Sygnia profit rises 25,1% to R216m as Wierzycka warns on AI

Sygnia grew after-tax profit 25,1% to R216 million in the six months to 31 March, and lifted its interim dividend 24,5% to 122 cents a share, the Cape Town asset manager reported on Monday.

Revenue for the half-year rose 24,3% to R616,1 million, just behind the pace of profit growth. Basic and headline earnings per share climbed 22% to 138,1 cents. By lunchtime on Monday the share price was up 3,7% at R33,50.

Assets under management and administration grew 13,6% to R460,8 billion over the period. That growth came despite net outflows of R8,4 billion, caused by the termination of a large investment administration mandate by a client that had been acquired by a competitor. Market appreciation of R8 billion on existing assets mostly offset the loss.

Retirement fund and retail flows carry the half

The Sygnia Umbrella Retirement Fund grew to R23 billion in assets from R18,1 billion at the end of the prior half-year, and membership rose to 77 757 from 68 315.

The retail business brought in net inflows of R1,9 billion, only slightly below the R2 billion reported for the prior comparable half. Most of that money went into the Sygnia Skeleton range of balanced index tracking funds, which now hold more than R17,5 billion.

Organic growth remains the group’s main strategy. The interim results also show the company is looking at acquisitions as a possible route to expansion.

Wierzycka keeps her AI caution on the record

Chief executive and co-founder Magda Wierzycka used the results presentation to repeat a warning she first made publicly in March, that artificial intelligence is concentrating enormous influence in a small group of hands.

She said the world was being shaped by eight unelected men making decisions on behalf of roughly 8 billion people, naming the chief executives of Anthropic, OpenAI, Google, Meta, Nvidia, SpaceX and xAI, Amazon and Microsoft.

“As much as AI enhances productivity, it is also expected to cause massive job displacement, erode data privacy, and increase vulnerability to cybercrime, among other issues.”

Wierzycka said AI agents, which she described as digital workers, are expected to significantly reduce demand for many entry-level roles across a wide range of industries over the next two to three years, and that examples of AI agents acting autonomously are multiplying. She said the pace of innovation was unprecedented and was rapidly amplifying the digitisation sparked by the Covid-19 pandemic in 2020.

She also argued that the AI investment theme has dwarfed concerns about the economic impact of political disruption, and that strong GDP growth fuelled by infrastructure spending may soon be seen to coexist with rising unemployment.

Her tone on Monday was more measured than in March, when she told a Sandton investment conference that the technology was bringing nothing good to the world.

The interim results state that the group is increasingly exploring and cautiously implementing AI strategies, while keeping staff as its ambassadors and technology as the enabler.

What the numbers mean for the people who hold the paper

A shareholder holding Sygnia stock through the half will receive 122 cents a share from income reserves, against the 98 cents declared for the prior corresponding half-year, a 24,5% increase.

The outflows are the figure to watch into the second half. A single client mandate lost to a competitor took R8,4 billion out of the book, and market gains rather than new money did the work of replacing it. Retail inflows of R1,9 billion and the growth of the umbrella fund are the counterweight, and both sit in the parts of the business the group controls directly.

The company said it remains focused on organic growth while assessing acquisitions.

Source: Sygnia, Wierzycka stresses AI warning as Sygnia rallies on strong first-half results