Including the dividend of 268 cents per share paid during the year, a RoGEV per share of 14,8% was achieved for 2017. This exceeded the 13,2% target for the year, due to strong growth in VNB and positive experience variances, investment market returns in excess of long-term assumptions, lower risk discount rates (RDR) and profit realised on the disposal of the Enterprise Group in Ghana. These factors more than offset the negative effect of a stronger rand exchange rate, write-off of goodwill recognised in respect of the BrightRock, Saham Finances and Rwandan acquisitions in terms of the EV methodology, as well as IFRS impairments of the investments in Pacific & Orient and Letshego that also affects RoGEV. Adjusted RoGEV per share, which excludes the impact of higher investment return than the long-term assumptions, interest rate changes and other one-off effects not under management control, and assuming normalised exchange rate movements, amounted to 15,8% – well in excess of the target.
South African nine-year and five-year long-term interest rates declined by 20bps and 60bps respectively in 2017, with a corresponding decline in the RDR used to value the Group’s South African businesses for GEV purposes. A discounted cash flow (DCF) valuation basis is used for essentially all of the Group’s operations, with the decline in RDR having a positive effect on the end-2017 valuations and RoGEV for 2017. This positive impact was augmented by a relatively stronger equity market performance, which supported assets under management and hence GEV valuations at Sanlam Investments (SI) and Sanlam Personal Finance (SPF). After strengthening significantly in 2016, the rand ended the year slightly stronger against most of the currencies where we operate.