Sygnia : Audited Summarised Consolidated Annual Financial Statements - September 2022

Audited Summarised

Consolidated Annual

Financial Statements

for the year ended

30 September 2022

These financial statements have been prepared under the supervision of the Financial Director, MA Sirkot (CA (SA)).

Summarised consolidated annual financial statements

1. Corporate information
2. Directors' report

1. Summarised consolidated statement of financial position
2. Summarised consolidated statement of profit or loss and other comprehensive income
3. Summarised consolidated statement of changes in equity
4. Summarised consolidated statement of cash flows
5. Notes to the summarised consolidated financial statements

Highlights

For the year ended 30 September 2022

R285.1bn -3.8%

2021: R296.4 billion

Assets under management and administration

R808.9m +9.7%

2021: R737.2 million Revenue

R287.4m +19.3%

2021: R240.9 million Profit after tax

191.3c +12.1%

2021: 170.7 cents

Basic earnings and headline earnings per share

210c +55.6%

2021: 135 cents

Total dividend per share

Turning ordinary savers into extraordinary investors.

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Corporate information

Annual general meeting: 30 January 2023

Share code (ordinary shares): SYG

ISIN: ZAE000208815

Board of Directors

Name	Date of appointment
MF Wierzycka (Chairperson) #	17/09/2007
DR Hufton (CEO) #	01/09/2018
MA Sirkot (Financial Director) #	16/01/2019
WA Wierzycki #	10/06/2021
G Cavaleros (Lead Independent) *	28/06/2019
HI Bhorat *	11/06/2015
MH Jonas *	01/09/2018
C Appana *	08/09/2020
J Boyd *	29/07/2021

* Independent Non-executive Director # Executive Director

Registered office:	Sponsor:
7th Floor, The Foundry	The Standard Bank of South Africa
Cardiff Street	Limited
Green Point	30 Baker Street, Rosebank,
8001	Johannesburg, 2196

Postal address:	External auditor:
PO Box 51591	Mazars
Waterfront	Mazars House, Rialto Road
8002	Grand Moorings Precinct
Company registration number	Century City, 7441
South Africa
2007/025416/06	Transfer secretaries:
Company secretary:
Computershare Investor Services
G MacLachlan	Proprietary Limited
Appointed: 01/11/2016	Rosebank Towers, 15 Biermann
	Avenue, Rosebank,
	Johannesburg, 2196

Sygnia Summarised Consolidated Annual Financial Statements 2022

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Directors' report

The directors have pleasure in presenting their report on the activities of the Group for the year ended 30 September 2022.

Highlights

• Assets under management and administration of
  R285.1 billion as at 30 September 2022 (2021: R296.4 billion), down 3.8%.
• Revenue of R808.9 million (2021: R737.2 million), up 9.7%.
• Profit after tax of R287.4 million (2021: R240.9 million), up 19.3%.
• Headline earnings per share of 191.3 cents (2021: 170.7 cents), up 12.1%, and diluted headline earnings per share of 186.1 cents (2021: 166.1 cents), up 12.0%.
• Total dividend per share of 210 cents (2021: 135 cents).

Financial performance

Assets under management and administration decreased by 3.8% to R285.1 billion as at 30 September 2022 (2021: R296.4 billion). This is against a backdrop of the FTSE/JSE SWIX Index returning 0% and the MSCI All World Index falling by 4% in rands for the full financial year, and with traditional multi-asset- class portfolios experiencing some of their worst performances in many years.

The Sygnia-managed range of funds continue to rank in the top quartile of performance surveys across most risk profiles over the medium- to long-term. This performance is a mixture of low- cost strategies and a strong focus on macroeconomic trends, which drive active asset allocation decisions. Our superior long- term performance has been a strong factor behind our growing presence in the retail market.

In addition, the Group has launched several new funds in line with customers' demands, which have contributed to the growth in its revenue.

Sygnia's focus on low-cost investment and savings products and service provision has meant that, in contrast to our competitors, we have experienced little pressure on management fees.

Our past initiatives, such as the launch of the Sygnia Umbrella Retirement Funds ("SURF") in 2016 and the acquisition of the db X-tracker passive management business from Deutsche Bank in 2017 (renamed to Sygnia Itrix), are contributing materially

to the Group's results, both financially and in terms of market recognition and profile. SURF is now the sixth largest umbrella fund offering in South Africa, while Sygnia Itrix is the second largest provider of ETFs listed on the JSE and the largest South African provider of international ETFs.

Total revenue for the year rose 9.7% to R808.9 million (2021: R737.2 million), while total expenses, at R428.8 million, increased by 4.1% (2021: R411.9 million). The increase in expenses was primarily driven by higher staff costs associated with increased business activity. The increase in interest income to R26.8 million (2021: R19.6 million) primarily relates to the increase in average cash balances driven by higher profits, and higher interest rates. The increase in other investment income to R6.9 million (2021: R4.2 million) is mainly due to foreign exchange movements.

Profit after tax increased by 19.3% to R287.4 million (2021: R240.9 million) in spite of difficult market conditions.

The Group continues to invest in technology to ensure that Sygnia continues to offer leading fintech solutions and exceptional service to clients. Its offshore expansion is not expected to contribute materially to the results for the foreseeable future but is regarded as an exciting opportunity to diversify its revenues. To that end, Sygnia has launched

1. number of Ireland-registered funds. These funds will be distributed to South African clients with existing offshore investments, as well as through international platform providers.

Corporate services

Sygnia offers the following services:

• Asset management services in the form of passive and multi-managed investments.
• A broad spectrum of investment funds, such as unitised life funds, unit trusts, exchange traded funds, and management of segregated portfolios.
• A full range of savings products, including retirement annuities, tax-free savings accounts, investment policies, living annuities, and preservation funds.
• Institutional investment administration services.
• Employee benefits services, including the Sygnia Umbrella Retirement Fund.
• Execution-onlystockbroking, and securities lending and foreign exchange transacting services.

Although we may conclude strategic acquisitions where these are regarded as being value-accretive and consistent or complementary to our core strategy, we continue to focus on organically growing assets under management supported by strong investment performance at low cost, a commitment to ongoing innovation and the relentless pursuit of superior customer service.

Passive investing is on the rise in South Africa, and Sygnia is well positioned to take advantage of a growing scepticism among investors about the more expensive alternative of active management, especially in a low-return environment. Thematic investing is also gaining in popularity, and our niche funds continue to enjoy good flows.

Market conditions

2022 has unfortunately seen a reversal of 2021's remarkable recovery. The Russian/Ukraine invasion sparked a global energy price crisis, which compounded already-high inflation carried over from excess stimulus during Covid. Central banks around the world are at their most hawkish since the early 1980s, but the dollar has been the key beneficiary as the US has retained its safe haven status. The strong dollar and fear of central-bank- induced recessions drove commodities and commodity currencies (including the rand) to lows last seen with the rise of Covid in early 2020. The risk of overaggressive policy tightening causing a global recession remains high, but resilient growth suggests a soft landing is still possible. A recovering underlying global economy, risk-averse current investor positioning and anchored long-term inflation should form a base from which a recovery is increasingly feasible. A great deal of bad news is already priced in, and if inflation declines according to plan, investors will be rewarded

4	Sygnia Summarised Consolidated Annual Financial Statements 2022

/Directors' report

with attractive opportunities. However, if inflation has become entrenched and second-order effects force the Fed to remain hawkish, any bear market rally is likely to be short-lived.

Our key focus remains the art of alpha in a low-growth world, and to this end our long-term term global investment themes remain intact. The listing of our new Sustainable Economies ETF in October signifies our conviction that the answer to the decarbonisation megatrend lies in the emergence of the sustainable economy.

The 20th Congress of the Chinese Communist Party saw President Xi Jinping strengthen his seven-member Politburo Standing Committee. The markets sold off aggressively after the reshuffle in response to a likely continuation of policies staked on Covid Zero and state-driven companies. This had a local knock-on effect, with the Naspers/Prosus group being particularly hard hit as a result of their large holding in Chinese internet giant Tencent. US - China geopolitical risks remain high, but saw a respite at the G20 summit in Bali where Biden and Xi promised to "elevate the relationship".

The local equity market was hindered by Eskom loadshedding, the risks of South Africa being grey-listed by the Financial Action Task Force (FATF) in February next year and the threat of a global recession, which saw the FTSE/JSE SWIX Index return 0%. Along with the rest of the world, South Africa's interest rates rose rapidly to 7.0%, and the market is pricing in another 0.75% of hikes by the end of 2023. Growth in South Africa will continue to be constrained as a result of load shedding, high fuel prices and a possible increase in trading costs after a FATF grey-listing. On a positive note, we look forward to using our increased regulation 28 offshore allowance with our new, expanded ITRIX range.

Events subsequent to the reporting date

The directors are not aware of any matters or circumstances, arising since the end of the financial period, not otherwise dealt with in the consolidated financial statements that significantly affect the financial position of the Group or the results of its operations. The dividend declared after year-end has been disclosed in the notes to the financial statements.

Going concern

The consolidated financial statements have been prepared on the basis of accounting policies applicable to a going

concern. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.

Stated capital

Sygnia Limited had 150 439 353 (2021: 149 633 224) shares in issue at the end of the year.

Final cash dividend

Sygnia is committed to rewarding its shareholders with regular distributions of free cash flow generated. Accounting for projected cash requirements, a gross final dividend for the financial year ended 30 September 2022 of 130.0 cents per share has been declared out of income reserves, resulting in a net dividend of 104.0 cents per share for shareholders after Dividends Tax ("DT"). Together with the interim gross dividend of 80.0 cents per share, this amounts to a total gross dividend of 210.0 cents per share.

Last day to trade: Tuesday, 20 December 2022

Shares trade ex dividend: Wednesday, 21 December 2022

Record date: Friday, 23 December 2022

Payment date: Tuesday, 27 December 2022

Share certificates may not be dematerialised or rematerialised between Wednesday, 21 December 2022 and Friday, 23 December 2022, both dates inclusive. Dividends declared after 31 March 2012 are subject to DT, where applicable. In terms of the DT, the following additional information is disclosed:

• The local DT rate is 20%;
• The number of ordinary shares in issue at the date of this declaration is 150 430 489;
• Sygnia's tax reference number is 9334/221/16/6.

Approval of annual financial statements

These audited summarised consolidated financial statements were approved by the board of directors on 5 December 2022.

Sygnia Summarised Consolidated Annual Financial Statements 2022

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