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RESULTS: Sanlam
Johannesburg, Marc h 11 (I-Net Bridge) - Diversified financial services group Sanlam (SLM) on Thursday reported a 133% leap in normalised headline earnings per share from 93.9% to 218.9 cents for the year ended December.
Diluted headline earnings per share for the 12 months were up 66% from 132.2 cents to 218.8 cents.
The operational performance of the group in the 2009 financial year enabled the board to increase the dividend per share by 6% to 104 cents.
“The Sanlam Group delivered a solid and stable performance in 2009 - a year heavily scarred by turmoil in world financial markets, the magnitude of which claimed unprecedented victims late in 2008. The resilience of Sanlam’s business model stood out clearly with our persistence commended by both shareholders and analysts,” the group stated.
It added that the turmoil in the international financial markets had an ongoing impact on the Sanlam business environment in 2009.
“Prudent policies and practices shielded the group from major financial losses, but could not prevent our 2009 new business volumes and operating results being affected by the challenging economic conditions experienced in all areas in which the Sanlam Group operates.
“Investment markets have a material impact on the group’s reported results.”
Similar to international trends, the South African equity market experienced huge volatility in 2009. After losing 14% in the first two months of 2009, the FTSE JSE All Share Index recovered on the back of increasing local and international demand to record an overall gain of 29% for the year compared to a loss of 26% in 2008.
“This had a positive impact on portfolio returns achieved for the year and in particular also on the investment return on shareholder funds reported in headline earnings. However, the average FTSE JSE All Share Index level for the year was still 15% lower than in 2008, which impacted negatively on the group’s asset-based revenue.
“Long-term interest rates increased from the beginning of 2009, which is reflected in the 1% negative All Bond return in 2009, compared to a return of 17% in 2008. Short-term interest rates decreased in line with the reduction in the South African Reserve Bank’s repo rate, which had a negative impact on the interest earned on working capital.
“The rand strengthened against most of the currencies of the other countries in which we operate. This had a negative impact on the translated rand results of these entities. Against the British pound the rand strengthened by 11% from R/GBP13,33 at the end of December 2008 to
R/GBP11,89 at the end of 2009 and against the Botswana pula from R/P1,26 to R/P1,13.
“In the context of the challenging environment, the group achieved a pleasing operational performance for the 2009 financial year,” Sanlam stated.
The group said the return on Group Equity Value (ROGEV) per share of 16.2% achieved in 2009 comfortably exceeded the target of 11.3%, in part owing to the positive impact of the strong equity market. The adjusted ROGEV, i.e. assuming a normalised investment market performance and excluding any once-off items, for 2009 amounted to 13,1%, also well ahead of
target.
Total new business volumes for 2009 of 103 billion rand were 3% higher than in 2008.
After a relatively flat first half performance, new business volumes improved by 5% in the second half on those achieved in the comparable period in 2008. Net inflows of 15.5 billion rand were well up on the 9.1 billion rand achieved in 2008, which was testimony to the group’s positive fund retention and persistency experience, Sanlam added.
Value of new covered business of 689 million rand was down 1% at a marginally lower average margin of 2.61%.
Core earnings of 3.690 billion rand were 5% lower than in 2008, the combined effect of a 3% decrease in the net result from financial services and a 9% decline in net investment income earned on the capital portfolio.
“The relatively lower base of assets under management impacted on the growth in fee income and the profitability of especially the investment management businesses. This was further aggravated by deterioration in the claims experience at Santam. Core earnings per share decreased by a lower 3%, attributable to a 2% reduction in the weighted average number of shares in issue.
“The investment return earned on the Group’s capital portfolio improved significantly compared to the negative performance in 2008, supported by the strong investment market gains in particularly the second half of the 2009 financial year. Normalised headline earnings per share benefited from the turnaround in investment returns and increased by 133% on 2008,” Sanlam
said.
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