. The entertainment industry is facing disruption on an epic scale, and it is far from clear how it can bounce back.
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