In what amounts to a swansong for Sygnia founder and outgoing joint-CEO Magda Wierzycka, the Cape Town based asset management house delivered impressive growth for the half-year to end March.
Assets under management were up 27.8% to R278.3 billion, revenue rose 13.8% to R350.5 million, and profit after tax was up 16% to R105.8 million.
The group credited the rise in the value of its assets under management and administration, as well as “positive net inflows”, for its success.
The period under review coincided with a surge in local and global stock markets.
“Over the six months to 31 March 2021, the FTSE/JSE All Share Index rose by 24.2% and the JSE All Bond Index by 4.9%, while the rand appreciated by 11.5% relative to the US dollar.
“Over twelve months, the FTSE/JSE All Share and All Bond indices were up 54% and 17% respectively, and the rand was 17.3% stronger against the US dollar.”
The group notes that these numbers reflect a sharp turnaround from where the country and the world was a year ago.
“A few days before the end of Sygnia’s previous financial half-year, Moody’s downgraded South Africa’s sovereign credit rating to sub-investment grade just as the country entered its first lockdown. Stock markets around the world plummeted in response to the anticipated impact of Covid-19 on global economies.
“The unfolding pandemic saw governments worldwide locking down their borders and, consequently, their economies.”
Sygnia’s latest numbers mark the end of Wierzycka’s reign at the asset management company she co-founded 15 years ago.
At the time, she and Sygnia were pioneers when it came to implementing a passive/low-cost investment strategy, which has since grown in popularity.
This can be seen in the group having only R4.7 billion assets under management by the end of its first year in 2007. This figure ballooned to R136.6 billion by the time it listed in 2015. In the six years since then, this number has grown by over R141 billion to R278.3 billion.
A large part of this success was getting institutions to buy into its business model. This can be seen in institutional assets under management amounting to R232.6 billion at March 31, 2021, compared to R214.6 billion at the end of September 30, 2020.
Though institutional assets under management showed an increase in value, it was not plain sailing.
“Despite no significant client losses over the six months ended 31 March 2021, the institutional business experienced net outflows of R1.3 billion – a consequence of R3.8 billion net inflows in assets under management and R5.1 billion net outflows from mostly lower- profit-margin assets under administration business.
“The latter is attributed mainly to lower contributions and higher benefit payments across distressed retirement fund sponsoring employers as a result of the Covid-19 pandemic.”
Wierzycka’s last day on the job was June 1.
Dave Hufton, her fellow joint-CEO, is now solely in charge.
Listen to Moneyweb editor Ryk van Niekerk’s March 25 interview with Magda Wierzycka (or read the transcript here):