Sygnia : Reviewed Condensed Consolidated Financial Statements March 2023

Market overview

Many of the challenges that characterised the 2022 financial year continued into 2023. The war in Ukraine is now in its 15th month, while elevated inflation remains a concern both globally and domestically. Central bankers around the world have hiked interest rates to levels last seen in the late 1990s to fight the rising cost of living: the US Federal Reserve increased rates by 500 basis points over the last year, with the domestic repurchase rate reaching 8.25% after the tenth consecutive rate hike since November 2021 by the South African Reserve Bank.

To add to international concerns, three small- to mid-size US banks failed over the course of five days in March 2023, triggering a sharp decline in global bank stock prices and a swift response by regulators to prevent global contagion. At the same time, Swiss investment bank UBS Group AG agreed to buy Credit Suisse for CHF 3 billion in an all-stock deal brokered by the government of Switzerland and the Swiss Financial Market Supervisory Authority.

At home, President Cyril Ramaphosa announced some changes to his cabinet and the addition of a few ministers and deputy ministers in early March, including a Minister of Electricity tasked with reducing the severity and frequency of the load shedding that is crippling the South African economy. The SARB estimates that power cuts will shave 2% from GDP through 2023, and the IMF recently downgraded South Africa's 2023 GDP growth to 0.1% on the back of intensified load shedding, which citizens have been exposed to virtually every day this year. As expected, the commodity-fuelled revenue boom of last year proved to be temporary, and lower commodity prices are reflected in the rand, which has weakened more than its emerging market peers and developed market currencies. Adding to the self-inflicted economic woes of power cuts

and transport, logistic and water-governance crises was the greylisting of South Africa in February by the Financial Action Task Force - a consequence of inadequate measures to combat money laundering and the financing of terrorism. It would also be remiss not to mention that the recent "cosying up" to Russia, from staging joint military exercises to being accused of supplying weapons to Russia and finding a way to invite Vladimir Putin to a BRICS meeting, will cost South Africa dearly on the global stage - not only reputationally but economically, should our trade deals with the US be revoked.

Unsurprisingly, investors have increasingly withdrawn their savings to offset the increasing cost of living, solar power installations and emigration. On the institutional side, withdrawals continued to exceed contributions, with unemployment and ongoing retrenchments showing no signs of abating.

Despite the challenging economic backdrop of the six months to 31 March 2023, the Group delivered financial results roughly in line with the comparable prior period and has declared a 8.8% higher interim dividend than that of 2022. As we look ahead, we remain confident in our ability to grow assets under management by coupling competitive investment performance

with low management fees. We are committed to innovation and to relentlessly pursuing customer service excellence. We will continue to leverage benefits of scale through automation and operational excellence to deliver durable profits to our shareholders.

2023 interim results

Group revenue for the six months to 31 March 2023 increased by 2.8% to R408.6 million (31 March 2022: R397.4 million), while total expenses rose by 11.1% to R235.0 million (31 March 2022: R211.5 million). After accounting for net interest and investment income and finance costs of R18.0 million (31 March 2022:

R10.0 million), pre-tax profit amounted to R191.6 million (31 March 2022: R195.8 million), and, at an effective rate of 27.8%, income tax for the reporting period was R53.2 million (31 March 2022: R56.8 million). After-tax profit came in at R138.4 million (31 March 2022: R139.1 million), down by 0.5% over the prior comparable period.

For the half year ended 31 March 2023, basic and headline earnings per share reduced by 0.9% to 91.8 cents (31 March 2022: 92.6 cents).

Assets under management and administration grew by 9.7% over the six months to 31 March 2023, with a closing balance of R312.7 billion (30 September 2022: R285.1 billion). Market appreciation of R32.7 billion more than countered net outflows of R5.1 billion (31 March 2022: net outflows of R5.6 billion) over the six months under review. Over the six months to 31 March 2023, the FTSE/JSE All Share Index rose by 21.1% and the JSE All Bond Index by 9.3%, while the rand appreciated by 1.3% relative to the US dollar. Over twelve months, the FTSE/ JSE All Share and All Bond indices were up 4.9% and 5.8%, respectively, while the rand depreciated by 21.4% against the US dollar.

Business review

The ongoing financial success of the Group is largely dependent on the growth of assets under management and administration from a mix of institutional and retail clients. The results are also cyclical, reflecting the performance of the markets and currency.

Institutional assets under management increased to R253.3 billion at the end of March 2023 (30 September 2022: R232.9 billion; 31 March 2022: R241.2 billion).

Our institutional flagship Sygnia Signature multi-manager and passively managed Sygnia Skeleton fund ranges have outperformed their benchmarks over all time frames to 31 March 2023 since inception. Compared to peers, the Sygnia Signature funds ranked at or near the top of the Alexander Forbes Multi- Manager Watch SurveyTM across all risk profiles over five through ten years to 31 March 2023 and outperformed most actively managed portfolios in the Alexander Forbes Global Large Manager Watch SurveyTM over the same timeframe.

The Sygnia Umbrella Retirement Fund ("SURF") accounts for

/Commentary of the directors

R13.2 billion of the institutional assets under management, an increase of 26.9% over the six months ended 31 March 2023

(30 September 2022: R10.4 billion; 31 March 2022: R10.5 billion). With another R2.5 billion awaiting regulatory transfer approval, SURF is the sixth-largest commercial umbrella fund in South Africa.

Retail assets under management were R59.4 billon at 31 March 2023 (30 September 2022: R52.2 billion; 31 March 2022: R54.1 billion). At that time, our ever-growing mix of direct and advice- led retail investors stood at 18 900 and 25 100, respectively, 10.3% more than the 39 900 retail investors at 31 March 2022.

Our wide range of domestic and global specialist index-tracking funds and our risk-profiled Sygnia Skeleton Balanced unit trusts have continued to produce outstanding peer-comparable performance since inception (source: Morningstar). Highlights include the Sygnia Skeleton Balanced 70 Fund, which ranked 10th out of 78 mostly actively managed unit trusts since 2013, and the Sygnia Skeleton Balanced 60 and 40 funds, which are ranked 2nd and 5th out of 50 and 72 funds, respectively, since their launch in 2014.

Sygnia is the second-largest provider of exchange traded funds (ETFs) in South Africa and the largest provider of international ETFs on the Johannesburg Stock Exchange (JSE). Total assets under management of the Sygnia Itrix range of 15 ETFs, included in the relevant client-type assets reported above, amounted to R36.0 billion as at 31 March 2023 (30 September 2022: R31.1 billion; 31 March 2022: R32.2 billion).

Combined revenue from treasury, securities lending and brokerage services was 24.7% higher than the first six months of 2022, due primarily to a far more favourable environment for securities lending and transition management opportunities that boosted treasury services.

Interim dividend

Sygnia is committed to rewarding its shareholders with regular distributions of free cash flow generated. Accounting for projected cash requirements, a gross dividend of 87.0 cents per share was declared on 5 June 2023 out of retained income, resulting in a net dividend of 69.6 cents per share for shareholders after dividends tax (DT).

In compliance with the JSE listings requirements, the following dates are applicable:

Last day to trade: Tuesday, 20 June 2023

Share trade ex-dividend: Wednesday, 21 June 2023

Record date: Friday, 23 June 2023

Payment date: Monday, 26 June 2023

Share certificates may not be dematerialised or rematerialised between Wednesday, 21 June 2023 and Friday, 23 June 2023, both dates inclusive. Dividends declared after 31 March 2012 are subject to DT where applicable. In terms of 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 150 585 489. Sygnia's tax reference number is 9334/221/16/6.

These condensed consolidated financial statements were prepared under the supervision of the Financial Director, Niki Giles CA (SA).