SLM - Sanlam Limited - Operational update - June 2008

SLM - Sanlam Limited - Operational update - June 2008                           
SANLAM LIMITED                                                                  
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)                                  
(REGISTRATION NUMBER 1959/001562/06)                                            
JSE SHARE CODE: SLM                                                             
NSX share code: SLA                                                             
ISIN number: ZAE000070660                                                       
("Sanlam" or "the Group")                                                       
Operational Update - June 2008                                                  
As contemplated in our 2007 annual report market conditions have weakened       
markedly thus far in 2008. Global equity and debt markets are under pressure,   
with an unprecedented level of divergence in the performance of resources shares
versus the other South African equity sectors, while a number of deteriorating  
economic factors have a negative effect on South African consumers` disposable  
income.                                                                         
In context of this challenging business environment, the Group achieved sound   
trading results for the four months to 30 April 2008. Growth in total new       
business volumes of some 9% represents a satisfying performance. This growth    
should also be evaluated against the strong base of business flow experienced in
recent years. Core Earnings per share for the four months are marginally up on  
2007 but Headline Earnings per share are down 16%, substantially due to lower   
investment returns on shareholder funds. Normalised Headline Earnings per share,
which exclude certain IFRS related adjustments, are down 47% on 2007.           
The Sanlam Board remains committed to capital optimisation in the Sanlam group  
and continues to pursue the most efficient alternatives of utilising            
discretionary capital, either through investing in value adding strategic       
ventures or to reduce capital that is in excess of the Group`s ongoing business 
requirement. As indicated in our 2007 financial results announcement we have    
continued the buy back of Sanlam shares. For the year to date 62 million Sanlam 
shares (2.7% of issued capital) have been acquired as treasury shares for a     
consideration of R1 248 million. Of the Sanlam shares held as treasury shares,  
63.5 million were cancelled, reducing Sanlam`s issued share capital to 2 240    
million shares.                                                                 
Salient features of the Group`s performance for the 4 months to April 2008 are: 
New Business volumes:                                                           
- Overall new business volumes are up 9% on 2007, substantially due to some 30% 
growth experienced in new Life insurance business:                              
 - Sanlam Personal Finance (SPF) recorded a 43% increase in SA single life      
premiums, in part due to a noticeable shift towards guaranteed-plan sales.      
Notwithstanding recurring risk premium business that continues to perform well, 
the impact of the challenging economic environment is evident in a 2% overall   
reduction in new SA recurring premiums. Merchant Investors in the UK almost     
doubled its new life business volumes;                                          
- In Sanlam Developing Markets (SDM) new SA recurring premiums for the four    
months are up 16%, with ongoing strong growth (28%) in non-SA business flows;   
 - Sanlam Employee Benefits (SEB) new business flows are however marginally     
down on 2007;                                                                   
- Overall, the average life new business margin for the four months (based on  
the present value of new business premiums net of minorities) is marginally     
lower than that achieved in the 2007 financial year.                            
- Gross Investment business inflows are in line with 2007 as an increase in     
retail inflows is offset by lower institutional flows:                          
 - SPF`s new investment business increased by some 30%, including good growth   
in Namibian unit trust flows. The latter is however not sustainable due to the  
expected impact of changes in the tax regime applicable to Namibian Unit Trusts;
- Gross investment flows in Sanlam Investments (SIM) are down 7%, mainly due   
to lower multi-manager and wholesale collective investments business flows.     
Retail collective investment business continued to reflect satisfactory new     
business volumes. SIM`s assets under management amounted to R451 billion on 30  
April 2008, marginally down on December 2007.                                   
 - Net fund inflows of R3,4 billion are the result of positive net flows in     
both life insurance and investment business. As expected, life business         
persistency levels deteriorated somewhat from the levels experienced in 2007.   
Earnings:                                                                       
- Net result from financial services (operating income) for the four months is  
slightly lower than in 2007:                                                    
 - SPF and SEB achieved solid performances to date;                             
- Santam reported satisfactory underwriting results for the period;            
 - SDM`s performance has been negatively impacted by new business strain        
resulting from its stronger new business recurring premium sales, some cost     
overruns and lower equity markets in Botswana;                                  
- Volatile equity markets and a reduction in performance fees earned had a     
negative impact on SIM`s results for the year to date while SCM`s performance is
also down on 2007 due to a substantial slowdown in deal flow, as well as a      
general deterioration in the mark-to-market valuation of certain debt           
instruments.                                                                    
 - MiWay, our new direct financial services business, was launched in March     
2008 and is performing ahead of expectations. As expected though, this new      
venture will only start to make a positive profit contribution once critical    
mass in business volumes has been achieved.                                     
- Core earnings per share are marginally up on 2007, as a small reduction in    
both operating results and investment income (due to a smaller capital base) is 
compensated for by a reduction in Sanlam`s weighted average number of shares in 
issue.                                                                          
- Normalised headline earnings per share are down 47% to date, substantially due
to lower investment returns as well as a lower capital base. Investment returns 
were adversely impacted by both a lower overall stock market performance        
relative to the same period in 2007 and an underweight exposure in shareholder  
funds to the outperforming resources equity sector.                             
- Net of IFRS related adjustments, headline earnings are down 16%.              
Outlook:                                                                        
The challenging macro-economic conditions and volatile financial market         
conditions are not expected to abate for the remainder of the year, and are     
likely to impact on growth in the group`s key operational performance           
indicators. Shareholders need to be aware of the impact of financial market     
volatility on Group earnings. Relative market movements towards the end of June 
and December 2008 may have a material impact on the level of Group earnings to  
be reported for the interim and full 2008 financial year respectively.          
The information in this operational update has not been reviewed or reported on 
by Sanlam`s auditors. Sanlam`s interim results for the six months to 30 June    
2008 are due to be released on 4 September 2008. Shareholders are advised that  
this is not a trading statement as per section 3.4 of the JSE Listings          
Requirements.                                                                   
Bellville                                                                       
4 June 2008                                                                     
Sponsor                                                                         
Deutsche Securities (SA) (Proprietary) Limited                                  
Date: 04/06/2008 14:00:01 Supplied by www.sharenet.co.za                     
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