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Sanlam 'satisfied' despite flat earnings

Sep 09 2010 09:01
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Sanlam Limited [JSE:SLM]

Last traded 62
Change 1
% Change 1
Cumulative volume 1967553
Market cap 0

Last Updated: 02-09-2015 at 02:27. Prices are delayed by 15 minutes. Source: McGregor BFA

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Johannesburg - Financial services group Sanlam [JSE:SLM] on Thursday reported a 5% decline in diluted headline earnings per share for the six months to end-June from 83 cents to 79.2 cents.

However, normalised headline earnings per share, which the group uses as a more accurate barometer of performance, reflected a 2% improvement - from 78.9 cents to 80.5 cents.

Commenting on the group's performance, Sanlam's Group CEO Johan van Zyl said: "The group performed well despite challenging business conditions during the first six months of 2010, with all key performance indicators reflecting a satisfactory result on a comparable basis.

"This again confirms the group's track record of resilient results as our diversification strategy (which includes market segmentation, solutions offerings and geographical presence), combined with prudent operational and financial practices, contributed towards its defensive character in adverse trading conditions. Our core operations continue to provide a stable base, complemented by an increasing contribution from investments in new growth initiatives.  
"The group's well-established strategy successfully supported these interim results. The board and management remain committed to the group's key objective of maximising shareholder value. The five pillars of optimal capital utilisation, earnings growth, cost control and efficiencies, diversification and transformation underpin this strategy and good progress has been made on all of these pillars."

Increase in new life business

New business volumes for the half-year were down 3% to R50bn, but new life business volumes increased by 13%. The group said the decrease in total new business volumes was the combined result of strong growth in new life business, offset by a decline in new investment business from a high base in 2009.

The net value of new covered business was up 16% to R283m, with net fund inflows of R6.6bn for the six months.

The group reported an equity value (GEV) per share of 2 479c for the period, with an annualised return on group equity value of 9.1%.   
Looking ahead, Van Zyl said that "optimism in the face of uncertainty" best describes the outlook for the second half of the year.

"2010 started with renewed investor confidence that the worst of the financial markets crisis was over and that the world was gearing up for accelerated growth.

"While global economic growth is gradually returning, uncertainty and risk aversion remain, aggravated by the emergence of sovereign credit risk in Europe and regular economic data that confirms a prolonged upturn at best.

"We remain confident and optimistic that the group will continue to deliver sound operating results. The business environment is however expected to remain challenging in the second half of the year, with only slow economic recovery in most of the economies in which we operate.

"This is not expected to result in any meaningful performance improvement in the second half of the year compared to the first six months of 2010 or relative to the strong second half of 2009," he said.




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