4 December 2013
Investment market returns improved significantly since the end of June 2013, despite periods of volatility emanating from concerns around a tapering of Quantitative Easing by the US Federal Reserve. This supported an increase in the Group’s assets under management as well as investment return earned on the capital portfolio. The operating results reported for the 10 months to October include maiden contributions from the increase in the Group’s holding in Shriram Capital in India, the acquisition of a 49% stake in Pacific & Orient in Malaysia during May 2013 and the equity-accounted earnings of Capricorn Investment Holdings (CIH), the Group’s insurance partner in Namibia and also the holding company of Bank Windhoek, with effect from 1 July 2013. This follows an increase in the Group’s interest in CIH to a strategic stake of 22% (“the CIH transaction”).
The salient features of the Group’s performance for the 10 months to October 2013 are:
All of the Group operations remain well capitalised. Sanlam Life Insurance’s statutory capital covered its Capital Adequacy Requirements by 4.2 times on 30 September 2013.
The Group had excess capital of some R3.2 billion available for redeployment at the end of June 2013. Utilisation since then included the acquisition of an additional interest in Shriram Transport Finance Company for some R200 million and increasing the Group’s stake in CIH to 22% (refer above) for R243 million. Net of these transactions and investment return, available discretionary capital amounts to some R3 billion. This remains earmarked for growth opportunities in mainly Africa and South-East Asia.
We do not anticipate any material improvement in the economic environment for the remainder of the year. General operating conditions are therefore expected to remain challenging with a resulting impact on the Group’s key operational performance indicators. Investment market volatility is expected to continue as the debate on the tapering of Quantitative Easing unfolds.
Shareholders need to be aware of the impact of the level of interest rates and financial market returns and volatility on the Group’s earnings and Group Equity Value. Relative movements in these elements may have a major impact on the growth in normalised headline earnings and Group Equity Value to be reported for the full year to 31 December 2013.
The information in this operational update has not been reviewed and reported on by Sanlam's external auditors. Sanlam’s financial results for the year ending 31 December 2013 are due to be released on 6 March 2014. Shareholders are advised that this is not a trading statement as per section 3.4 of the JSE Limited Listings Requirements.
A conference call for analysts, investors and the media will take place at 17h00 (South African time) today. Investors and media who wish to participate in the conference call should dial the following numbers:
A toll free dial-in facility will be available. We kindly advise callers to dial in 5 - 10 minutes before the conference call starts at 17:00.
South Africa and other countriesToll +27 (0)11 535 3600Toll-free 0800 200 648
USAToll-free 1 866 652 5200
UKToll-free 0808 162 4061
Recorded playback will be available for three days after the conference
Access code for recorded playback: 24049#
South Africa and other countriesToll +27 (0)11 305 2030
USAToll 1 412 317 0088
UKToll 0808 234 6771
Deutsche Securities (SA) (Proprietary) Limited
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