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Performance Highlights 2018

Earnings

  • Net result from financial services increased by 4%
  • Dividend per share of 312 cents, up 8%

Business volumes

  • Net value of new covered business up 8% to R2 billion (up 14% on consistent economic basis)
  • Net new covered business margin of 2,8% on consistent economic basis (2,94% in 2017)
  • New business volumes increased by 1% to R223 billion
  • Net fund inflows of R42 billion compared to R37 billion in 2017

Group Equity Value

  • Group Equity Value per share of R63,41
  • Return on Group Equity Value per share of 11,6%
  • Adjusted Return on Group Equity Value per share of 19,4%; exceeding target of 13,0%

Capital management

  • R7,9 billion of capital raised and released; R13,5 billion deployed in strategic investments
  • Acquisition of remaining 53% stake in Saham Finances finalised
  • Package of BBBEE transactions approved by shareholders; planned implementation 1H2019
  • Sanlam Group SAM cover ratio of 215% (2017: 218%); Sanlam Life Insurance Limited SAM cover ratio for covered business of 221% (2017: 233%)

Overview

We celebrated 100 years of value creation for our stakeholders in 2018. We faced major headwinds in our centenary year, which makes the 11,6% RoGEV per share we achieved a fitting tribute to our resilience, diversification and ability to execute under adverse conditions.

We made major progress in executing on our strategic pillars during 2018, as elaborated on in the Group Chief Executive’s report. Our federal model and diversified profile are major contributors, enabling a dual focus on growing our existing operations while also concluding new corporate transactions to drive enhanced future growth. This diligent focus on strategic execution enabled us to achieve solid growth in 2018 and double-digit average growth rates in most key performance indicators over the last 10 years. Growth of 14% in the value of new covered business (VNB) on a consistent economic basis and more than R2 billion in positive experience variances is testimony to Sanlam’s resilience in difficult times.

RoGEV

11,6% 10yr CAGR: 15,6%

Dividend

7,6% 10yr CAGR: 12,3%

Net result from financial services

4,0% 10yr CAGR: 12,2%

New business volumes

0,8% 10yr CAGR: 9,1%

Net VNB

7,8% 10yr CAGR: 12,5%

Net VNB margin

2,67% 2008: 2,50%

We entered 2018 with renewed optimism in South Africa. The election of Mr Cyril Ramaphosa as president of the African National Congress and South Africa boded well for an improved operating environment. Corporate and individual investor confidence soared, but it was unfortunately short-lived. It was soon realised that it will take longer than expected to transform the positive changes into enhanced economic growth. Investor confidence faded as a result, compounded by international developments including a steady rise in the US Federal Reserve policy interest rate, the uncertainties surrounding Brexit and an escalating trade war between the US and China. Operating conditions in South Africa remained challenging as a result, with pedestrian economic growth, negative returns on the local equity market and currency volatility.

The negative return of 9% for the JSE/FTSE All Share Index compared to a positive return of 21% in 2017 had a pronounced impact on RoGEV and earnings growth in 2018.

Economic growth in a number of the other key emerging markets where we operate was also constrained. In addition, equity markets across most of our markets recorded declines, placing severe pressure on our ability to grow earnings and create value for our clients. The currencies of oil-producing countries, Nigeria and Angola in particular, remained weak.

Read more about our operating environment.

Despite these challenges, the Group delivered robust overall growth in key performance indicators, supported by our diversification across geographies, market segments and lines of business.

The key highlights and challenges for the year are:

This report provides an overview of the Group’s performance, focussing on the key shareholder performance indicators. More detailed information is available in the Shareholders’ information section including balance sheet and income statement information for the shareholders’ fund reconciled to the IFRS Statement of Financial Position and Statement of Comprehensive Income. Reconciliations between the IFRS net asset value and Group Equity Value (GEV) are also provided.

Sanlam Life Insurance is a licensed financial service provider.
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