| Wed 6 Jun 2007, 14:42 | | SLM / SLA - Sanlam Limited - Trading Update and re |
|
SLM
SLM
SLM / SLA - Sanlam Limited - Trading Update and result of Annual General Meeting
Registered name: Sanlam Limited
(Registration number 1959/001562/06)
JSE share code: SLM
NSX share code: SLA
ISIN number: ZAE000070660
Trading Update and result of Annual General Meeting
The Group`s strong operational performance in the 2006 financial year continued
during the four months to April 2007, supported by a favourable economic and
equity market environment.
Financial results
Business volumes:
All Group businesses, with the exception of Employee Benefits, reported
satisfactory growth compared to the first four months of 2006, with an overall
increase in gross new business flows in excess of 25%.
Life business continued the growth of 2006, albeit at a more subdued level of
some 10%. New Individual Life recurring premium business for the four months
performed well and was up some 20% on a comparable basis. The growth in
Individual Life single premiums for the four months was however just in excess
of 10%. This resulted from an overall lower demand for single premium life
products, as well as a reduction in single premium sales by African Life South
Africa, following a decision to focus its efforts on its core recurring premium
life business in the entry level market. Group life sales volumes were well down
on the comparable period in 2006, the result of a challenging group life market
as well as a focus on efficiencies and optimisation during the integration of
the business into the Institutional Cluster. The overall life new business
margin for the four months (based on the present value of new business premiums)
was maintained at the 2006 full year level, as a contraction in group life
margins offset an improvement experienced in both Personal Finance and
Developing Markets.
Investment business had a solid start to the year. Personal Finance increased
its new investment business inflows for the four months to April by more than
15%, while Sanlam Investments` funds under management improved to R440 billion,
assisted by strong new business flows in its South African businesses in
particular.
Net fund inflows in excess of R4 billion were achieved during the first four
months of 2007, with investment business contributing largely to this result.
Life business experienced negative net flows at similar overall levels as in the
comparable period, essentially due to ongoing negative group life flows, albeit
at a lower level, and an increase in individual life maturity benefits.
The Group made a satisfactory start to the year in a competitive market for both
investment and insurance products. Business Volume growth prospects for the rest
of 2007 should however be evaluated against an increasing comparable 2006 base.
The Group is not expected to maintain the current overall percentage growth in
new business volumes for the remainder of the year.
Earnings:
All major Group businesses exceeded their comparable 2006 net result from
financial services during the first four months of 2007, contributing to growth
in Core earnings and Core earnings per share in excess of 20%. This strong
performance was achieved on the back of the favourable equity markets, stronger
sales volumes, an improvement in group life underwriting results and a continued
focus on cost efficiency. Investment income was also positively impacted by a
more conservative asset mix in the shareholder capital portfolio. Due to the
strong growth towards the end of the 2006-year, full-year growth in Core
earnings is not expected to remain at the current high levels.
Headline earnings per share for the four months are marginally down on 2006.
Buoyant equity markets contributed to an improvement in investment returns and
an increase of more than 15% in earnings per share, before accounting for IFRS
related Fund Transfers. The rally in the Sanlam share price during 2007 resulted
in a more than R400 million negative change in Fund Transfers as at the end of
April, thereby offsetting the positive impact of investment markets.
Shareholders are reminded that Fund Transfers are not economic gains or losses,
but purely the result of an IFRS technical accounting requirement.
Shareholders need to be aware of the potential volatility in earnings caused by
volatility in the financial markets. Headline earnings in particular are
sensitive to investment market performance. Market movements towards the end of
the 2007 financial year may have a major impact on the level of Headline
earnings to be reported for the remainder of the year. The Group will also need
to account for its share of the IFRS 2 income statement charge in respect of
Santam`s Black Economic Empowerment transaction, which became operative on 21
May 2007. The full effect will only be known once the detail of the transaction
has been finalised, but will impact on the reported 2007 Headline earnings.
Capital Management
As previously reported, only some 18 million Sanlam shares were tendered in the
recent voluntary share buy back offer. The Group therefore still holds a
significant level of discretionary capital. The Sanlam Board remains committed
to optimising capital utilisation in the Sanlam group and will continue to
investigate and evaluate the most efficient alternatives of reducing capital
that is in excess of the Group`s ongoing business requirement. Shareholders will
be kept informed of progress in this regard. In the interim, we will continue to
buy back Sanlam shares in the market in periods of relative price weakness.
Since the closure of the voluntary tender offer we have acquired 17.5 million
shares at a cost of some R400 million.
Annual General Meeting
At the Annual General Meeting of Sanlam Limited held in Bellville on Wednesday 6
June 2007, Sanlam shareholders approved all the resolutions proposed in the
notice of the Annual General Meeting.
The Sanlam group interim results for the 2007 financial year will be released on
6 September 2007. Shareholders are advised that this is not a trading statement
as per section 3.4 of the JSE Listings Requirements.
Bellville
6 June 2007
Sponsor: J.P.Morgan Equities Limited
Date: 06/06/2007 14:42:40 Produced by the JSE SENS Department.
