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Contents
Shareholders` fund balance sheet - Net Asset Value
Analysis of Shareholders` fund at Fair Value
Shareholders` fund income statement
Notes to the shareholders` fund information
SHAREHOLDERS` FUND BALANCE SHEET AT NET ASSET VALUE
at 30 June 2007
June December
Reviewed Reviewed Audited
2007 2006 2006
R million R million R million
Assets
Goodwill 2 391 1 958 2 163
Value of business acquired 970 949 977
Investments 40 146 31 810 36 423
Working capital and other
assets 44 917 41 178 45 982
Total assets 88 424 75 895 85 545
Equity and liabilities
Shareholders` fund 30 988 27 352 30 980
Share capital and premium 955 956 955
Treasury shares (2 158) (773) (377)
Other reserves 9 854 9 778 9 812
Retained earnings 22 337 17 391 20 590
Minority shareholders`
interest 3 368 3 379 4 050
Term finance, working
capital and
other liabilities 54 068 45 164 50 515
Total equity and liabilities 88 424 75 895 85 545
Net asset value per
share (cents) 1 394 1 190 1 355
Reconciliation to Group
balance sheet
Shareholders` fund at net
asset value
above 30 988 27 352 30 980
Consolidation reserve (2 052) (1 726) (1 859)
Shareholders` fund per
Group balance
sheet 28 936 25 626 29 121
Note: Comparative information has been restated to exclude the impact of the
consolidation reserve.
ANALYSIS OF SHAREHOLDERS` FUND AT FAIR VALUE
at 30 June 2007
June December
Reviewed Reviewed Audited
2007 2006 2006
R million R million R million
Property and equipment 209 181 195
Owner-occupied properties 604 488 514
Goodwill (2) 476 473 477
Value of business acquired (2) 967 947 977
Deferred acquisition costs 857 782 917
Investments 41 645 32 011 38 504
Sanlam businesses 15 191 10 309 13 210
Sanlam Investments (3) 5 817 4 240 5 358
SIM Wholesale 3 992 3 110 3 729
International 1 495 816 1 336
Sanlam Collective Investments 330 314 293
Sanlam Personal Finance 1 146 869 1 058
Glacier 569 440 527
Sanlam Personal Loans (4) 114 98 94
Multi-Data 115 85 110
Sanlam Trust 96 82 95
Sanlam Home Loans 187 110 168
Other (5) 65 54 64
Independent Financial
Services 757 622 625
Punter Southall Group 298 354 209
Other (6) 459 268 416
Alfinanz 35 - -
Sanlam Capital Markets 540 467 541
Santam 6 896 4 111 5 628
Associated companies 101 799 2 806
Peermont - 736 1 062
Other 101 63 1 744
Joint ventures 435 395 387
Safair Lease Finance 271 271 271
Shriram and other 164 124 116
Other investments 25 918 20 508 22 101
Other equities and similar
securities 11 719 11 494 10 232
Public sector stocks
and loans 1 932 2 231 2 368
Investment properties 310 530 793
Other interest-bearing and
preference
share investments 11 957 6 253 8 708
Net term finance (1 986) - (2 071)
Term finance (5 142) (2 954) (5 322)
Assets held in respect of
margin business 3 156 2 954 3 251
Net deferred tax (415) (366) (215)
Net working capital (2 693) (1 922) (989)
Minority shareholders`
interest (927) (588) (818)
Shareholders` fund at
fair value 38 737 32 006 37 491
Fair value per share (cents) 1 743 1 393 1 640
(1) Group businesses listed above not consolidated, but reflected as
investments at fair value.
(2) The value of business acquired and goodwill relate mainly to the
consolidation of African Life, Channel Life and Merchant Investors and are
excluded in the build-up of the Group embedded value, as the current value of
in-
force business for these life insurance companies are included in the embedded
value.
(3) Excludes the investment management operations of Botswana Insurance Fund
Management (BIFM), as it is included in the current value of BIFM in-force life
insurance business.
(4) The life insurance component of Sanlam Personal Loans` operations is
included in the value of in-force business and therefore excluded from the
Sanlam Personal Loans fair value.
(5) Other Sanlam Personal Finance businesses comprise the non-life businesses
in Namibia.
(6) Other Independent Financial Services investments include Intrinsic,
Nucleus, Coris, JHI and other smaller investments.
SHAREHOLDERS` FUND INCOME STATEMENT
for the six months ended 30 June 2007
June December
Reviewed Reviewed Audited
2007 2006 2006
R million R million R million
Result from financial
services before tax 2 287 1 768 4 126
Life insurance 1 094 998 2 188
Short-term Insurance 567 304 906
Investment Management 560 482 1 077
Capital Markets 90 53 151
Independent Financial
Services 9 27 20
Corporate and other (33) (96) (216)
Tax on financial
services income (556) (411) (996)
Minority shareholders`
interest (283) (192) (514)
Net result from financial
services 1 448 1 165 2 616
Net investment income 514 417 786
Core earnings 1 962 1 582 3 402
Net project expenses (31) - -
Net broad-based employee
share plan (4) (19) (19)
Net equity-accounted
headline earnings 104 56 164
Net investment surpluses 1 210 1 246 3 215
Amortisation of value of
business acquired (23) (21) (45)
Net Secondary Tax
on Companies (92) (99) (84)
Normalised headline
earnings 3 126 2 745 6 633
Other equity-accounted
earnings - - 5
Profit on disposal of
subsidiaries and
Associates 614 98 132
Impairment of investments
and goodwill - (8) (30)
Normalised attributable
earnings 3 740 2 835 6 740
Fund transfers (381) 385 205
Attributable earnings per Group
income statement 3 359 3 220 6 945
NOTES TO THE SHAREHOLDERS` FUND INFORMATION
for the six months ended 30 June 2007
June
Reviewed Reviewed
2007 2006
R million R million
1. NEW BUSINESS AND TOTAL
FUNDS RECEIVED FROM CLIENTS
Analysed per market:
Retail (1)
Life business 5 063 4 478
Sanlam Personal Finance 4 382 3 985
Sanlam Developing Markets 681 493
Non-life business 13 849 11 905
Sanlam Personal Finance 4 482 3 822
Sanlam Private Investments 3 730 4 051
Sanlam Collective Investments 5 637 4 032
South African 18 912 16 383
Non-South African 3 999 3 164
Sanlam Developing Markets 369 278
Sanlam Personal Finance - Merchant
Investors 566 367
Sanlam Personal Finance - Namibia 3 064 2 519
Total Retail 22 911 19 547
Institutional (1)
Group Life business 972 1 379
Sanlam Employee Benefits 961 1 341
Sanlam Investment Management 11 38
Non-life business 14 806 8 144
Segregated 5 111 3 292
Sanlam Multi-Manager 3 672 1 189
Sanlam Collective Investments
wholesale 6 023 3 663
South African 15 778 9 523
Sanlam Investment Management non-South
African 1 203 1 806
Total Institutional 16 981 11 329
White label 4 452 3 808
Sanlam Collective Investments 3 998 3 600
Sanlam Developing Markets 454 208
Short-term insurance 5 476 4 897
Total new business 49 820 39 581
(1) Comparative figures have been restated for a reclassification of collective
investment funds between retail and institutional business and to disclose
Sanlam Developing Markets` white label flows separately.
June
Reviewed Reviewed
2007 2006
R million R million
2. NET FLOW OF FUNDS
Analysed per market:
Retail (1)
Life business (377) 522
Sanlam Personal Finance (454) 223
Sanlam Developing Markets 77 299
Non-life business 4 867 3 668
Sanlam Personal Finance 1 732 1 618
Sanlam Private Investments 2 445 1 726
Sanlam Collective Investments 690 324
South African 4 490 4 190
Non-South African 1 582 1 321
Sanlam Developing Markets 420 278
Sanlam Personal Finance - Namibia 1 349 1 165
Sanlam Personal Finance - Merchant
Investors (187) (122)
Total Retail 6 072 5 511
Institutional (1)
Group Life business (2 174) (1 841)
Sanlam Employee Benefits (1 764) (1 321)
Sanlam Investment Management (410) (520)
Non-life business (4 617) 251
Segregated (4 522) (659)
Sanlam Multi-Manager 470 3
Sanlam Collective Investments
wholesale (565) 907
South African (6 791) (1 590)
Sanlam Investment Management
non-South African 29 1 541
Total Institutional (6 762) (49)
White label 173 1 423
Sanlam Collective Investments 60 1 449
Sanlam Developing Markets 113 (26)
Short-term insurance 1 767 1 387
Total net flow of funds 1 250 8 272
(1) Comparative figures have been restated for a reclassification of collective
investment funds between retail and institutional business and to disclose
Sanlam Developing Markets` white label flows separately.
June December
Reviewed Reviewed Audited
2007 2006 2006
R million R million R million
3. EXCESS OF FAIR VALUE OVER NET ASSET VALUE OF SANLAM BUSINESSES AND
INVESTMENTS
The shareholders` fund at fair
value includes the value of the
companies below based on directors`
valuation, apart from Santam and
Peermont, which are valued according
to ruling share prices.
Net fair value of businesses and
investments 15 727 11 420 16 403
Fair value of businesses
and investments 15 727 11 503 16 403
Deferred capital gains tax
on businesses and investments
at fair value - (83) -
Less: Net asset value of
businesses and
investments 6 708 5 511 8 643
Sanlam Investments 870 694 938
SIM Wholesale
International 262 168 283
Sanlam Collective
Investments 70 59 33
Sanlam Personal Finance 586 394 510
Glacier 258 191 217
Sanlam Personal Loans 63 46 47
Multi-Data 52 28 40
Sanlam Trust 7 6 13
Sanlam Home Loans 187 100 168
Other 19 23 25
Independent Financial
Services 516 498 536
Punter Southall Group and
other
international 203 249 189
Other 313 249 347
Sanlam Capital Markets 540 467 541
Santam 3 766 2 852 3 798
Associated companies 101 386 2 079
Peermont - 323 335
Other 101 63 1 744
Joint ventures 329 220 241
Safair Lease Finance 165 96 125
Shriram and other 164 124 116
Less: Goodwill in respect
of above
businesses 1 270 1 248 1 247
Revaluation adjustment of
interest in businesses
and investments
to fair value 7 749 4 661 6 513
Analysis of fair value
Sanlam businesses 15 191 10 309 13 210
Associated companies 101 799 2 806
Joint ventures 435 395 387
Fair value of businesses and
Investments 15 727 11 503 16 403
The fair value of the Sanlam businesses has been determined by the application
of stock exchange prices for listed subsidiaries and the following valuation
methodologies for unlisted businesses:
June December
Reviewed Reviewed Audited
2007 2006 2006
Valuation method R million R million R million
Ratio of price to assets
under management 5 817 4 240 5 358
SIM Wholesale 3 992 3 110 3 729
International 1 495 816 1 336
Sanlam Collective Investments 330 314 293
Discounted cash flows 1 686 1 325 1 451
Glacier 569 440 527
Sanlam Personal Loans 114 98 94
Multi-Data 115 85 110
Sanlam Trust 96 82 95
Punter Southall Group 298 354 209
Other 494 266 416
Earnings multiple - Other 65 56 64
Net asset value 727 577 709
Sanlam Home Loans 187 110 168
Sanlam Capital Markets 540 467 541
Fair value of unlisted
businesses 8 295 6 198 7 582
The main assumptions applied in the primary valuation for the unlisted
businesses are presented below. The sensitivity analysis is based on the
following changes in assumptions:
Assumption Change in assumption
Ratio of price to assets under management (P/AuM) 0,1%
Risk discount rate (RDR) 1,0%
Perpetuity growth rate (PGR) 1,0%
Earnings multiple (PE) 1,0
Fair value of Sanlam businesses
R million Weighted Base value Decrease Increase
average in in
assumption assumption assumption
Ratio of price to
assets under
management P/AuM = 1,31% 5 817 5 299 6 340
Discounted cash
flows RDR = 17,8% 1 686 1 795 1 593
PGR = 2,5% - 5% 1 686 1 644 1 737
Earnings multiple
PE = 7,5 times 65 56 74
Six months Full year
Reviewed Reviewed Audited
2007 2006 2006
R million R million R million
4. INVESTMENT INCOME -
SHAREHOLDERS` FUND
Interest-bearing, preference
shares and
similar securities 393 223 459
Interest income and
preference share
dividends 630 327 796
Interest paid and term
finance cost (237) (104) (337)
Equities and similar
securities 265 294 581
Properties 17 29 54
Total investment income 675 546 1 094
5. NORMALISED DILUTED EARNINGS PER SHARE
In terms of IFRS, the policyholders` fund`s investments in Sanlam shares and
Group subsidiaries are not reflected as equity investments in the Sanlam balance
sheet, but deducted in full from equity on consolidation (in respect of Sanlam
shares) or reflected at net asset value (in respect of subsidiaries). The
valuation of the related policy liabilities however includes the fair value of
these shares, resulting in a mismatch between policy liabilities and
policyholder investments, with a consequential impact on the Group`s earnings.
The number of shares in issue must also be reduced with the treasury shares held
by the policyholders` fund for the calculation of IFRS basic and diluted
earnings per share. This is not a true representation of the earnings
attributable to the Group`s shareholders, specifically in instances where the
share prices and/or the number of shares held by the policyholders` fund varies
significantly. The Group therefore calculates normalised diluted earnings per
share to eliminate the impact of investments in Sanlam shares and Group
subsidiaries held by the policyholders` fund.
Cents Cents Cents
Normalised diluted earnings
per share:
Net result from financial
services 62,9 49,0 111,2
Core earnings 85,3 66,5 144,6
Headline earnings 135,9 115,4 282,0
Profit attributable to
shareholders` fund 162,5 119,2 286,6
5. NORMALISED DILUTED EARNINGS PER SHARE (continued)
R million R million R million
Analysis of normalised
earnings (refer
shareholders` fund income
statement:
Net result from financial
services 1 448 1 165 2 616
Core earnings 1 962 1 582 3 402
Headline earnings 3 126 2 745 6 633
Profit attributable to shareholders`
fund 3 740 2 835 6 740
million million million
Adjusted number of shares:
Weighted average number of shares
for diluted earnings per share 2 209,8 2 262,3 2 243,1
Add: Weighted average Sanlam
shares held by policyholders 90,8 117,0 108,9
Adjusted weighted average number of
shares for normalised diluted earnings
per share 2 300,6 2 379,3 2 352,0
Number of ordinary shares in issue at
beginning of period 2 303,6 2 408,6 2 408,6
Shares cancelled - (70,0) (105,0)
Number of ordinary shares in issue 2 303,6 2 338,6 2 303,6
Shares held by subsidiaries in shareholders`
fund (91,1) (47,0) (24,1)
Convertible deferred shares held by
Ubuntu-Botho 9,7 6,6 7,2
Adjusted number of shares for value
per share 2 222,2 2 298,2 2 286,7
6. SHARE REPURCHASES
The Sanlam shareholders granted general authorities to the Group at the 2006 and
2007 annual general meetings to repurchase Sanlam shares in the market. The
Group acquired 61,8 million shares from 8 March 2007 to 30 June 2007 in terms of
the general authorities. The lowest and highest prices paid were R20,69 and
R23,29 per share respectively. The total consideration paid of R1,4 billion was
funded from existing cash resources. All repurchases were effected through the
JSE trading system without any prior understanding or arrangement between the
Group and the counter parties. Authority to repurchase 201,6 million shares, or
8,7% of Sanlam`s issued share capital at the time, remain outstanding in terms
of the general authority granted at the annual general meeting held on 6 June
2007.
The financial effects of the share repurchases during 2007 on IFRS earnings and
net asset value per share are illustrated in the table below:
Before After
repurchases repurchases
Basic earnings per share:
Profit attributable to shareholders`
fund Cents 154 155
Headline earnings Cents 126 126
Diluted earnings per share:
Profit attributable to
shareholders`fund Cents 151 152
Headline earnings per share
Cents 124 124
Value per share:
Embedded value Cents 2 192 2 188
Net asset value Cents 1 330 1 302
Tangible net asset
value Cents 1 115 1 082
Group Financial Statements for the six months ended 30 June 2007
Contents
Group Balance Sheet
Group Income Statement
Group Statement of Changes in Equity
Group Cash Flow Statement
Notes to the financial statements
GROUP BALANCE SHEET at 30 June 2007
June December
Reviewed Reviewed Audited
2007 2006 2006
R million R million R million
ASSETS
Property and equipment 280 240 259
Owner-occupied properties 622 504 530
Goodwill 2 391 1 958 2 163
Value of business acquired 970 949 977
Deferred acquisition costs 1 536 1 248 1 397
Long-term reinsurance assets 416 391 427
Investments 297 002 251 819 280 627
Properties 15 640 13 072 14 602
Equity-accounted investments 1 264 2 016 3 417
Equities and similar
securities 152 217 133 901 141 456
Public sector stocks and
loans 49 339 47 624 53 921
Debentures, insurance
policies, preference
shares and other loans 30 767 25 058 31 743
Cash, deposits and similar
securities 47 775 30 148 35 488
Deferred tax 333 356 549
Short-term insurance
technical assets 2 248 2 505 2 288
Working capital assets 46 446 43 063 46 265
Trade and other receivables 35 259 31 270 37 103
Cash, deposits and similar
securities 11 187 11 793 9 162
Total assets 352 244 303 033 335 482
EQUITY AND LIABILITIES
Shareholders` fund 28 936 25 626 29 121
Minority shareholders`
interest 3 275 3 263 3 934
Total equity 32 211 28 889 33 055
Long-term policy liabilities 248 350 215 423 237 864
Insurance contracts 128 749 113 812 125 517
Investment contracts 119 601 101 611 112 347
Term finance 6 238 3 262 5 760
Interest-bearing liabilities
matched
by assets 4 252 3 262 3 689
Other interest-bearing
liabilities 1 986 - 2 071
External investors in
consolidated funds 12 767 8 072 8 010
Cell owners` interest 383 286 329
Deferred tax 1 981 1 588 1 929
Short-term insurance technical
provisions 8 235 7 537 7 752
Working capital liabilities 42 079 37 976 40 783
Trade and other payables 38 855 35 767 37 801
Provisions 1 106 887 996
Taxation 2 118 1 322 1 986
Total equity and liabilities 352 244 303 033 335 482
GROUP INCOME STATEMENT for the six months ended 30 June 2007
Six months Full year
Reviewed Reviewed Audited
2007 2006 2006
Note R million R million R million
Net income 31 480 26 457 69 960
Financial services
income 12 932 11 382 24 221
Reinsurance premiums
paid (1 310) (1 072) (2 432)
Reinsurance commission
received 187 222 383
Investment income 7 584 7 359 12 022
Investment surpluses 14 840 9 024 37 903
Finance cost - margin
business (120) (104) (223)
Change in fair value of
external investors
liability (2 633) (354) (1 914)
Net insurance and
investment contract
benefits and claims (21 045) (17 516) (50 072)
Long-term insurance and
investment
contract benefits (17 483) (14 082) (43 272)
Short-term insurance
claims (4 196) (3 838) (8 086)
Reinsurance claims
received 634 404 1 286
Expenses (4 678) (4 059) (8 956)
Sales remuneration (1 742) (1 580) (3 300)
Administration costs (2 936) (2 479) (5 656)
Impairment of investments
and goodwill - (8) (30)
Amortisation of value of business
acquired (23) (21) (45)
Net operating result 5 734 4 853 10 857
Equity-accounted earnings 201 121 423
Finance cost - other (117) - (114)
Profit before tax 5 818 4 974 11 166
Taxation 1 (1 814) (1 347) (3 070)
Shareholders` fund (1 189) (876) (1 894)
Policyholders` fund (625) (471) (1 176)
Profit for the period 4 004 3 627 8 096
Attributable to:
Shareholders` fund 3 359 3 220 6 945
Minority shareholders`
interest 645 407 1 151
4 004 3 627 8 096
Earnings attributable to shareholders
of the company (cents):
Basic earnings
per share 2 154,5 145,2 315,2
Diluted earnings
per share 2 152,0 142,3 309,6
GROUP STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2007
Six months Full year
Reviewed Reviewed Audited
2007 2006 2006
R million R million R million
Shareholders` fund:
Balance at beginning of period 29 121 25 020 25 020
Total recognised income 3 354 3 531 7 263
Profit for the period 3 359 3 220 6 945
Movement in foreign currency translation
reserve (5) 311 318
Net recognised investment surpluses on
treasury shares (203) (85) (188)
Share-based payments 28 45 74
Dividends paid (1) (1 705) (1 469) (1 467)
Shares cancelled - (1 036) (1 644)
Cost of treasury shares
(acquired)/sold (2) (1 659) (380) 63
Balance at end of period 28 936 25 626 29 121
Minority shareholders` interest:
Balance at beginning of period 3 934 3 443 3 443
Total recognised income 640 512 1 257
Profit for the period 645 407 1 151
Movement in foreign currency translation
reserve (5) 105 106
Share-based payments 4 4 9
Dividends paid (255) (575) (668)
Acquisitions, disposals and other movements
in minority interests (507) (121) (107)
Cost of treasury shares acquired (541) - -
Balance at end of period 3 275 3 263 3 934
Shareholders` fund 29 121 25 020 25 020
Minority shareholders` interest 3 934 3 443 3 443
Total equity at beginning
of period 33 055 28 463 28 463
Shareholders` fund 28 936 25 626 29 121
Minority shareholders` interest 3 275 3 263 3 934
Total equity at end of period 32 211 28 889 33 055
(1) Dividend of 77 cents per share paid during 2007 (2006: 65 cents per share)
in respect of the 2006 financial year.
(2) Comprises movement in cost of shares held by subsidiaries and the share
incentive trust.
GROUP CASH FLOW STATEMENT
for the six months ended 30 June 2007
Six months Full year
Reviewed Reviewed Audited
2007 2006 2006
R million R million R million
Net cash inflow/(outflow) from operating
activities 1 017 8 415 (5 436)
Net cash inflow/(outflow) from investment
activities 14 653 (2 672) 11 704
Net cash (outflow)/inflow from financing
Activities (1 355) (1 210) 971
Net increase in cash and
cash equivalents 14 315 4 533 7 239
Cash, deposits and similar securities at
beginning of period 44 647 37 408 37 408
Cash, deposits and similar securities at
end of period 58 962 41 941 44 647
NOTES TO THE FINANCIAL STATEMENTS
For the six months ended 30 June 2007
Six months Full year
Reviewed Reviewed Audited
2007 2006 2006
R million R million R million
1. TAXATION
Result from financial services 536 411 850
Investment income 93 68 184
Investment surpluses 312 247 714
Profit on disposal of subsidiaries 10 - 3
Profit on disposal of
associated companies 138 4 4
Broad-based employee share plan (2) (8) -
Secondary Tax on Companies 102 154 139
Tax expense - shareholders` fund 1 189 876 1 894
Tax expense - policyholders` fund 625 471 1 176
Total income tax charged to income
statement 1 814 1 347 3 070
Cents Cents Cents
2. EARNINGS PER SHARE
Basic earnings per share:
Net result from financial services 66,6 52,5 118,7
Core earnings 90,2 71,3 154,4
Headline earnings 126,2 141,1 310,4
Profit attributable to
shareholders` fund 154,5 145,2 315,2
Diluted earnings per share:
Net result from financial services 65,5 51,5 116,6
Core earnings 88,8 69,9 151,7
Headline earnings 124,2 138,4 304,9
Profit attributable to
shareholders` fund 152,0 142,3 309,6
R million R million R million
Analysis of earnings:
Net result from financial services
(refer note 5 above) 1 448 1 165 2 616
Core earnings (refer note 5 above) 1 962 1 582 3 402
Headline earnings 2 745 3 130 6 838
Per note 5 above 3 126 2 745 6 633
Fund transfers (381) 385 205
Profit attributable to shareholders`
Fund 3 359 3 220 6 945
Per note 5 above 3 740 2 835 6 740
Fund transfers (381) 385 205
Six months Full year
Reviewed Reviewed Audited
2007 2006 2006
million million million
2. EARNINGS PER SHARE (continued)
Number of shares:
Number of ordinary shares in issue at
beginning of period 2 303,6 2 408,6 2 408,6
Less: Weighted average number of
shares cancelled - (11,7) (43,8)
Less: Weighted average Sanlam shares
held by subsidiaries (including
policyholders) (129,4) (178,7) (161,7)
Weighted average number of shares for
basic earnings per share 2 174,2 2 218,2 2 203,1
Add: Weighted conversion of
deferred shares 8,7 6,6 6,8
Add: Total number of shares under
option 42,7 72,7 63,1
Less: Number of shares (under option)
that would have been issued at fair
value (15,8) (35,2) (29,9)
Weighted average number of shares for
diluted earnings per share 2 209,8 2 262,3 2 243,1
3. SEGMENTAL INFORMATION
Six months Full year
Reviewed Reviewed Audited
2007 2006 2006
R million R million R million
Segment revenue (per shareholders`
fund information) 12 280 10 816 22 913
Life Insurance 5 196 4 744 10 039
Short-term Insurance 5 643 5 023 10 482
Investment Management 1 129 870 1 996
Sanlam Capital Markets 237 151 370
Independent Financial Services 13 30 28
Corporate and other 62 (2) (2)
IFRS adjustments 652 566 1 308
Total segment revenue 12 932 11 382 24 221
Segment result (per shareholders fund
information before tax
and minorities) 5 228 4 504 10 183
Life Insurance 5 841 3 478 9 454
Short-term Insurance 1 213 865 2 483
Investment Management 619 502 1 186
Sanlam Capital Markets 142 53 151
Independent Financial Services 26 112 110
Corporate and other (2 613) (506) (3 201)
IFRS adjustments (13) 2 (146)
Policyholder activities 603 468 1 129
Total segment result 5 818 4 974 11 166
4. CONTINGENT LIABILITIES
Shareholders are referred to the contingent liabilities disclosed in the 2006
annual report. The circumstances surrounding these contingent liabilities
remained materially unchanged.
5. SUBSEQUENT EVENTS
No material facts or circumstances have arisen between the dates of the balance
sheet and this report which affect the financial position of the Sanlam Limited
group as reflected in these financial statements.
Group Embedded Value Results for the six months ended 30 June 2007
Contents
Basis of presentation
Assumptions
Group Embedded Value
Group Return on Embedded Value
Value of New Life Business
Notes to the Group Embedded Value Results
GROUP EMBEDDED VALUE RESULTS
for the six months ended 30 June 2007
BASIS OF PRESENTATION
The embedded value information has been prepared in accordance with PGN 107
(Version 3), the guidance note on the derivation of assumptions, calculation and
reporting of embedded values, issued by the Actuarial Society of South Africa.
The embedded value results have been prepared on the same basis as used in the
2006 annual report, apart from the treatment of the Shriram joint venture.
Shriram was previously included in the Group embedded value at its equity-
accounted carrying value. With effect from 1 January 2007, the goodwill
included in the equity-accounted carrying value is replaced with Shriram`s value
of in-force business.
The net impact of the above change in methodology was a decrease in the embedded
value earnings for the six months ended 30 June 2007 of some R100 million.
ASSUMPTIONS
The embedded value calculation is based on best estimate assumptions (refer note
9). These assumptions are used as the basis for statutory solvency reporting, to
which compulsory and discretionary margins are added for the determination of
policy liabilities in the financial statements.
Economic assumptions
The assumed investment return on assets supporting the policy liabilities and
capital at risk are based on the long-term asset mix for these funds.
Inflation assumptions for unit cost, policy premium indexation and employee
benefits salary inflation are based on an assumed long-term gap relative to
fixed-interest securities.
Assets backing capital at risk
The assumed composition of the assets backing the capital at risk is consistent
with Sanlam`s practice and with the long-term asset distribution used to
calculate the statutory capital requirements of the Group`s life businesses.
Decrements, expenses and bonuses
Future mortality, morbidity and discontinuance rates and future expense levels
are based on recent experience where appropriate.
Future rates of bonuses for traditional participating business, stable bonus
business and participating annuities are set at levels that are supportable by
the assets backing the respective product asset funds at the valuation date.
The surrender and paid-up bases of the Group`s South African life companies have
been adjusted, where applicable, to reflect the minimum standards for early
termination values agreed between the Life Offices Association and National
Treasury. In all other respects, future benefits have been determined on
current surrender and paid-up bases.
HIV/Aids
Allowance is made, where appropriate, for the impact of expected HIV/Aids-
related claims, using models developed by the Actuarial Society of South Africa,
adjusted for Sanlam`s practice and product design.
Premiums on individual business are assumed to be rerated, where applicable, in
line with deterioration in mortality, with a three-year delay from the point
where mortality losses would be experienced.
Asset management fees
Projected asset management expenses are based on the fee structures agreed with
the Group and external fund managers, as appropriate. To the extent that fees
include profit margins for Sanlam Investment Management, these margins have not
been included in the value of in-force and new business.
Project costs
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