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SLM
SLM
Sanlam Limited - Trading Statement and Results of Annual General Meeting
Registered name: Sanlam Limited
(Registration number 1959/001562/06)
JSE share code: SLM
NSX share code: SLA
ISIN number: ZAE000070660
Sanlam Trading Statement and Results of Annual General Meeting
Strong growth in new business volumes and a sound operational performance,
coupled with South African equity markets reaching new record heights in April
2006, contributed to overall satisfactory Group results for the first four
months of 2006.
Financial results
Business volumes:
The improved levels of new business flow attained in the second half of 2005
continued during the first four months of 2006 and all major businesses reported
a solid improvement compared to the same period in 2005.
*Strong growth was experienced by the retail businesses in particular. SA
individual life new business grew by 25% (new recurring premiums up 10% and
single premiums up 27%) and the non-SA life business grew by 19%. This excludes
the maiden contribution from the new entry-level businesses, which performed in
line with expectations and contributed some 15% of new individual life inflows.
Retail investment businesses achieved exceptional growth, with both Sanlam
Private Investments and Sanlam Collective Investments doubling their inflows.
Sanlam Personal Finance"s new investment business inflows grew by 32%.
*The SA institutional businesses achieved growth of 18% while non-SA
institutional businesses also continue to experience strong inflows.
These percentage growth levels are in most instances from a relatively low base
at the start of 2005 and will not necessarily be maintained for the remainder of
the financial year.
Net positive funds flow for the period exceeded R10 billion with increased
contributions from both the Life and Investment businesses, although, as
anticipated, Group Life business still recorded negative flows.
Earnings:
Businesses in Sanlam"s retail cluster produced solid operating results for the
four months due to positive life risk underwriting results and market linked
income in Sanlam Personal Finance, while the maiden contribution from the entry-
level market life businesses (African Life and Channel Life) is on target.
Strong equity markets supported the Investment cluster"s earnings through a
higher level of assets under management and incentive fees earned, while Sanlam
Capital Markets delivered another satisfactory profit contribution. However, in
line with expectations, these positive operating results are offset
substantially by a lower operating profit contribution from Santam, due to the
normalisation of underwriting margins, as well as a higher effective tax rate
for Sanlam Life. The net effect of this is that operating profit, after tax and
minorities, is on a similar level to that for the same period in 2005.
Shareholders need to be aware of the potential volatility in earnings due to
market factors. Headline earnings for the first four months benefited from the
strong equity markets. Market movements towards the end of June 2006, in
particular in comparison with the strong equity market performance in May and
June 2005, may however have a material impact on the Headline earnings and the
level of growth to be reported for the six months to June 2006. The reported
earnings are also affected by changes in the composition of the Sanlam
investment base following the disposal of our stake in Absa (which contributed
both equity accounted earnings as well as a special dividend in the first half
of 2005), strategic acquisitions and the buy back of Sanlam shares.
Delivering on Strategy
Sanlam continues to pursue its strategy to enhance shareholder value by
maximising return on embedded value. Growth through improved operational
efficiencies and the optimal use of capital are key to achieving this strategy:
*The positive impact of distribution initiatives throughout the Group is evident
in the continuing improvement in new business volumes.
*Recent acquisitions in the entry-level market, an important component of our
growth strategy, are delivering according to expectations.
*The Group aims to utilise excess capital to invest in structural growth
initiatives that support the Group strategy and have the potential to yield an
acceptable hurdle rate. A number of potential opportunities continue to be
evaluated.
*Relative price weakness is also being used to continue the buy-back of Sanlam
shares in open-market transactions. During 2006 to date some 2.9% of Sanlam"s
shares were purchased at a cost of R1.1 billion. Application will be made to the
JSE to cancel and delist these shares.
*Progress towards the potential introduction of debt as part of Sanlam Life
Assurance"s long-term capital remains on track.
Shareholders are advised that the financial information referred to in this
trading statement has not been reviewed or reported on by Sanlam"s auditors.
The interim results for 2006 are due for release on 7 September 2006.
Annual General Meeting
At the Annual General Meeting of Sanlam Limited held in Bellville today, Sanlam
shareholders approved all the proposed resolutions, including the special
resolution authorising the directors to repurchase the Company"s shares. This
special resolution will be registered with CIPRO in due course. Shareholders
also elected Ian Plenderleith* as an independent non-executive director of
Sanlam Limited to replace Dave Brink who retired at the AGM.
* British
Bellville
7 June 2006
Sponsor: J.P.Morgan Equities Limited
Date: 07/06/2006 02:59:10 PM Produced by the JSE SENS Department
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