Sygnia feels vindicated on negative views

FINANCIAL services group Sygnia on Friday said it felt vindicated on its negative view of the political situation affecting economic growth and investment risk in South Africa.

In a commentary at the release of its financial results for the year ended September 30, Sygnia bemoaned the political uncertainty which it said had taken a “massive toll” on the South African economy with low growth, record unemployment, credit rating downgrades of the debt and volatile market returns. It is a poignant tragedy as this has happened against a backdrop of a global economic recovery, which should have benefited South Africa,” the company said.

Despite recovery in the global economy, it said, South Africa continued to struggle with weak economic fundamentals as political risks intensified.

“The level of corruption was vividly exposed by the media and implicated a number of cabinet ministers. Despite this, no action has been taken by prosecuting authorities.”

The group gave itself a pat on the back, saying its investment portfolios were well-positioned for the market conditions. Sygnia said it would stick to its investment philosophy, which is focused on risk management and diversification.

Volatility

“After a challenging 2016, our negative view of the political situation impacting economic growth and investment risk was vindicated, with investment performance recovering strongly despite the volatility (in South Africa).

“We believe that our active tactical asset allocation strategies, superior asset manager selection, focus on low-cost passive investments, and on capital preservation through exposure to funds of hedge funds, will provide an adequate arsenal of weapons to deliver value to all our investors going forward,” it said.

Sygnia chief executive Magda Wierzycka is a vocal critic of President Jacob Zuma and the so-called state capture. Wierzycka has on numerous occasions called for Zuma to step down.

She recently sued former government spokesman Mzwanele Manyi for defamation for social media comments he made.

In the year ended September 30, Sygnia’s revenue increased by 20.6 percent to R333.1 million, up from R276.2m in the corresponding period last year. Headline earnings per share for the year increased by 25.1 percent to 69.72 cents a share, while diluted headline earnings per share increased from last year’s 53.54 cents to 68.81 cents.

Sygnia has attributed the increase in revenue to a combination of the growth in existing assets under management, new client flow, strong performance from Sygnia Securities and an increased revenue stream following the acquisition of DBX, a collective investment schemes management firm which the company acquired earlier this year.

Assets under management increased by 16 percent, from R158 billion to R184bn, with profits after tax soaring 28 percent, from R72.3m to R92.5m year-on-year. The company declared a dividend of 60 cents, up from last year’s 52 cents.

The increase in earnings was in line with the company’s recent guidance. Sygnia last month told shareholders that it expected earnings per share and headline earnings per share for the year to be between 66.5 cents and 70 cents per share, compared to earnings per share of 55.71 cents and headline earnings per share of 55.72 cents in the corresponding period last year.

Sygnia’s shares on the JSE were down 3.57 percent at R13.79 a share. In earlier trade, the company’s share price was down more than 9 percent.

Assets under management increased by 16% from R158bn to R184bn.