SYGNIA LIMITED PRESENTS 2016 INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2016

Transcription

1 SYGNIA LIMITED PRESENTS 2016 INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2016

2 AGENDA 1. OUR PERFORMANCE 2. SIX MONTHS SINCE LISTING 3. BUSINESS UPDATE INSTITUTIONAL RETAIL 4. FINANCIAL PERFORMANCE 5. LOOKING AHEAD 6. QUESTIONS

3 OUR PERFORMANCE

4 WHAT WE DO SYGNIA LIMITED A JSE-listed financial services group offering a range of savings, investment and product management solutions and administration services to institutional and retail clients in South Africa and abroad. ASSET MANAGEMENT We manage assets on behalf of South African institutional and retail investors. We offer: f Multi-manager funds f Index-tracking funds f Funds of SA hedge funds (FoFHs) INVESTMENT ADMINISTRATION We provide investment administration services to South Africa, UK and USA based institutional clients. f Investment administration f Liability administration f LISP SAVINGS PRODUCTS f Retail savings products (living annuities, preservation funds, RAs) f Unitised products (pooled portfolios, unit trusts) f Sygnia Umbrella Retirement Fund (SURF) INCUBATOR/SUPPORT BUSINESSES f Sygnia Securities f Sygnia RoboAdvisor

5 SYGNIA S PERFORMANCE IS LINKED TO THE MARKET MARKET PERFORMANCE TO 31 MARCH MONTHS 1 YEAR 3 YEARS 5 YEARS FTSE/JSE All Share Index 5.6% 3.2% 12.8% 13.6% FTSE/JSE SWIX Index 7.3% 2.7% 14.6% 15.4% Resources % -27.8% -12.7% -10.0% Industrials % 10.5% 21.1% 24.6% Financials % -3.6% 15.7% 18.8% JSE All Bond Composite Index -0.3% -0.6% 4.0% 7.8% STeFI Index 3.3% 6.6% 6.0% 5.8% MSCI Emerging Markets Index in SA Rands 12.8% 6.2% 11.4% 11.9% MSCI All Country World Index in SA Rands 11.6% 15.5% 23.1% 22.9% Barclays Capital Global Index in SA Rands 11.2% 26.3% 17.7% 18.9% Rand/US Dollar Exchange Rate 6.0% 20.8% 16.6% 16.8%

6 HIGH-LEVEL SAVINGS TRENDS HIGH-LEVEL SAVINGS TRENDS 12 MONTHS TO 31 MARCH 2016 f High market volatility, and political and currency uncertainty translated into risk aversion among retail investors f Poor economic fundamentals manifested in large scale retrenchments, resulting in significant net outflows from the South African occupational retirement funds f Increased focus on the collapse of stand-alone retirement fund arrangements into umbrella funds f Increased number of unit trusts being launched (149 new unit trusts in 12 months) competing for a fairly static retail savings market COLLECTIVE INVESTMENT SCHEMES IN SOUTH AFRICA Assets under Management (Million) Net sales - sales from income reinvestments (Million) MAR-16 DEC-15 SEP-15 JUN-15 MAR-15 DEC-14 R R R R R R R4 879 R R R 484 R R Number of unit trusts SOURCE: ASISA Collective Investments statistics by Management Company (excl. all Money Market funds)

7 ASSETS UNDER MANAGEMENT AND ADMINISTRATION SEP 07 SEP 08 R4.7bn R4.5bn SEP 09 R40.5bn SEP 10 SEP 11 SEP 12 R62.7bn R70.4bn R82.7bn R4.5bn SEP 13 R103bn R5.9bn SEP 14 R105.1bn R7.5bn SEP 15 MAR 16 R127.9bn R8.7bn R135.0bn R10.6bn SYGNIA INSTITUTIONAL SYGNIA RETAIL

8 SYGNIA HIGHLIGHTS TO 31 MARCH 2016 ASSET BREAKDOWN TOTAL AuM AND AuA: up 20.7% at R146 bn (Sept 2015: R137 bn, March 2015: R121 bn) TOTAL NET INFLOWS (12 MONTHS): R11.4 bn INSTITUTIONAL AuM AND AuA: up 20.5% to R135 bn (Sept 2015: R128 bn, March 2015: R112 bn) RETAIL AuM: up 23.5% to R10.6 bn (Sept 2015: R8.8 bn, March 2015: R8.5 bn) RETAIL AuA (LISP): up 79.2% to R4.3 bn (Sept 2015: R3.0 bn, March 2015: R2.4 bn) NUMBER OF CLIENTS (LISP): up 68.3% to (Sept 2015: March 2015: 2 434) AuM IN INDEX-TRACKING FUNDS: up 23.9% to R10.3 bn (Sept 2015: R9.5 bn, March 2015: R8.3 bn) NOTE: f f f Gallet Group Employee Benefits numbers relating to AuA are not included above AuM: Assets under Management AuA: Assets under Administration

9 SYGNIA HIGHLIGHTS TO 31 MARCH 2016 FINANCIALS REVENUE: R m (March 2015: R m) EXPENSES: R93.72 m (March 2015: R77.15 m) HEADLINE EARNINGS PER SHARE (CENTS): Basic (March 2015: 30.28) Diluted (March 2015: 30.28) TOTAL GROSS DIVIDEND: (12 months to 30 September 2015: 41.7) NOTE: Number of shares in issue as at 30 September 2015: Number of shares in issue as at 14 October 2015:

10 SIX MONTHS SINCE LISTING

11 LISTING ON THE JSE 14 OCTOBER 2015 Offer price: R8.40 per share Capital raised: R262 m Historical PE to 30 September 2015: Opening bid price: R13.56 per share Share trade range: R13.56 R16.75 REASONS FOR THE LISTING: f f f f f Raising of Sygnia s corporate profile and brand awareness Equity market access for future acquisitions Staff incentivisation and retention Building up of statutory reserves Pursuit of organic growth strategies: - systems development - marketing campaign - R&D investment - expansion of distribution channels

12 ORGANIC GROWTH INITIATIVES MARKET POSITIONING PROFILE SYSTEMS DEVELOPMENT R&D Market disruptor Pop-up campaign in the first half of 2016 Advertising campaign planned for second half of 2016 Significant PR exposure across different media channels (online, press, radio and TV) Ongoing development of systems platforms Ongoing development of retail client-facing systems Launch of Sygnia RoboAdvisor Ongoing search for international opportunities for expansion

13 ORGANIC GROWTH EXPANSION OF DISTRIBUTION LAUNCHED SYGNIA UMBRELLA RETIREMENT FUND (SURF) ON 1 APRIL 2016 AVERAGE COST OF AN UMBRELLA FUND (BIG 5): COST OF SURF: 2.2% pa (incl VAT) 0.39% pa to 0.92% pa (incl VAT) ALL-IN PRICING: f No administration fee f No consulting fee f Asset management fees only (restricted choice of investment products) DESIGN REVOLUTION (as per National Treasury s blue-print ): f In-fund preservation in institutional products f In-fund annuitisation in institutional products f Lifestage model default f Phased-in living annuity to life annuity default

14 SURF: HOW? IMPLEMENTATION FACILITATED BY THE ACQUISITION OF GALLET GROUP EMPLOYEE BENEFITS (PTY) LTD EFFECTIVE 1 APRIL 2016 (NOT AMALGAMATED INTO ANY NUMBERS): f R1.5 bn umbrella fund with an over 10-year history f R3.5 bn stand-alone retirement fund book (consulting and liability administration) BENEFITS TO SURF: f Instant market access, recognition and acceptance f Sygnia s investment administration system is integrated with the liability administration system used by Gallet for transacting purposes f Acquisition of administration processes, structures and people f Opportunity to market SURF to the existing client base

15 SURF: WHY? INSTITUTIONAL STAND-ALONE RETIREMENT FUND MARKET IS SHRINKING f Number of self-administered retirement funds in 2000: f Number of self-administered retirement funds in 2015: SOURCE: FSB Annual Report UMBRELLA FUND MARKET PRESENTS AN OPPORTUNITY (NEW AND EXISTING ASSETS UNDER MANAGEMENT) RETIREMENT FUND INDUSTRY AuM (Rands in bn) NUMBER OF ACTIVE RETIREMENT FUNDS FREESTANDING PRESERVATION UNKNOWN UMBRELLA - TYPE A UMBRELLA - TYPE B

16 SURF: THE FUTURE THE BIG 5 Alexander Forbes Old Mutual Sanlam Momentum Liberty TOTAL TARGETED BY SYGNIA: R65 bn R96 bn R27 bn R41 bn R31 bn R260 bn SOURCE: Latest available industry/fsb data f f f f f Disrupt the industry by significantly lowering the cost of access Simplify the product proposition: - sound default strategies - simple investment choices Innovate service offering: - Sygnia RoboAdvisor - Sygnia Alchemy No consulting fees make it friendly for independent financial advisors Win the business on substance of offering and distribution strategy

17 ORGANIC GROWTH EXPANSION OF DISTRIBUTION SYGNIA ROBOADVISOR f Internet based digital advice platform launched on 16 May 2016 f Low level of advice provision as per Retail Distribution Review (FAIS advice is provided by Sygnia) f R500 per month minimum investment f 0.50% per annum management fees f Linked to Sygnia s index-tracking products f Electronic forms and signatures (no need for human interaction)

18 SYGNIA ROBOADVISOR: WHY? RETAIL MARKET f f f f Access to the millennial generation of first time savers (tech-savvy, cost-conscious, DIY-oriented) Unlimited PR opportunities in South Africa Distribution for low cost index-trackers and tax-free savings accounts Underpinned by financial advisor friendly distribution model INSTITUTIONAL MARKET f Retirement benefit counsellor as envisaged by National Treasury in the Draft Default Regulation (July 2015) to be plugged into SURF

19 INSTITUTIONAL BUSINESS

20 INSTITUTIONAL BUSINESS HIGHLIGHTS f f Institutional AuM and AuA up 20.5% to R135 bn (March 2015: R112 bn), with R10.2 bn in net inflows over 12 months Fund of Hedge Funds AuM up 53.2 % to R3.0 bn (March 2015: R1.9 bn) FLAGSHIP INSTITUTIONAL PRODUCTS PROFILE MULTI-MANAGER INDEX-TRACKING FUNDS OF HEDGE FUNDS HIGH RISK Signature 70 Fund Skeleton 70 Fund All Star FoHFs MODERATE/ HIGH RISK Signature 60 Fund Skeleton 60 Fund MODERATE RISK Signature 50 Fund Skeleton 50 Fund Signature FoHFs LOW RISK Signature 40 Fund Skeleton 40 Fund Absolute FoHFs

21 INSTITUTIONAL BUSINESS HIGHLIGHTS KEY ACHIEVEMENTS f Our flagship risk-profiled multi-manager products, the Sygnia Signature 40, 50 and 60 Funds, ranked 1 st in terms of returns over 3 years and 5 years in all their respective risk categories in the Alexander Forbes Multi-Manager Watch TM Survey to 31 March 2016, while the Sygnia Signature 70 Fund ranked 1 st over 3 years and 2 nd over 5 years. f Sygnia All Star Fund of Hedge Funds and Sygnia Signature Fund of Hedge Funds ranked 1 st and 2 nd over 3 and 5 years in the Alexander Forbes Fund of Hedge Funds Manager Watch TM Survey to end March 2016 in the multi-strategy category. f When compared to large single asset managers performances, as published in the Alexander Forbes Global Large Manager Watch TM Survey to 31 March 2016, the Sygnia Signature 70 Fund ranked 1 st over 3 years and 5 years. The significance of this lies in the fact that multi-manager products can compete directly with single asset managers products for top level performance and can offer a compelling alternative to the selfselection of single asset managers for retirement funds.

22 INVESTMENT PERFORMANCE ALEXANDER FORBES LOW EQUITY MULTI-MANAGER SURVEY TO 31 MARCH 2016 (Source: Alexander Forbes survey and published data/fact sheets) 1 YEAR 3 YEARS 5 YEARS Sygnia Signature 40 Fund 7.5% Sygnia Signature 40 Fund 13.1% Sygnia Signature 40 Fund 13.8% 27Four CPI+ 3% 7.5% 27Four CPI+ 3% 12.6% IS 37.5% Equity 12.1% Momentum Enhanced 3 7.3% Momentum Enhanced % Momentum Enhanced % Momentum Enhanced 4 7.3% IS 37.5% Equity 10.2% IS Low Equity 10.9% IS 37.5% Equity 5.6% Momentum Enhanced 3 9.3% Momentum Enhanced % IS Low Equity 5.5% IS Low Equity 9.2%

23 INVESTMENT PERFORMANCE ALEXANDER FORBES HIGH EQUITY MULTI-MANAGER SURVEY TO 31 MARCH 2016 (Source: Alexander Forbes survey and published data/fact sheets) 1 YEAR 3 YEARS 5 YEARS IS Performer 8.8% Sygnia Signature 70 Fund 16.2% Momentum Classic % IS Entrepreneur 7.3% Momentum Classic % Sygnia Signature 70 Fund 16.4% Momentum Classic 7 7.0% Momentum Enhanced % Momentum Enhanced % Sygnia Signature 70 Fund 6.9% Old Mutual Aggressive 14.6% IS Performer 15.8% Momentum Enhanced 7 6.8% IS Performer 14.2% Old Mutual Aggressive 14.8% Old Mutual Aggressive 6.0% IS Entrepreneur 13.3% IS High Equity 14.4% IS High Equity 5.8% IS High Equity 12.8% IS Entrepreneur 14.1% IS Spectrum 5.8% SMM % IS Spectrum 14.0% Momentum Target 7 5.4% IS Spectrum 12.0% SMM % SMM %

24 INVESTMENT PERFORMANCE ALEXANDER FORBES GLOBAL LARGE MANAGER WATCH SURVEY TO 31 MARCH 2016 (Source: Alexander Forbes survey and published data/fact sheets) 1 YEAR 3 YEARS 5 YEARS Allan Gray 14.9% Sygnia Signature 70 Fund 16.2% Sygnia Signature 70 Fund 16.4% Foord 7.5% Investec 15.7% Foord 16.4% Investec 7.5% Allan Gray 14.6% Investec 15.8% MMI 7.1% Coronation 14.0% Coronation 15.7% Sygnia Signature 70 Fund 6.9% Prudential 13.7% Allan Gray 15.7% Prudential 6.2% Foord 13.4% Prudential 15.2% Stanlib 5.9% MMI 13.2% Stanlib 14.4% Coronation 5.8% SIM 12.5% Oasis 14.2% SIM 5.7% Oasis 12.4% MMI 13.8% Oasis 5.6% OMIGSA 12.1% SIM 13.7% Absa 5.5% Stanlib 12.0% OMIGSA 13.5% OMIGSA 3.3% Absa 11.3%

25 RETAIL BUSINESS

26 RETAIL BUSINESS HIGHLIGHTS f Retail AuM: up 23.5% to R10.6 bn (Sept 2015: R8.8 bn, March 2015: R8.5 bn) f Retail AuA (LISP): up 79.2% to R4.3 bn (Sept 2015: R3.0 bn, March 2015: R2.4 bn) f Number of clients (LISP): up 68.3% to (Sept 2015: 3 435, March 2015: 2 434)

27 RETAIL BUSINESS HIGHLIGHTS FLAGSHIP PRODUCTS PROFILE MULTI-MANAGER INDEX-TRACKING FUNDS of HEDGE FUNDS HIGH RISK CPI + 6% Fund Skeleton 70 Fund All-Star FoHFs MODERATE RISK CPI + 4% Fund Skeleton 50 Fund Signature FoHFs LOW RISK CPI + 2% Fund Skeleton 40 Fund Absolute FoHFs OTHER Active Equity SWIX Tracker International Flexible FoFs Top 40 Tracker Divi Tracker Listed Property Tracker All Bond Tracker Africa Equity Fund Skeleton International Equity FoFs

28 RETAIL BUSINESS HIGHLIGHTS KEY PERFORMANCE ACHIEVEMENTS f The Sygnia Skeleton Balanced 70 Fund, a passively managed high-equity multi-asset class unit trust, ranked 25 th out of 115 unit trusts*, most of them actively managed, in the South African Multi-Asset High Equity category since its inception in October 2013 to March f The Sygnia SWIX Index Fund, a passively managed equity unit trust, ranked 28 th out of 124 unit trusts*, most of them actively managed, in the South African Equity General category since its inception in October 2013 to March f The Sygnia Top 40 Index Fund, a passively managed equity unit trust, ranked 6 th out of 17 unit trusts*, most of them actively managed, in the South African Equity Large Cap category since its inception in November 2013 to March f The Sygnia CPI + 2% Fund ranked 31 st out of 96 unit trusts* in the South African - Multi-Asset - Low Equity category for the 3 years to March f The Sygnia CPI + 4% Fund ranked 17 th out of 55 unit trusts* in the South African Multi-Asset Medium Equity category for the 3 years to March f The Sygnia CPI + 6% Fund ranked 24 th out of 107 unit trusts* in the South African Multi-Asset High Equity category for the 3 years to March *SOURCE: MoneyMate

29 FINANCIAL PERFORMANCE

30 FINANCIAL HIGHLIGHTS STATEMENT OF COMPREHENSIVE INCOME Assets under Management and Administration 6 MONTHS TO 31 MARCH MONTHS TO 31 MARCH 2015 % CHANGE R146 bn R121 bn 20.7% Revenue R131.4 m R109.8 m 19.7% Expenses R93.7 m R77.1 m 21.5% Profits before tax R48.3 m R40.7 m 18.7% Profits after tax R34.9 m R29.3 m 19.4% Headline earnings R34.9 m R30.3 m 15.3%

31 FINANCIAL HIGHLIGHTS EARNINGS AND DIVIDENDS 6 MONTHS TO 31 MARCH 2016 Headline earnings per share (cents) Diluted headline earning per share (cents) Interim dividend per share (cents) SHARES IN ISSUE Shares in issue (31/03/15) Shares in issue (31/03/16) Increase in shares in issue 37.2%

32 FINANCIAL HIGHLIGHTS REVENUE ANALYSIS REVENUE SPLIT BY CLIENT CATEGORY 6 MONTHS TO 31 MARCH MONTHS TO 30 SEPTEMBER MONTHS TO 31 MARCH 2015 Institutional business 78.3% 80.4% 81.7% Retail business 21.7% 19.6% 18.3% REVENUE SPLIT BY SOURCE OF BUSINESS Asset management (multi-management, index-tracking, FoHFs) Investment and LISP administration 71.6% 73.4% 74.2% 19.0% 18.7% 17.9% Stockbroking and other 9.4% 7.9% 7.9%

33 FINANCIAL HIGHLIGHTS COST ANALYSIS Total operating expenses MAJOR CONTRIBUTORS: Staff costs Management fees to third party asset managers by Sygnia Collective Investments RF Rental and related Professional services and fees Marketing 6 MONTHS TO 31 MARCH 2016 R93.7 m R39.8 m R24.9 m R6.1 m R5.3 m R3.5 m

34 FINANCIAL HIGHLIGHTS STATEMENT OF FINANCIAL POSITION (CORPORATE) BALANCE SHEET AS AT 31 MARCH 2016 ASSETS Intangible assets R Deferred tax assets R Property and equipment R Investments R Loans receivable R Taxation receivable R Trade and other receivables R Cash and cash equivalents R TOTAL ASSETS R TOTAL EQUITY R LIABILITIES Deferred tax liabilities R Taxation payable R Trade payable and other accruals R TOTAL LIABILITIES R TOTAL EQUITY AND LIABILITIES R

35 LOOKING AHEAD

36 REGULATORY CHANGE TREATING CUSTOMERS FAIRLY f Sygnia is at the forefront of TCF initiatives e.g. educational series on Moneyweb, transparent fee disclosures, internet-based communication portals, lowest cost investment and savings products in South Africa RETAIL DISTRIBUTION REVIEW f Implementation of key proposals delayed by the FSB REGULATION OF HEDGE FUNDS UNDER CISCA f We expect flows into hedge funds via unit trusts to be modest f Institutional market is waking up to the risk/return profile offered by hedge funds DRAFT DEFAULT REGULATION f No update has been provided since the Budget 2016/17

37 GROWTH PROSPECTS IN 2016 SURF INSTITUTIONAL MULTI-MANAGEMENT INSTITUTIONAL INDEX-TRACKING INVESTMENT ADMINISTRATION LISP AND RETAIL INDEX-TRACKING FoHFs

38 CLOSING COMMENTS f Sygnia is well-positioned to grow its Assets under Management and Administration in a wide range of different areas. f Growth will be a function of market disruption based on offering simpler, better products at a lower cost to both the institutional and retail markets, as well as regulatory change which supports Sygnia s business proposition. f Sygnia is less dependent on the growth of the total savings market. It aims to grow by taking market share from ex-growth competitors e.g. umbrella funds, multi-managers, active asset managers, actively managed unit trusts. f Focus remains on organic growth. However, relevant acquisitions which aid growth remain a possibility. f New requirements of the Draft Amended Financial Services Sector Code will require new business initiatives to retain a reasonable rating.

39 QUESTIONS

40 DISCLAIMER SYGNIA LIMITED ( SYGNIA ) IS A SPECIALIST FINANCIAL SERVICES GROUP HEADQUARTERED IN SOUTH AFRICA FOCUSING ON THE PROVISION OF INVESTMENT MANAGEMENT AND ADMINISTRATION SOLUTIONS TO INSTITUTIONAL AND RETAIL CLIENTS PREDOMINANTLY LOCATED IN SOUTH AFRICA. The information and opinions contained in this presentation are of a general nature and are not intended to address the circumstances of a particular individual or entity. The information in this presentation is not intended nor does it constitute financial, tax, legal, investment, or other advice. Sygnia does not act as an advisor or in a fiduciary capacity towards the recipient(s). Whilst reasonable care was taken in ensuring that the information contained in this presentation is accurate, Sygnia does not warrant its accuracy and accepts no liability in respect of any damages and/or loss suffered as a result of reliance on the information in this presentation. Sygnia s business procedures, processes and policies and business structure may change from time to time and may differ at certain times from that presented herein. Where information has been provided on investments, please note that different investments may have different risks associated with them. In particular fund of hedge fund products may pose risks that are different to those associated with investments in traditional asset classes. Full disclosure of all risks associated with the investments and investment strategies contained in this presentation (and in particular the specific risks associated with investments into fund of hedge funds), is available on request from Sygnia and no decision regarding investments should be taken without having obtained professional advice thereon and without having investigated the risks inherent thereto. COPYRIGHT AND CONFIDENTIALITY: This presentation and its content is owned by the Sygnia Group and is protected by copyright and other intellectual laws. All rights not expressly granted are reserved. This presentation contains confidential information and is intended only for the individuals who were present at this presentation or who received a copy of this presentation directly from Sygnia. The purpose of the confidential information presented is solely to enable an assessment of the services provided by Sygnia and may not be used for any other purpose. The confidential information contained herein may not be distributed or reproduced for any reason whatsoever without first having obtained Sygnia s express written permission to do so. Any breach of Sygnia s confidentiality requirement may result in damages and/or financial loss to Sygnia and Sygnia reserves the right to recover such damages or loss from any person or entity that is in breach of this requirement INTER GROUP RELATIONSHIPS: Financial products such as policies of insurance and/or collective investment schemes described in this presentation are issued by Sygnia Life Limited and Sygnia Collective Investments RF, companies that are related by common shareholding to Sygnia. Sygnia has a conflict of interest policy to manage any potential conflicts of interest that may occur. This policy is available on request FINANCIAL SERVICE PROVIDERS IN THE GROUP: Sygnia Asset Management: CAT II/IIA Discretionary FSP (FSP Registration No. 873) Sygnia Life Limited: CAT I/II/IIA FSP (FSP Registration No. 2935) Sygnia Financial Services: CAT I/II/III LISP and approved Section 13 B Administrator (FSP Registration NO ) Sygnia Securities, CAT I FSP and member of the JSE. (FSP Registration No ) INFORMATION REGARDING SYGNIA: Physical Address: 7th Floor, the Foundry, Cardiff Street, Green Point, 8001 Postal Address: PO Box 51591, the Waterfront, 8002 Tel: Fax: info@sygnia.co.za