Wrap Text
Interim results for the six months ended 30 June 2016
Sanlam Limited
(Registration number 1959/001562/06)
(Tax reference number: 9536/346/84/5)
JSE share code (primary listing): SLM
NSX share code: SLA
ISIN: ZAE000070660
Incorporated in South Africa
Interim results for the six months ended 30 June 2016
Key features
Earnings
- Net result from financial services per share increased by 11%
- Normalised headline earnings per share down 7%
Business volumes
- New business volumes up 15% to R115 billion
- Net value of new covered business up 7% to R702 million
- Net new covered business margin of 2,44% (2,66% in 2015)
- Net fund inflows of R22 billion compared to R7 billion in 2015
Group Equity Value
- Group Equity Value per share of R52,12
- Return on Group Equity Value per share for the six months of 7,9%
Capital management
- Unallocated discretionary capital of R3,1 billion at 30 June 2016
- Sanlam Life Insurance Limited CAR cover of 5,3 times
Salient results
for the six months ended 30 June 2016
2016 2015 % Change
Sanlam Group
Earnings
Net result from financial services per share cents 196,8 177,0 11
Normalised headline earnings per share(1) cents 208,0 224,2 (7)
Diluted headline earnings per share cents 214,1 233,1 (8)
Net result from financial services R million 4 028 3 622 11
Normalised headline earnings(1) R million 4 256 4 588 (7)
Headline earnings R million 4 322 4 726 (9)
Business volumes
New business volumes R million 115 353 99 879 15
Net fund inflows R million 21 746 6 769 221
Net new covered business
Value of new covered business R million 702 655 7
Covered business PVNBP(2) R million 28 759 24 633 17
New covered business margin(3) % 2,44 2,66
Group Equity Value
Group Equity Value(5) R million 106 599 103 506 3
Group Equity Value per share(5) cents 5 212 5 057 3
Return on Group Equity Value per share(4) % 7,9 6,3
Sanlam Life Insurance Limited
Shareholders’ fund(5) R million 80 042 77 970
Capital Adequacy Requirements (CAR)(5) R million 8 375 8 250
CAR covered by prudential capital(5) Times 5,3 5,8
(1) Normalised headline earnings = headline earnings, excluding fund transfers.
(2) PVNBP = present value of new business premiums and is equal to the present value of new recurring premiums plus
single premiums.
(3) New covered business margin = value of new covered business as a percentage of PVNBP.
(4) Growth in Group Equity Value per share (with dividends paid, capital movements and cost of treasury shares
acquired reversed) as a percentage of Group Equity Value per share at the beginning of the year.
(5) Comparative figures are as at 31 December 2015.
Executive review
In an unsupportive business environment during the first half of the 2016 financial year, the Group once again achieved a
solid operational performance. Delivering double digit Return on Group Equity Value (RoGEV) (annualised) and double
digit growth in new business volumes and net result from financial services under challenging conditions is testimony to
the resilience of the Group’s strategy and its operations.
Economic growth in most of the markets where the Group operates remained below longer-term potential, in particular in
South Africa, the Group’s largest market. Investment market volatility also persisted as global investors navigated an
increasingly uncertain global environment. Markets grappled with the risk of an economic slowdown in China, the downturn
in the commodity cycle, rising geopolitical risks and the impact of potentially opposing monetary policy stances by
central banks in the United States (US), United Kingdom (UK), Europe and Japan. The fragile outlook for global economic
growth was dealt a further blow at the end of the second quarter by the UK electorate’s surprise vote in favour of Britain
leaving the European Union, signifying rising pressure in a number of countries for more protectionist policies. These
conditions contributed to rising risk aversion, increasing the pressure on the economies, currencies and investment
markets of emerging market countries.
- In South Africa, the economy continued to grow at a pedestrian pace in nominal terms with no real growth expected in
2016. Both internal and external factors are depressing economic activity. The current soft commodity cycle amidst weak
global growth and demand is placing severe pressure on the mining and ancillary sectors, exports and consequently the
current account balance. A depreciating rand exchange rate over the last two years and weaker consumer demand alleviated
some of the pressure on the current account, with recent data suggesting some rebalancing in the economy. Business
confidence in the private sector has declined in an environment of policy uncertainty, the risk of a downgrade in South
Africa’s sovereign debt rating and suppressed profitability due to real growth in employment costs without associated gains
in productivity. Fixed capital investment by the private sector is consequently lagging, placing pressure on employment
growth and consumer disposable income.
A major positive development since the end of December 2015 is renewed cooperation between the public and private
sectors to address the structural challenges that are hampering economic and employment growth. Various initiatives have
already been launched, which assisted in South Africa maintaining its investment grade sovereign debt ratings in June 2016.
The Finance Ministry and private sector are committed to achieve the common goals of the initiatives, which bode well
for accelerated future economic growth.
The South African equity and bond markets followed international events closely and exhibited periods of intense
volatility. Average market levels during the first half of 2016 were some 1% lower than the comparable period in 2015,
limiting growth in assets under management and fund-based fee income at Sanlam Investments and Sanlam Personal Finance.
The economic, political and volatile investment market conditions had a pronounced negative impact on institutional
and retail investor confidence during the first half of 2016. Institutional clients refrained from making significant
investment decisions, including the reallocation of investment management mandates. The retail sector exhibited similar
trends, with waning demand for discretionary single premium investment products.
- The Rest of Africa region continued to experience tough operating conditions with economic growth below the region’s
long-term potential. In many countries sustained loose fiscal policies following the global financial crisis left
economies exposed to deteriorating economic and financial conditions. The shift towards tighter monetary policy in the US,
albeit modest and slow, tighter global financial conditions and a significant downturn in the region’s commodity export
prices have led to a period of macro-economic adjustment. This is especially true of countries which have been running
large current account and government budget deficits along with high government debt levels, including Ghana, Zambia,
Kenya, Angola, Mozambique and Tanzania.
Oil exporters have been especially hard hit, notably Angola and Nigeria, where deteriorating balance of payment
positions, reflected in falling foreign exchange reserves levels, have forced devaluation of the Angolan kwanza and
the Nigerian naira. The negative shock to the terms of trade of these countries are also restricting growth in domestic
demand. Nigeria, for example, is expected to record negative economic growth in 2016, followed by a mild recovery only in
2017. Currency weakness has also contributed to sharp increases in inflation in these economies.
Elsewhere, inflation is also elevated in a number of economies including Ghana, Zambia, Tanzania and Malawi. Domestic
policy interest rates remained high or were increased in these countries in the first half of 2016 as a result. In
addition, drought conditions in some countries have also weighed heavily on economic activity, including Zimbabwe, Zambia
and Malawi.
Oil importing countries, however, benefited from low oil prices, which have supported their terms of trade and purchasing
power. Kenya is one example among the larger countries where economic growth has remained robust. Other commodity
producers that have improved their terms of trade significantly since the global financial crisis include Botswana and
Namibia where the production of diamonds is material. Botswana recorded a healthy current account surplus and a small
budget deficit in 2015. In contrast, Namibia is running large twin deficits, which cannot be sustained indefinitely. Even
so, Namibia’s international reserves did increase in the first quarter of 2016 due to capital inflows and valuation
adjustments.
Despite the difficult conditions, the overall Rest of Africa region continues to expand at a much faster pace than
South Africa. Low levels of insurance penetration also supported the Group’s growth in the region.
- India is making steady progress to improve economic growth, with the economy expanding in 2015 at a six year high.
Consumption tailwinds, supported by slower inflation and declining short-term interest rates, continue to drive economic
activity in 2016, benefiting growth at the Group’s Indian operations. The roll-out of the anticipated infrastructure
projects and diligent management of arrears in the equipment finance book is yielding positive results with no additional
bad debt provisions being required.
- Economic growth in Malaysia moderated somewhat in the first quarter of 2016 to 4,2 percent on an annualised basis.
Increased consumption spending by the public and private sector are not fully compensating for a decline in investment
and exports in the current weak commodity cycle. Motorcycle sales remain under pressure, impacting on premium growth in
the Group’s Malaysian general insurance business.
The Group’s primary strategic objective of optimising value creation for shareholders, as measured by RoGEV, remains
solidly in place. Given the nature of the Group’s diversified business, we consider this measure of performance the most
appropriate since it incorporates the result of all the major value drivers in the business. The RoGEV per share for the
six months to 30 June 2016 of 7,9% exceeded the target of 6,8%. Normalised RoGEV per share, which excludes investment
market and currency volatility as well as changes in interest rates and other factors outside of management’s control,
was slightly above the actual RoGEV for the period.
Net result from financial services increased by 11%. Sanlam Personal Finance (SPF) achieved solid growth of 9%. Sanlam
Emerging Markets (SEM) grew its contribution by 40%, the combination of solid organic growth and the first-time
inclusion of Saham Finances. As anticipated, underwriting margins at Santam normalised from an exceptional performance in
2015 to within its target range, resulting in a 6% decline in its net result from financial services. Pressure on fee income
in the asset management operations of Sanlam Investments (SI) and weaker claims experience at Sanlam Employee Benefits
(SEB), limited growth in the cluster’s profit contribution to 1%.
New business volumes increased by 15%, a strong performance under difficult conditions. All of the major businesses
contributed to the growth. Diligent focus on client centricity and the quality of new business written over many years
significantly improved the resilience of the life insurance in-force book as reflected in decent persistency experience
despite the pressure on consumer disposable income. The net value of the new covered business (VNB) increased by 7% at a
margin of 2,44%. The slight reduction in margin from 2,66% in the first half of 2015 is due to changes in business mix and
relatively higher long-term interest rates, with profitability mostly maintained on a per product basis.
- Strategic initiatives
The Group strategy is embedded in five pillars:
- Improving performance through top-line growth
- Increasing market share in key segments
- Diversifying the base (including geographical presence, products, market segments and distribution platforms)
- Improved operating and cost efficiencies, including quality of business written
- Prioritising Sanlam’s international positioning through diversification
- Improving capital efficiency on an ongoing basis
- Embracing and accelerating transformation of the Group.
Varying emphasis is placed on the different pillars over time as the Group evolves, the economic and operating environment
changes and client needs and preferences develop. This approach is applied throughout the business clusters, tailored to
their specific circumstances.
The Group’s international positioning remains focused on emerging markets, specifically Africa, India and South-East
Asia. A niche presence is maintained in selected developed markets to provide an investment and wealth management
capability to the African client base, augmented by local distribution capacity to achieve economies of scale.
Steady progress has been made on a number of strategic initiatives:
- SEM finalised the Saham Finances acquisition. This transaction significantly expands the Group’s footprint, which is
unmatched in Africa. The expanded footprint presents the Group with a significant opportunity to provide a holistic and
seamless insurance, investment and employee benefits offering to corporate clients and brokers operating across the
continent.
Conscious of management capacity available in the Group, focus in the near term has been shifted to successfully
execute on this opportunity, with less emphasis on further acquisitive growth in South-East Asia for the time being.
Good progress has been made with the acquisition of additional 23% stakes in Shriram General Insurance and Shriram
Life Insurance in India. The transaction remains subject to final regulatory approval.
Capacity within the SEM central support team has been strengthened in line with the increased focus on accelerated
organic growth.
- SPF refined its strategy to become the leader in insurance, investment and ancillary services in all segments of the
South African retail sector. The business is being realigned along broad solution categories to enhance management
focus and agility, which will significantly improve its ability to anticipate and fulfil rapidly evolving client needs,
while being optimally competitive. The realignment will also strategically position the business to operate effectively in a
regulatory environment post the introduction of the South African regulator’s Retail Distribution Review proposals.
The importance of digital distribution and support channels is rising at a rapid pace. These channels are demanded by
a new generation of clients and can also be a key component in improving the cost effectiveness and affordability of
products to the benefit of clients. The optimal digital offering, including both channel design and tailored product
solutions, is under development.
Life insurance products were launched on the MiWay direct distribution platform during 2015 under the MiWay Life
brand. Satisfactory sales traction was achieved during the first six months of 2016.
- SI’s implemented consulting offering continues to gain popularity with strong retail inflows generated during the
first half of 2016. Particularly satisfactory is the increased portion of funds invested in internally managed portfolios.
This offering also positions the cluster for a post Retail Distribution Review regulatory environment. Institutional
net inflows, however, continued to disappoint. The positioning of the business to gain market share in this highly
competitive segment will receive particular attention going forward. Improving cost efficiencies will also be a strategic
focus area.
- Santam’s strategy is aimed at maintaining its leadership position in South Africa, while building its non-South
African emerging market presence together with SEM. Good progress has been made in optimising the support model for the
general insurance businesses in SEM. MiWay, Santam’s direct offering in South Africa, continues on a strong growth path,
now competing in both the retail and small enterprises markets.
- Progress has been made in implementing the strategy of the new Sanlam Corporate cluster announced earlier in the year.
Recruitment of a Chief Executive for the cluster is progressing after Junior Ngulube’s appointment as Chief Executive
of SEM.
- Outlook
We expect that the economic and operating environment will remain challenging for the remainder of 2016, apart from
India where robust economic growth is expected. Global economic growth prospects for the second half of the year is
weighed to the downside as markets absorb the consequences of the UK exiting the European Union. Business and investor
confidence is unlikely to improve under these conditions, while investment market and currency volatility are expected to
persist. We remain confident in the Group’s ability to grow operational earnings and new business volumes despite the
challenging environment, but shareholders need to be aware of the impact that the level of interest rates, currency exchange
rates and financial market returns and volatility have 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, VNB and GEV to be reported for
the 2016 financial year.
We will continue to diligently execute on the strategic priorities identified in the Group’s 2015 Annual Report in the
second half of the 2016 financial year.
Forward looking statements
In this report we make certain statements that are not historical facts and relate to analyses and other information
based on forecasts of future results not yet determinable, relating, among others, to new business volumes, investment
returns (including exchange rate fluctuations) and actuarial assumptions. These statements may also relate to our future
prospects, developments and business strategies. These are forward looking statements as defined in the United States
Private Securities Litigation Reform Act of 1995. Words such as “believe”, “anticipate”, “intend”, “seek”, “will”, “plan”,
“could”, “may”, “endeavour” and “project” and similar expressions are intended to identify such forward looking statements,
but are not the exclusive means of identifying such statements. Forward looking statements involve inherent risks and
uncertainties and, if one or more of these risks materialise, or should underlying assumptions prove incorrect, actual
results may be very different from those anticipated. Forward looking statements apply only as of the date on which
they are made, and Sanlam does not undertake any obligation to update or revise any of them, whether as a result of new
information, future events or otherwise. Any forward looking information contained in this announcement has not been
reviewed and reported on by Sanlam’s external auditors.
Comments on the results
- Introduction
The Sanlam Group’s International Financial Reporting Standards (IFRS) financial statements for the six months ended 30
June 2016 are presented based on and in compliance with IFRS, specifically IAS 34 on Interim Financial Reporting. The
basis of presentation and accounting policies for the IFRS financial statements and shareholders’ information are in all
material respects consistent with those applied in the 2015 Annual Report.
Most of the Group businesses achieved a solid underlying performance in the first half of 2016 despite challenging
economic and investment market conditions. Highlights for the six months include the finalisation of the Saham Finances
transaction, in absolute terms the largest acquisition concluded by the Group to date, and a continued improvement in the
operational performances of SEM and Sanlam Capital Markets (SCM).
- Operating environment
Economic conditions
Economic conditions in the first six months of the 2016 financial year were not conducive to growth, as expanded on in
the Executive Review.
Equity markets
The South African equity market delivered a relatively weaker performance with the FTSE/JSE All Share Index recording
a total return of 4,3% for the six months to 30 June 2016, compared to a return of 6,7% in the comparable six-month
period in 2015. The MSCI World Index return in rand of -3,9% was significantly lower than the 7,8% return for the first
half of 2015. A number of the Rest of Africa markets where the Group operates also experienced significantly lower relative
investment market performance. Investment return earned on the Group’s capital portfolio was commensurately lower, with
a similar impact on headline earnings.
Interest rates
South African long-term interest rates declined by 110 basis points since the end of 2015, but were still 50 basis
points higher than the 30 June 2015 levels. RoGEV for the first six months of 2016 was supported by the decline in rates
since the end of 2015. Growth in VNB was, however, negatively impacted by the higher rates relative to the 30 June 2015
comparable base. The South African All Bond Index returned 11,2% in the first half of 2016 compared to a return of 1,6%
for the same period in 2015, partly offsetting the negative impact of the lacklustre equity market performance on the
South African operations’ assets under management.
Foreign currency exchange rates
The South African rand strengthened against most currencies over the six months to 30 June 2016, after a significant
depreciation during the 2015 financial year. Currency volatility was a key feature in a number of African countries. The
exchange rate of the rand against the currencies to which the Group has major exposure is summarised in the table below.
United Rest of
Europe Kingdom USA Botswana India Africa
Foreign currency/ZAR EUR GBP USD BWP INR (weighted)
31/12/2015 16,84 22,83 15,49 1,41 0,24
30/06/2016 16,31 19,57 14,78 1,37 0,22
Weakening/(strengthening) (3,1%) (14,3%) (4,6%) (2,4%) (6,7%) (9,6%)
Average first half 2015 13,29 18,14 11,91 1,24 0,19
Average first half 2016 17,18 22,05 15,40 1,40 0,23
Weakening/(strengthening) 29,3% 21,6% 29,3% 13,5% 21,0% 10,7%
The stronger closing exchange rate of the rand had a negative impact on the rand-based valuations and RoGEV of the
Group’s non-South African operations. The weaker average exchange rates, however, benefited the translated rand earnings,
new business volumes and VNB of these operations.
Taxation
The following changes in South African tax legislation affected the Group’s results for the six months to 30 June 2016:
- The effective capital gains tax (CGT) rate on unrealised market value appreciation was increased from 18,67% to 22,4%
during the first half of 2016, requiring re-measurement of the Group’s deferred tax balances. This resulted in the
recognition of a R175 million one-off capital gains tax charge in the Group’s earnings for the six months to 30 June 2016
net of non-controlling interests.
- The taxation of risk business written by life insurance companies was amended through the introduction of a separate
risk policy fund (RPF) for tax purposes. The net effect was as follows:
- For new business, tax relief for the upfront costs incurred in respect of writing new business is delayed until the
product becomes profitable from a cash flow perspective, impacting negatively on VNB. Together with product design
changes and re-pricing, the margin of new risk business was unaffected.
- In respect of existing business transferred to the RPF, investment income earned on policyholder liabilities
attributable to the RPF is not subject to tax in the RPF, resulting in an increase in the discretionary reserves of
the RPF to ensure profit is still recognised over the lifetime of the affected policies. This increase in the
discretionary reserve led to an increase in the value of in-force life business.
- Group Equity Value
GEV amounted to R106,6 billion or 5 212 cents per share on 30 June 2016. Including the dividend of 245 cents per share
paid during the year, a RoGEV per share of 7,9% was achieved for the first six months of 2016. This exceeds the 2016
six-month target of 6,8% by a healthy margin. Adjusted RoGEV per share, which excludes the impact of investment market and
currency volatility, interest rate changes and other one-off effects not under management control (such as tax
changes), was slightly in excess of the actual return.
South African and Namibian long-term interest rates declined by 110bp during the first half of 2016, with a
corresponding 110bp decrease in the risk discount rate (RDR) used to value the Group’s South African and Namibian operations for
GEV purposes. This had a commensurate positive impact on the 30 June 2016 valuations and RoGEV of these businesses. The
benefit was, however, to a large extent offset by:
- Currency translation losses on the non-South African operations due to the stronger rand exchange rate;
- A strengthening in the valuation assumptions used for the SEM and SEB operations;
- The utilisation of prudent investment market return assumptions in the valuation of the investment management businesses; and
- Weak investment market returns and a worsening in risk underwriting experience in the first half of 2016.
After underperforming in 2015, the Group’s shareholding in Santam achieved a stellar return of 24% for the six months
to 30 June 2016. The investment in Santam is valued at its listed market price for GEV purposes and reflects the share
price performance during the period.
Group Equity Value at 30 June 2016
GEV RoGEV - %
June December June June
R million 2016 2015 2016 2015
Group operations 101 077 91 558 9,1 7,0
Sanlam Personal Finance 41 408 38 249 13,8 8,1
Sanlam Emerging Markets 22 335 18 047 1,5 4,8
Sanlam Investments 21 780 22 412 (0,4) 9,8
Santam 15 554 12 850 23,8 2,5
Covered business 49 966 47 222 8,8 6,9
Value of in-force 34 612 32 114 13,2 8,4
Adjusted net worth 15 354 15 108 (0,5) 4,0
Other operations 51 111 44 336 9,4 7,2
Group operations 101 077 91 558 9,1 7,0
Discretionary capital and other 5 522 11 948 (3,8) (3,2)
Group Equity Value 106 599 103 506 7,9 6,2
Per share (cents) 5 212 5 057 7,9 6,3
Group operations yielded an overall return of 9,1% in the first half of 2016, the combination of 8,8% return on covered
business and 9,4% on other Group operations. The reduction in return on adjusted net worth reflects the relatively
weaker investment market return earned during the first six months of 2016, especially on the non-South Africa exposure,
as well as the one-off impact of the change in the effective CGT rate in South Africa (refer above).
SPF’s RoGEV of 13,8% was well in excess of its target. Covered business yielded a return of 12,8% compared to 8,0% in
the first half of 2015. A decline in return on adjusted net worth and some reduction in positive experience variances
and operating assumption changes were more than compensated for by the positive impact on the value of in-force of the
lower RDR and the introduction of the RPF. The valuation of other group operations benefited from the lower RDR applied
in the discounted cash flow valuation models, supporting a return of 22,7% from these operations in the first half of 2016
compared to 10,2% in the comparable 2015 period.
Notwithstanding SEM achieving solid growth in operating earnings and VNB for the first half of 2016, the cluster did
not achieve its RoGEV hurdle for the six-month period. RoGEV for the first half of 2016 of 1,5% (2015: 4,8%) is the
combined result of -0,8% (2015: 5,7%) return on covered business and a yield of 2,3% (2015: 4,3%) on other operations. The
following factors impacted on the return:
- The strengthening of the rand against particularly the Indian rupee, Botswana pula, Ghanaian cedi and Nigerian naira
had a 6% negative impact on the reported RoGEV. In constant currency terms, a RoGEV of 7,5% was achieved.
- Some of the general insurance operations have not yet succeeded with the successful implementation of
diversification strategies, resulting in a more prudent view being taken in the valuation bases of these businesses. Pacific
& Orient and Shriram General Insurance in particular yielded inadequate returns as a result.
- Negative variances from the correction of Soras Assurances Generales’ results, following corrective measures taken
to address financial irregularities uncovered during the period.
- Excess capital carried by MCIS, Botswana Insurance Holdings and Shriram Capital detracts from the total returns
achieved on the SEM portfolio given the low rate of investment return earned on the underlying investments. Redeploying the
excess capital remains a focus area.
- The return on covered business also fell short of target. In Kenya and Zambia the turnaround has been slower than
anticipated. Despite profitable new business written by MCIS, returns were negatively impacted by changes to in-force
modelling assumptions. Similar to the South African operations, investment return earned on the capital supporting the life
operations also underperformed.
- In support of the accelerated organic growth strategy, the SEM support structure has been expanded. Although the
increase in group costs have been capitalised, no allowance has been made in the valuations for the future benefits arising
from expected accelerated organic growth.
The SI operations recorded negative RoGEV of 0,4% in the first half of 2016 compared to 9,8% in the first six months
of 2015. Covered business yielded -3,3% (2015: 2,6%) and other operations 1,0% (2015: 14,4%). The return on covered
business was negatively impacted by the significant strengthening of the rand against the British pound, weak investment
return earned on the capital supporting these operations and negative risk underwriting experience at SEB. Last mentioned is
in line with trends already visible in peer’s 2015 results. The low return on other operations is mostly attributable
to currency translation losses on the International sub-cluster businesses. The South African Wealth and Investment
management businesses achieved acceptable growth in light of prudent investment market return assumptions being allowed for
in the valuation bases in an uncertain environment. The valuations were supported by the lower RDR and some growth in the
level of assets under management. In constant currency, the cluster achieved overall RoGEV of 3,0% and a RoGEV of 4,7%
on other operations.
As mentioned above, the RoGEV on Santam reflects the return on the listed Santam share.
The low return on discretionary and other capital is essentially the combined effect of the following:
- Net corporate expenses recognised in net result from financial services.
- A relatively low level of return earned on the portfolio’s exposure to low yielding liquid assets.
- Hedging of the Saham Finances and Shriram life and general insurance transactions. The transactions were hedged
through the acquisition of foreign currency, which earns a very low rate of interest due to the US dollar denomination. The
application of hedge accounting principles in the GEV presentation furthermore eliminated the foreign currency
movements, essentially exposing the portfolio to some R5 billion of assets that earned close to zero return - in respect of the
Saham Finances transaction for a period of two months and six months in respect of the Shriram insurance transactions.
Earnings
Shareholders’ fund income statement for the six months ended 30 June 2016
R million 2016 2015 % Change
Net result from financial services 4 028 3 622 11%
Sanlam Personal Finance 2 133 1 955 9%
Sanlam Emerging Markets 788 562 40%
Sanlam Investments 721 712 1%
Santam 388 413 (6%)
Corporate and other (2) (20) 90%
Net investment return 377 1 148 (67%)
Project costs and amortisation (145) (143) (1%)
Equity participation costs (4) (39) 90%
Normalised headline earnings 4 256 4 588 (7%)
Per share (cents) 208,0 224,2 (7%)
Net result from financial services (net operating profit) of R4 billion increased by 11% on 2015, with a strong
performance by SEM augmented by solid growth at SPF. As anticipated, Santam experienced a normalisation in underwriting
margins after exceptional results in 2015, contributing to a 6% decline in its contribution to operational earnings. SI’s
1% operating earnings growth is the combined effect of a strong recovery at SCM, offset by lower earnings at SEB and the
asset management businesses.
SPF achieved particularly satisfactory growth for a largely mature business in a challenging South African business
environment.
Sanlam Individual Life grew its net result from financial services by 8% in the first half of 2016. Excluding the
first-time contribution from Afrocentric of R43 million and start-up losses at MiWay Life of R20 million, Individual Life
net result from financial services grew by 7%. Profit from investment products grew by 18%, supported by an 11% increase
in the average level of assets under management. Strong guaranteed plan sales over the last two years contributed to the
increase in the asset base. Profit from risk products declined by 25%, the combined effect of significantly higher new
business strain following the strong new business performance (refer Business volumes section below) and an increase in
claims experience. Profit released from the asset mismatch reserve declined by 6% due to the lower level of this reserve
in the first half of 2016 compared to the same period in 2015. Positive annuity mortality experience, higher annuity
spread margins and an increase in interest earned on working capital supported the profit contribution from other life
products, which increased by 20%. Sanlam Personal Loans profit declined by 1%, attributable to only a marginal increase
in the size of the loan book. The implementation of the National Credit Amendment Act added substantially to the
administration process surrounding loan applications and also introduced more strict affordability requirements. This
resulted in an increase in the number of clients not completing the loan application process due to the additional
administrative burden, and also a decline in the number of clients qualifying for loans. Focus remained on maintaining the
quality of the book. Bad debt experience remained at some 5% as a result, which was in line with the 2015 experience.
Sanlam Sky’s net result from financial services increased by 7%, broadly in line with the growth in the size of the
in-force book.
Glacier grew its net profit contribution by 20%. Although fees are under constant pressure, fund-based fee income
benefited from an increase in assets under management due to good net fund inflows.
SEM grew its net result from financial services by 40%. This includes a first-time contribution of R95 million (before
group cost allocation) from Saham Finances. The transaction contributed to the cluster’s earnings from 1 March 2016.
Excluding Saham Finances, net result from financial services increased by 24%.
Namibia (up 29% net of tax and non-controlling interests; 10% on a gross basis) benefited from strong profit growth at
Capricorn Investment Holdings (CIH). The life operations achieved growth of 13% in gross result from financial
services, augmented by 31% growth in CIH’s contribution. Claims experience normalised at Santam Namibia after exceptional
underwriting results in 2015, contributing to a 21% decline in the business’ operating earnings. The higher growth on a net
basis relative to gross earnings is largely attributable to relatively stronger growth in businesses without
non-controlling interests and a tax overprovision in the first half of 2015 that reversed in the second half of 2015.
Botswana achieved growth of 19% in its net result from financial services (20% before tax and non-controlling
interests). The weaker average rand exchange rate in the first half of 2016 contributed 14% to the growth, with underlying
organic growth of some 5%. The life insurance operations achieved only marginal growth in constant currency terms due to
lower investment related earnings in volatile market conditions as well as a decline in annuity new business sales and
margins from a high base in 2015. Asset management earnings were negatively impacted by the large withdrawal of Botswana
Public Officers Pension Fund (BPOPF) funds in 2015 and volatile investment market conditions. Slow growth in loan advances,
combined with currency depreciation in some markets, suppressed growth in Letshego’s profit contribution.
The Rest of Africa operations (excluding Saham Finances) recorded a 23% decline in net result from financial services
(33% in constant currency). A first-time contribution by Zimbabwe and good growth in Ghana, Nigeria and Tanzania was
more than offset by a lower profit contribution from Zambia, Malawi and Rwanda, lower residential property sales in Kenya
and an increase in cluster level cost allocations based on the expanded central support capacity. As highlighted in the
Executive Review, the Zambian and Malawi operations are under pressure from a difficult economic environment. Financial
irregularities relating to prior years were identified in the Rwandan operations, which negatively impacted on the
results of the general insurance business. Corrective actions were taken to address these activities.
Net result from financial services in India rose 73%; 14% in constant currency terms and excluding the abnormal
equipment finance bad debt provisions recognised in the first half of 2015. The credit businesses increased their profit
contribution by 19% in constant currency terms and excluding the equipment finance provisions in 2015, largely attributable
to an increase in the size of the loan books. Both businesses are benefiting from the strong economic growth in India.
Higher claims experience in the general insurance business limited its profit growth to 6% in constant currency. Life
insurance profits declined compared to the first half of 2015, attributable to higher new business strain following strong
new business sales and costs incurred on growing the distribution footprint.
In Malaysia, net result from financial services decreased by 41%, the aggregate of 55% growth in general insurance
earnings and a net loss of R10 million from the life insurance operations. Growth in general insurance business premiums
remained under pressure from a combination of lower sales of two-wheelers and increased competition. This was, however,
more than offset by further anticipated releases of the IBNR reserves recognised in 2015 as experience develops. Product
innovation is a key focus for the business to regain market share and to expand its product lines. A number of new
products are planned for release over the coming months. The life insurance business had a difficult year with operating
earnings declining substantially. This is attributable to a number of one-off items:
- Higher reinsurance premiums payable in respect of Group Life products in terms of renewed treaties.
- Continued medical losses due to the delayed effect of repricing of the product.
- Asset mismatch losses following the sharp decrease in Malaysian government bond yields during 2016.
SI net result from financial services increased by 1%.
Significant investment market volatility resulted in a decline in the average level of most asset class indices during
the first half of 2016 compared to the same period in 2015. The impact of lower average market levels on the investment
management businesses’ assets under management was partly offset by good net fund inflows, in particular strong retail
flows. Average assets under management increased by only 2% as a result, contributing to a 5% decline in Investment
Management net result from financial services. Fee income increased broadly in line with assets under management.
Project-related cost in Sanlam UK and the impact of the weaker average rand exchange rate on the translated rand-based
cost of the international businesses contributed to a higher than inflationary increase in the cost base.
SEB’s net profit contribution declined by 5%. Risk profits declined substantially due to higher claims experience (a
trend already visible in peer group experience in 2015) and the impact of keen pricing to retain business. This was
partly offset by lower new business strain at SEB Investments, a decline in administration losses and an increase in
working capital profits due to higher short-term interest rates.
Capital Management experienced a reversal of credit and structured finance related losses incurred in 2015. A narrowing
of credit spreads on Eurobonds and an increase in the listed price of equities underlying equity-backed financing
structures resulted in marked-to-market gains on these exposures and contributed to a 55% increase in the business’ gross
result from financial services. Net of tax, operating earnings grew at a lower rate of 29% due to an increase in the
effective tax rate following the utilisation of available assessed losses during 2015.
As anticipated, Santam experienced a normalisation in underwriting margins after an exceptional 2015 reporting period.
The claims ratio increased from 63,7% in the first six months of 2015 to 64,8% in the first half of 2016, attributable
to a number of large corporate claims experienced in 2016 and an increase in drought-related agricultural claims. Sales
remuneration increased by 25%. A decrease in the gross commission ratio due to the growth in MiWay, where limited
commission expenses are incurred, was offset by lower reinsurance commissions earned on specialist business lines, including
crop and corporate property, following relatively worse loss ratios compared to 2015. Furthermore, gross commission on
inwards reinsurance business from Santam Re as well as business written in Africa, typically carries higher commission
rates than South African business. Focus on cost efficiencies and the disposal of Indwe contributed to a decline in the
administration cost ratio during the first half of 2016. The net effect was a decline in the underwriting margin from 8,9%
in the first half of 2015 to 6,4% in 2016.
Normalised headline earnings of R4,3 billion are 7% down on the comparable 2015 period. This is the combined effect of
the 11% increase in net result from financial services, offset by a 67% decline in net investment return earned on the
capital portfolio due to:
- Relatively weaker investment market performance, in particular on non-South African exposure;
- The R175 million one-off CGT expense incurred in 2016 due to the increase in the effective CGT rate in South Africa;
and
- Some R120 million reduction in net investment income earned following the utilisation of discretionary capital for
the Saham Finances acquisition.
Excluding the one-off CGT expense, normalised headline earnings declined by 3%.
- Business volumes
The Group achieved overall growth of 15% in new business volumes during the first half of 2016, a particularly
pleasing performance in a difficult operating environment.
Life insurance new business volumes increased by 17%, investment business inflows by 15% and general insurance earned
premiums by 16% (8% excluding the first-time contribution by Saham Finances).
SPF’s new business sales grew by 9%, a satisfactory performance in a difficult market for single premium business.
Sanlam Sky, operating largely in the South African entry-level market, achieved growth of 8%. Individual life recurring
premium new business increased by a disappointing 2%, with 5% growth in risk sales being offset by a 13% decline in
savings sales. This reflects management effort to reduce the proportion of sales from low margin savings products. Group
recurring premium sales increased by 34% following two large schemes written by Safrican. These new schemes more than
offset the impact of the biennial renewal of the Zionist Christian Church scheme that occurred in 2015.
New business volumes in the Individual Life segment, which is largely focused on the middle-income segment in South
Africa, declined by 1%. Single premium sales decreased by 3%, impacted by waning investor confidence and continued focus
by bank brokers on their own in-house products. New recurring premiums grew by 12%, with a sterling performance by new
risk business sales that increased by 24%. This was augmented by solid growth in ad hoc premium increases and tax free
savings product sales. New recurring premium retirement annuity sales reflect the pressure on middle-income consumers and
grew by only 2%.
Glacier achieved a solid performance in the first half of 2016, growing its new business volumes by 12%. Life
insurance new business continued to grow strongly at 22%, with good demand for offshore and wrap solutions. Suppressed
investor confidence in the affluent market segment, however, had a marked impact on discretionary non-life product sales,
which increased by only 8%.
The SEM operations grew their new business contribution by 37%; 19% excluding the first-time contributions by Saham
Finances and the Zimbabwe operations (11% in constant currency). New life business increased by 23% (22% excluding Saham
Finances and Zimbabwe), investment business inflows by 23% (20% excluding Zimbabwe - Saham Finances does not contribute
to investment business) and general insurance earned premiums by 115% (9% excluding Saham Finances and Zimbabwe).
New business volumes in Namibia increased by 27%, the combined result of a more than doubling in new life business and
15% growth in unit trust inflows. Glacier Namibia volumes are included in SEM for the first time in 2016 (previous
reported by SPF). New life business sales were also supported by strong entry-level market and group business sales.
As anticipated, Botswana’s new business performance was more subdued against a high base in 2015. A slowdown in
annuity sales is the primary driver behind a 5% decline in new business sales in constant currency (8% growth in rand terms).
Rest of Africa new business volumes increased by 141% (32% excluding the first-time contributions by Saham Finances
and Zimbabwe). Tanzania, Nigeria and Kenya achieved excellent new business sales growth, offsetting lower volumes in
Zambia and Malawi and a slow start to the year in Ghana. The growth in Kenya was driven by strong investment flows into Pan
Africa Asset Management and good single premium corporate sales. The agency channel continues to recover after the disruption
caused by the implementation of a new policy administration system during 2015 and restructuring of the distribution model in
2016, but individual life sales volumes were not yet at the desired level and declined slightly compared to the first half of
2015.
New business growth in India of 43% was supported by the weaker average rand exchange rate. Constant currency growth
of some 20% represents a solid overall performance.
As indicated before, lower two-wheeler sales and competitive pressures impacted negatively on Pacific & Orient in
Malaysia. This is evident in its earned premiums that declined by 16%. MCIS continues to do well from a new business
perspective and increased sales by 57%.
SI’s new business volumes increased by 18% with strong contributions from all businesses. SEB in particular attracted
good inflows into its investment products, elevating its new business growth to 81%. The market for recurring premium
risk business, however, remains highly competitive with all competitors pricing keenly to retain business. The Wealth
Management and Investment Management businesses continued to attract strong retail inflows in South Africa as elaborated
on in the Executive Review. Some internal focus during the restructuring of Sanlam UK is impacting on new business
performance.
The majority of Santam’s premiums are still written in the highly competitive South African market. Earned premiums
grew by 7%, reflecting the maturity of the South African market and highly competitive niche and specialist market
segments that depressed renewals. MiWay, Santam’s direct insurance business, grew its premium base by 20%, with strong
growth also achieved by Santam Re.
Net fund inflows of R21,7 billion in the first half of 2016 were well in excess of the R6,8 billion net inflows achieved in
the comparable period in 2015. Excluding the BPOPF withdrawal of some R14,5 billion in the first six months of 2015, the 2016
first-half net inflows were broadly in line with 2015.
Business volumes for the six months ended 30 June 2016
New business Net inflows
R million 2016 2015 % Change 2016 2015 % Change
Sanlam Personal Finance 31 906 29 162 9 8 485 10 188 (17)
Sanlam Emerging Markets 7 387 5 395 37 2 757 (8 981) >100
Sanlam Investments 66 360 56 234 18 7 093 2 260 214
Santam 9 700 9 088 7 3 411 3 302 3
Total 115 353 99 879 15 21 746 6 769 221
Covered business 21 853 18 620 17 6 034 5 822 4
Investment business 82 054 71 359 15 11 680 (2 549) >100
General insurance 11 446 9 900 16 4 032 3 496 15
Total 115 353 99 879 15 21 746 6 769 221
The discount rate used to determine VNB is directly linked to long-term interest rates. The 50 basis points higher long-term
interest rates in South Africa and Namibia at the end of June 2016 compared to 30 June 2015 resulted in a commensurate increase
in the risk discount rate and a consequential negative impact on VNB growth and margins. This was partly alleviated by a decline
in the Botswana long-term rate. VNB at actual discount rates increased by 9%; on a comparable basis (before economic assumption
changes) VNB increased by 11%.
SPF achieved overall growth of 8% on a comparable basis. The introduction of the low margin tax free savings product in the
entry-level market at the end of March 2015 resulted in a change in business mix for Sanlam Sky with a commensurate decline in
overall VNB and VNB margins. Despite a normalisation in mix between risk and savings products in 2016, the first half of 2015
included a lower percentage of tax free savings sales relative to 2016 due to the product only being sold for two months in
first-half 2015. VNB at Sanlam Sky declined by 7% on a comparable basis as a result, with VNB margins also declining from 7,67%
in the first half of 2015 to 6,51% in 2016. The strong growth in recurring premium risk business in the Individual Life segment
more than compensated for the lower single premium sales, with VNB increasing by 11% and the VNB margin expanding from 2,54% to
2,68% on a comparable basis. Glacier VNB growth of 23% is broadly in line with its new life business performance.
VNB growth and margins at SEM were negatively impacted by the lower new business production in Zambia and Malawi, as well as the
decline in individual life sales in Kenya. This was more than compensated for by strong VNB growth in the other regions. On a
consistent economic basis, overall VNB increased by 23% to R265 million. The underperformance in Zambia, Malawi and Kenya, together
with the inclusion of the low margin Glacier life business in the Namibian results in 2016 contributed to a decline in the overall
VNB margin for the cluster.
SI’s VNB declined by 15%, largely due to the change in sales mix at SEB from recurring premium risk business to lower
margin savings products.
Value of new covered business for the six months ended 30 June 2016
2016 economic basis 2015 economic basis
R million 2016 2015 % Change 2016 2015 % Change
Value of new covered business 798 730 9 807 730 11
Sanlam Personal Finance 499 482 4 520 482 8
Sanlam Emerging Markets 277 222 25 265 222 19
Sanlam Investments 22 26 (15) 22 26 (15)
Net of non-controlling interest 702 655 7 714 655 9
Present value of new business premiums 30 735 25 866 19 30 813 25 866 19
Sanlam Personal Finance 20 038 18 263 10 20 169 18 263 10
Sanlam Emerging Markets 5 688 3 599 58 5 634 3 599 57
Sanlam Investments 5 009 4 004 25 5 010 4 004 25
Net of non-controlling interest 28 759 24 633 17 28 860 24 633 17
New covered business margin 2,60% 2,82% 2,62% 2,82%
Sanlam Personal Finance 2,49% 2,64% 2,58% 2,64%
Sanlam Emerging Markets 4,87% 6,17% 4,70% 6,17%
Sanlam Investments 0,44% 0,65% 0,44% 0,65%
Net of non-controlling interest 2,44% 2,66% 2,47% 2,66%
- Capital management
Progress on Solvency Assessment and Management (SAM) implementation
The South African insurance businesses have made good progress with their SAM implementation programmes and will be
compliant with the new solvency regime when it becomes effective during the course of 2017.
As indicated in previous results announcements, a SCR target cover range of between 1,7 times and 2,1 times has been
set for Sanlam Life Insurance Limited’s (Sanlam Life) covered business. The R10 billion of IFRS-based required capital
allocated to these operations at the end of June 2016 translated into a SCR cover at the upper end of this target range.
The SCR cover ratio for the Sanlam Life entity as a whole exceeded the covered business ratio at the end of June 2016 due
to the inclusion of discretionary and other capital held on the Sanlam Life balance sheet as well as investments in
Santam and other Group operations that are not allocated to Sanlam Life’s covered business operations (i.e. not included in
the R10 billion allocated capital referred to above).
Discretionary capital
The Group started the year with unallocated discretionary capital of R2,3 billion. The utilisation of unallocated discretionary
capital during the six months to 30 June 2016 was limited to a few small transactions. Together with investment return earned on
the discretionary capital portfolio and the 2015 dividend cover in excess of cash operating earnings, available discretionary
capital increased to R3,1 billion at 30 June 2016. We remain focused on utilising the available discretionary capital for
value-accretive investment opportunities.
- Solvency
All of the life insurance businesses within the Group were sufficiently capitalised at the end of June 2016. The total
admissible regulatory capital (including identified discretionary capital) of Sanlam Life, the holding company of the
Group’s major life insurance subsidiaries, of R44,4 billion, covered its capital adequacy requirements (CAR) 5,3 times.
No policyholder portfolio had a negative bonus stabilisation reserve at the end of June 2016.
Dividend
- The Group only declares an annual dividend due to the costs involved in distributing an interim dividend to our large
shareholder base.
Desmond Smith Ian Kirk
Chairman Group Chief Executive
7 September 2016
Accounting policies and basis of preparation
The preparation of the Group’s reviewed interim financial statements was supervised by the financial director, Kobus
Möller CA(SA).
These reviewed interim condensed consolidated results have been prepared in accordance with and contains the information
required by International Financial Reporting Standards (IFRS), specifically IAS34 on Interim Financial Reporting as well as
the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued
by the Financial Reporting Standards Council and the requirements of the Companies Act of South Africa.
The policy liabilities and profit entitlement rules are determined in accordance with prevailing legislation,
generally accepted actuarial practice and the stipulations contained in the demutualisation proposal. There have been no
material changes in the financial soundness valuation basis since 31 December 2015, apart from changes in the economic
assumptions.
The accounting policies and basis of preparation for the IFRS financial statements and Shareholders’ information are
in all material respects consistent with those applied in the 2015 annual report.
None of the new or revised IFRSs or interpretations that became effective in the current period affected the results.
The following new or revised IFRSs and interpretations that are applicable to the group have effective dates
applicable to future financial years and have not been early adopted:
- IFRS 9 - Financial Instruments (effective 1 January 2018)
- IFRS 15 - Revenue from Contracts with Customers (effective 1 January 2018)
- IFRS 16 - Leases (effective 1 January 2019)
The impact of the application of these revised standards and interpretations in future financial reporting periods on
the Group’s reported results, financial position and cash flows are still being assessed.
External review
The appointed auditors, Ernst & Young Inc, reviewed the interim condensed financial statements and Shareholders’
information of the Group at 30 June 2016. These reviews were conducted in accordance with International Standards on Review
Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”. Copies of
the unqualified review reports of Ernst & Young Inc are presented below.
Shareholders' information
Independent auditors’ review report
on Sanlam Limited interim Shareholders’ information
To the directors of Sanlam Limited
Introduction
We have reviewed the accompanying interim Shareholders’ information of Sanlam Limited for the six months ended 30 June 2016,
comprising Group Equity Value; Change in Group Equity Value; Return on Group Equity Value; Shareholders’ fund at fair value;
Shareholders’ fund income statement; Notes to the shareholders’ fund information; and Embedded Value of covered business;
Change in Embedded Value of covered business; Value of New Business and Notes to the Embedded Value of covered business; as
set out below.
Directors’ responsibility for interim financial information
The directors of Sanlam Limited are responsible for the preparation and presentation of this interim financial information in
accordance with the basis of accounting, and for such internal control as the directors determine is necessary
to enable the preparation of interim financial information that is free from material misstatement, whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express a conclusion on this interim financial information. We conducted our review in accordance with
International Standard on Review Engagements (ISRE) 2410, “Review of Interim Financial Information Performed by the Independent
Auditor of the Entity”. ISRE 2410 requires us to conclude whether anything has come to our attention that causes us to believe that
the interim financial statements are not prepared in all material respects in accordance with the basis of accounting set out above.
This standard also requires us to comply with relevant ethical requirements.
A review of interim financial information in accordance with ISRE 2410 is a limited assurance engagement. We perform
procedures, primarily consisting of making inquiries of management and others within the entity, as appropriate, and
applying analytical procedures, and evaluate the evidence obtained.
The procedures performed in a review are substantially less than and differ in nature from those performed in an audit
conducted in accordance with International Standards on Auditing. Accordingly, we do not express an audit opinion on
these financial statements.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim
Shareholders’ information for the six months ended 30 June 2016 is not prepared, in all material respects, in accordance with
the basis of accounting set out above.
Basis of accounting
Without modifying our conclusion, we draw attention to the basis of accounting. The Sanlam Limited Interim Shareholders’
information is prepared to provide additional information in respect of the Group shareholders’ fund in a format that
corresponds with that used by management in evaluating the performance of the Group. As a result the Sanlam Limited Interim
Shareholders’ information may not be suitable for another purpose.
Ernst & Young Inc.
Director: Johanna Cornelia de Villiers
Registered Auditor
Chartered Accountant (SA)
Ernst & Young House
35 Lower Long Street
Cape Town
7 September 2016
Group Equity Value
at 30 June 2016
June reviewed December audited
2016 2015
Fair Fair
value of Value of value of Value of
R million Note Total assets in-force Total assets in-force
Sanlam Personal Finance 41 408 12 636 28 772 38 249 12 010 26 239
Covered business(1) 37 100 8 328 28 772 34 526 8 287 26 239
Glacier 2 144 2 144 - 1 605 1 605 -
Sanlam Personal Loans 939 939 - 913 913 -
Afrocentric 703 703 - 703 703 -
Other operations 522 522 - 502 502 -
Sanlam Emerging Markets 22 335 18 877 3 458 18 047 14 884 3 163
Covered business(1) 6 089 2 631 3 458 5 486 2 323 3 163
Shriram Capital 7 965 7 965 - 7 594 7 594 -
Saham Finances 3 522 3 522 - - - -
Letshego 1 356 1 356 - 1 106 1 106 -
Pacific & Orient 735 735 - 812 812 -
Capricorn Investment Holdings 1 008 1 008 - 877 877 -
Other operations 1 660 1 660 - 2 172 2 172 -
Sanlam Investments 21 780 19 398 2 382 22 412 19 700 2 712
Covered business(1) 6 777 4 395 2 382 7 210 4 498 2 712
Sanlam Employee Benefits 5 347 3 720 1 627 5 577 3 720 1 857
Sanlam UK 1 430 675 755 1 633 778 855
Investment Management 14 326 14 326 - 14 417 14 417 -
Capital Management 677 677 - 785 785 -
Santam 15 554 15 554 - 12 850 12 850 -
Group operations 101 077 66 465 34 612 91 558 59 444 32 114
Discretionary capital 3 100 3 100 - 2 300 2 300 -
Balanced portfolio - other 4 240 4 240 - 11 199 11 199 -
Group Equity Value before adjustments to
net worth 108 417 73 805 34 612 105 057 72 943 32 114
Net worth adjustments - present value of
holding company expenses (1 818) (1 818) - (1 551) (1 551) -
Group Equity Value 106 599 71 987 34 612 103 506 71 392 32 114
Value per share (cents) 4 5 212 3 520 1 692 5 057 3 488 1 569
Analysis per type of business
Covered business(1) 49 966 15 354 34 612 47 222 15 108 32 114
Sanlam Personal Finance 37 100 8 328 28 772 34 526 8 287 26 239
Sanlam Emerging Markets 6 089 2 631 3 458 5 486 2 323 3 163
Sanlam Investments 6 777 4 395 2 382 7 210 4 498 2 712
Other Group operations 51 111 51 111 - 44 336 44 336 -
Discretionary and other capital 5 522 5 522 - 11 948 11 948 -
Group Equity Value 106 599 71 987 34 612 103 506 71 392 32 114
(1) Refer embedded value of covered business below.
Change in Group Equity Value
for the six months ended 30 June 2016
Six months reviewed
R million 2016 2015
Earnings from covered business(1) 4 146 3 319
Earnings from other Group operations 4 393 2 846
Operations valued based on discounted cash flows 1 241 2 342
Expected return 2 229 1 758
Operating experience variances (179) (97)
Assumption changes 330 86
Foreign currency translation differences (1 139) 595
Operations valued at net asset value - earnings for the period 90 145
Listed operations - investment return 3 062 359
Earnings from discretionary and other capital (363) (263)
Portfolio investments and other 44 41
Net corporate expenses (2) (20)
Share-based payment transactions (138) (242)
Change in net worth adjustments (267) (42)
Group Equity Value earnings 8 176 5 902
Dividends paid (4 967) (4 556)
Cost of treasury shares acquired
Share incentive scheme and other (116) (19)
Group Equity Value at beginning of the period 103 506 95 936
Group Equity Value at end of the period 106 599 97 263
(1) Refer embedded value of covered business below.
Return on Group Equity Value
for the six months ended 30 June 2016
Six months reviewed
2016 2015
Earnings Return Earnings Return
R million % R million %
Sanlam Personal Finance 5 271 13,8 3 129 8,1
Covered business(1) 4 427 12,8 2 822 8,0
Other operations 844 22,7 307 10,2
Sanlam Emerging Markets 296 1,5 702 4,8
Covered business(1) (43) (0,8) 290 5,7
Other operations 339 2,3 412 4,3
Sanlam Investments (90) (0,4) 1 975 9,8
Covered business(1) (238) (3,3) 207 2,6
Other operations 148 1,0 1 768 14,4
Santam 3 062 23,8 359 2,5
Discretionary and other capital (363) (263)
Return on Group Equity Value 8 176 7,9 5 902 6,2
Return on Group Equity Value per share 7,9 6,3
Annualised return on Group Equity Value per share 16,4 13,0
(1) Refer embedded value of covered business below.
Six months reviewed
R million 2016 2015
Reconciliation of return on Group Equity Value:
The return on Group Equity Value reconciles as follows to normalised attributable earnings:
Normalised attributable earnings per shareholders’ fund income statement 4 176 4 565
Net foreign currency translation gains recognised in other comprehensive income (1 460) 393
Earnings recognised directly in equity
Share-based payment transactions (98) (213)
Net cost of treasury shares delivered (266) (418)
Share-based payments 168 205
Other comprehensive income (410) -
Change in ownership of subsidiaries (31) (301)
Movement in fair value adjustment - shareholders’ fund at fair value 4 333 1 066
Movement in adjustments to net worth (242) (17)
Present value of holding company expenses (267) (42)
Change in goodwill and value of business acquired adjustments less value of in-force acquired 25 25
Growth from covered business: value of in-force(1) 1 908 409
Return on Group Equity Value 8 176 5 902
(1) Refer embedded value of covered business below.
Shareholders’ fund at fair value
at 30 June 2016
June reviewed December audited
2016 2015
Fair Fair
value Net value Net
Fair adjust- asset Fair adjust- asset
R million Note value ment value value ment value
Covered business, discretionary and
other capital 24 969 (79) 25 048 30 324 (419) 30 743
Property and equipment 388 - 388 458 - 458
Owner-occupied properties 663 - 663 668 - 668
Goodwill(2) 673 - 673 679 - 679
Value of business acquired(2) 1 122 - 1 122 1 177 - 1 177
Other intangible assets 187 - 187 195 - 195
Deferred acquisition costs 2 595 - 2 595 2 572 - 2 572
Investments 23 576 (110) 23 686 27 412 (574) 27 986
Properties 619 - 619 456 - 456
Associated companies 3 028 - 3 028 2 304 - 2 304
Equities and similar securities 2 285 - 2 285 3 130 - 3 130
Other interest-bearing and preference
share investments 5 945 - 5 945 8 351 - 8 351
Structured transactions 521 - 521 821 - 821
Investment funds 7 803 - 7 803 4 780 - 4 780
Cash, deposits and similar securities 3 375 (110) 3 485 7 570 (574) 8 144
Net term finance - - - - - -
Term finance (3 522) - (3 522) (3 698) - (3 698)
Assets held in respect of term finance 3 522 - 3 522 3 698 - 3 698
Net deferred tax (769) - (769) (870) - (870)
Net working capital (874) 31 (905) 803 155 648
Structured transaction liability (72) - (72) (31) - (31)
Non-controlling interests (2 520) - (2 520) (2 739) - (2 739)
Other Group operations 51 111 23 608 27 503 44 336 19 615 24 721
Sanlam Personal Finance 2.1 4 308 2 574 1 734 3 723 1 942 1 781
Glacier 2 144 1 783 361 1 605 1 239 366
Sanlam Personal Loans(3) 939 340 599 913 314 599
Afrocentric 703 15 688 703 - 703
Other operations 522 436 86 502 389 113
Sanlam Emerging Markets 2.2 16 246 1 196 15 050 12 561 512 12 049
Shriram Capital 7 965 1 432 6 533 7 594 863 6 731
Saham Finances 3 522 108 3 414 - - -
Letshego 1 356 171 1 185 1 106 83 1 023
Pacific & Orient 735 5 730 812 75 737
Capricorn Investment Holdings 1 008 117 891 877 31 846
Other operations 1 660 (637) 2 297 2 172 (540) 2 712
Sanlam Investments 2.3 15 003 10 560 4 443 15 202 10 645 4 557
Investment Management 14 326 10 499 3 827 14 417 10 507 3 910
Capital Management 677 61 616 785 138 647
Santam 15 554 10 475 5 079 12 850 7 713 5 137
Goodwill held on Group level in respect
of the above businesses - (1 197) 1 197 - (1 197) 1 197
Shareholders’ fund at fair value 76 080 23 529 52 551 74 660 19 196 55 464
Value per share (cents) 4 3 719 1 150 2 569 3 648 938 2 710
2016 2015
Fair Fair
value Net value Net
Fair adjust- asset Fair adjust- asset
R million Note value ment value value ment value
Reconciliation to Group Equity Value
Group Equity Value 106 599 71 987 34 612 103 506 71 392 32 114
Add: Net worth adjustments 1 818 1 818 - 1 551 1 551 -
Add: Goodwill and value of business
acquired replaced by value of in-force 2 275 2 275 - 1 717 1 717 -
Sanlam Life and Pensions 356 356 - 356 356 -
Sanlam Developing Markets 590 590 - 607 607 -
Saham Finances(5) 541 541 - - - -
MCIS Insurance 477 477 - 446 446 -
Shriram Life Insurance(4) 210 210 - 210 210 -
Other 101 101 - 98 98 -
Less: Value of in-force (34 612) - (34 612) (32 114) - (32 114)
Shareholders’ fund at fair value 76 080 76 080 - 74 660 74 660 -
(1) Group businesses listed above are not consolidated, but reflected as investments at fair value.
(2) The value of business acquired and goodwill relate mainly to the consolidation of Sanlam Developing Markets, Channel Life, Sanlam Life
and Pensions, and MCIS Insurance and are excluded in the build-up of GEV, as the current value of in-force business for these life
insurance companies are included in the embedded value of covered business.
(3) The life insurance component of Sanlam Personal Loans’ operations is included in the value of in-force business and therefore excluded
from the Sanlam Personal Loans fair value.
(4) The carrying value of Shriram Life Insurance includes goodwill of R210 million (2015: R210 million) that is excluded in the build-up of
GEV, as the current value of in-force business for Shriram Life Insurance is included in the embedded value of covered business.
(5) The carrying value of Saham Finances includes value of business acquired of R541 million that is excluded in the build-up of GEV, as the
current value of in-force business for Saham Finances is included in the embedded value of covered business.
Shareholders’ fund income statement
for the six months ended 30 June 2016 - reviewed
Sanlam Sanlam Sanlam
Personal Finance Emerging Markets Investments
R million Note 2016 2015 2016 2015 2016 2015
Financial services income 8 079 7 500 3 687 2 926 4 707 4 214
Sales remuneration (1 324) (1 165) (603) (523) (145) (123)
Income after sales
remuneration 6 755 6 335 3 084 2 403 4 562 4 091
Underwriting policy benefits (1 699) (1 727) (802) (582) (1 198) (1 033)
Administration costs (2 091) (1 890) (878) (704) (2 381) (2 125)
Result from financial services
before tax 2 965 2 718 1 404 1 117 983 933
Tax on result from financial
services (830) (758) (391) (323) (249) (203)
Result from financial services
after tax 2 135 1 960 1 013 794 734 730
Non-controlling interests (2) (5) (225) (232) (13) (18)
Net result from financial
services 2 133 1 955 788 562 721 712
Net investment income 536 561 85 80 76 99
Dividends received - Group
companies 288 263 - - - -
Other investment income 328 386 202 160 86 125
Tax on investment income (80) (88) (92) (45) (10) (26)
Non-controlling interests - - (25) (35) - -
Project expenses - - (3) (7) (6) -
Amortisation of value of
business acquired and
other intangibles (25) (24) (28) (21) (79) (82)
Equity participation costs - - - - - -
Net equity-accounted headline
earnings (11) - 3 4 (1) 5
Equity-accounted headline
earnings (11) - 7 8 (1) 5
Tax on equity-accounted
headline earnings - - (1) (1) - -
Non-controlling interests - - (3) (3) - -
Net investment surpluses (93) (291) (25) 90 (45) 111
Investment surpluses - Group
companies (20) (429) - - - -
Other investment surpluses 68 157 (32) 211 17 123
Tax on investment surpluses (141) (19) (4) 20 (62) (12)
Non-controlling interests - - 11 (141) - -
Normalised headline earnings 2 540 2 201 820 708 666 845
Net profit/(loss) on disposal
of subsidiaries and associated
companies 15 - 19 (1) - -
Profit/(loss) on disposal of
subsidiaries and associated
companies 18 - 19 (2) - -
Tax on profit/(loss) on disposal
of subsidiaries and associated
companies (3) - - - - -
Non-controlling interest - - - 1 - -
Impairments - - (111) - - (1)
Net equity accounted
non-headline earnings (3) - - - - -
Normalised attributable
earnings 2 552 2 201 728 707 666 844
Fund transfers - - - - - -
Attributable earnings per
Group statement of comprehensive
income 2 552 2 201 728 707 666 844
Diluted earnings per share 3
Adjusted weighted average number
of shares (million)
Net result from financial services (cents) 104,2 95,5 38,5 27,5 35,2 34,8
(1) Corporate and Other includes the consolidation entries in respect of the dividends received and the investment surpluses on the Sanlam Limited
shares held by Sanlam Life Insurance Limited.
Shareholders’ fund income statement
for the six months ended 30 June 2016 - reviewed
Shareholders’ fund income statement
for the six months ended 30 June 2016 - reviewed
Corporate
Santam and Other(1) Total
R million 2016 2015 2016 2015 2016 2015
Financial services income 10 067 9 335 120 112 26 660 24 087
Sales remuneration (1 217) (971) - - (3 289) (2 782)
Income after sales remuneration 8 850 8 364 120 112 23 371 21 305
Underwriting policy benefits (6 289) (5 786) - - (9 988) (9 128)
Administration costs (1 578) (1 523) (134) (147) (7 062) (6 389)
Result from financial services
before tax 983 1 055 (14) (35) 6 321 5 788
Tax on result from financial services (274) (306) 12 15 (1 732) (1 575)
Result from financial services after tax 709 749 (2) (20) 4 589 4 213
Non-controlling interests (321) (336) - - (561) (591)
Net result from financial services 388 413 (2) (20) 4 028 3 622
Net investment income 53 63 (281) (187) 469 616
Dividends received - Group companies - - (288) (263) - -
Other investment income 112 124 (6) 19 722 814
Tax on investment income (22) (16) 13 57 (191) (118)
Non-controlling interests (37) (45) - - (62) (80)
Project expenses - - - - (9) (7)
Amortisation of value of business acquired
and other intangibles (4) (9) - - (136) (136)
Equity participation costs (4) (39) - - (4) (39)
Net equity-accounted headline earnings 13 36 - - 4 45
Equity-accounted headline earnings 21 60 - - 16 73
Tax on equity-accounted headline earnings - - - - (1) (1)
Non-controlling interests (8) (24) - - (11) (27)
Net investment surpluses 35 149 32 428 (96) 487
Investment surpluses - Group companies - - 20 429 - -
Other investment surpluses 143 315 12 (1) 208 805
Tax on investment surpluses (85) (67) - - (292) (78)
Non-controlling interests (23) (99) - - (12) (240)
Normalised headline earnings 481 613 (251) 221 4 256 4 588
Net profit/(loss) on disposal of subsidiaries
and associated companies - - - - 34 (1)
Profit/(loss) on disposal of subsidiaries and
associated companies - - - - 37 (2)
Tax on profit/(loss) on disposal of subsidiaries
and associated companies - - - - (3) -
Non-controlling interest - - - - - 1
Impairments - (21) - - (111) (22)
Net equity accounted non-headline earnings - - - - (3) -
Normalised attributable earnings 481 592 (251) 221 4 176 4 565
Fund transfers - - 66 138 66 138
Attributable earnings per Group statement of
comprehensive income 481 592 (185) 359 4 242 4 703
Diluted earnings per share
Adjusted weighted average number of
shares (million) 2 046,30 2 046,40
Net result from financial services (cents) 19,0 20,2 (0,1) (1,0) 196,8 177,0
(1) Corporate and Other includes the consolidation entries in respect of the dividends received and the investment surpluses on the Sanlam Limited
shares held by Sanlam Life Insurance Limited.
Notes to the shareholders’ fund information
for the six months ended 30 June 2016 - reviewed
1. Business volumes
1.1 Analysis of new business and total funds received
Analysed per business, reflecting the split between life insurance, general insurance and investment business.
Life General Investment
insurance(1) insurance business(2) Total
R million 2016 2015 2016 2015 2016 2015 2016 2015
Sanlam Personal Finance 15 107 13 546 - - 16 799 15 616 31 906 29 162
Sanlam Sky 588 546 - - - - 588 546
Individual Life 5 870 5 893 - - 105 155 5 975 6 048
Glacier 8 649 7 107 - - 16 694 15 461 25 343 22 568
Sanlam Emerging Markets 2 575 2 086 1 746 812 3 066 2 497 7 387 5 395
Namibia 334 161 - - 1 297 1 125 1 631 1 286
Recurring 92 71 - - - - 92 71
Single 242 90 - - 1 297 1 125 1 539 1 215
Botswana 1 017 1 101 66 28 1 550 1 320 2 633 2 449
Recurring 167 135 66 28 - - 233 163
Single 850 966 - - 1 550 1 320 2 400 2 286
Rest of Africa 786 554 1 130 279 219 52 2 135 885
Recurring 462 335 1 130 279 79 - 1 671 614
Single 324 219 - - 140 52 464 271
India 206 122 352 269 - - 558 391
Recurring 120 74 352 269 - - 472 343
Single 86 48 - - - - 86 48
South-East Asia 232 148 198 236 - - 430 384
Recurring 203 102 198 236 - - 401 338
Single 29 46 - - - - 29 46
Sanlam Investments 4 171 2 988 - - 62 189 53 246 66 360 56 234
Employee benefits 2 142 1 182 - - - - 2 142 1 182
Recurring 121 76 - - - - 121 76
Single 2 021 1 106 - - - - 2 021 1 106
Investment Management 2 029 1 806 - - 62 189 53 246 64 218 55 052
Investment Management SA - - - - 46 572 39 909 46 572 39 909
Wealth Management(3) - - - - 8 172 10 295 8 172 10 295
International(3) 2 029 1 806 - - 7 445 3 042 9 474 4 848
Recurring 44 26 - - 8 10 52 36
Single 1 985 1 780 - - 7 437 3 032 9 422 4 812
Capital Management - - - - - - - -
Santam - - 9 700 9 088 - - 9 700 9 088
Total new business 21 853 18 620 11 446 9 900 82 054 71 359 115 353 99 879
(1) Life insurance business relates to business written under a life licence that is included in the calculation of embedded value of
covered business.
(2) Includes life licence and investment business. Life licence business relates to investment products provided by means of a life
insurance policy where there is very little or no insurance risk. Life licence business is excluded from the calculation of embedded
value of covered business.
(3) Comparative information has been adjusted for the reallocation of business units between the International and Wealth Management
sub-clusters.
Life General Investment
insurance(1) insurance business(2) Total
R million 2016 2015 2016 2015 2016 2015 2016 2015
Recurring premiums on
existing funds:
Sanlam Personal Finance 7 899 7 740 - - 99 113 7 998 7 853
Sanlam Sky 2 143 2 153 - - - - 2 143 2 153
Individual Life 5 756 5 587 - - 99 113 5 855 5 700
Sanlam Emerging Markets 2 645 2 317 - - - - 2 645 2 317
Namibia 488 465 - - - - 488 465
Botswana 586 494 - - - - 586 494
Rest of Africa 636 517 - - - - 636 517
India 100 72 - - - - 100 72
South-East Asia 835 769 - - - - 835 769
Sanlam Investments 2 784 2 297 - - 1 142 1 505 3 926 3 802
Sanlam Employee Benefits 2 579 2 116 - - - - 2 579 2 116
Sanlam Investments 205 181 - - 1 142 1 505 1 347 1 686
Investment Management SA - - - - 1 104 1 476 1 104 1 476
International 205 181 - - 38 29 243 210
Total funds received 35 181 30 974 11 446 9 900 83 295 72 977 129 922 113 851
(1) Life insurance business relates to business written under a life licence that is included in the calculation of embedded value of covered
business.
(2) Includes life licence and investment business. Life licence business relates to investment products provided by means of a life insurance
policy where there is very little or no insurance risk. Life licence business is excluded from the calculation of embedded value of
covered business.
1.2 Analysis of payments to clients
Life General Investment
insurance(1) insurance business(2) Total
R million 2016 2015 2016 2015 2016 2015 2016 2015
Sanlam Personal Finance 19 056 16 936 - - 12 363 9 891 31 419 26 827
Sanlam Sky 1 175 1 326 - - - - 1 175 1 326
Surrenders 214 193 - - - - 214 193
Other 961 1 133 - - - - 961 1 133
Individual Life 14 122 12 983 - - 284 278 14 406 13 261
Surrenders 2 081 2 070 - - - - 2 081 2 070
Other 12 041 10 913 - - 284 278 12 325 11 191
Glacier 3 759 2 627 - - 12 079 9 613 15 838 12 240
Sanlam Emerging Markets 3 436 2 606 1 125 618 2 714 13 469 7 275 16 693
Namibia 573 480 - - 1 043 1 312 1 616 1 792
Surrenders 80 63 - - - - 80 63
Other 493 417 - - 1 043 1 312 1 536 1 729
Botswana 1 034 766 31 10 1 555 12 150 2 620 12 926
Surrenders 216 213 - - - - 216 213
Other 818 553 31 10 1 555 12 150 2 404 12 713
Rest of Africa 683 453 650 143 116 7 1 449 603
Surrenders 119 84 - - - - 119 84
Other 564 369 650 143 116 7 1 330 519
India 109 85 358 258 - - 467 343
Surrenders 65 49 - - - - 65 49
Other 44 36 358 258 - - 402 294
South-East Asia 1 037 822 86 207 - - 1 123 1 029
Sanlam Investments 6 655 5 610 - - 56 538 52 166 63 193 57 776
Sanlam Employee Benefits 4 542 3 699 - - - - 4 542 3 699
Terminations 932 850 - - - - 932 850
Other 3 610 2 849 - - - - 3 610 2 849
Investment Management 2 113 1 911 - - 56 506 52 163 58 619 54 074
Investment Management SA - - - - 39 146 37 182 39 146 37 182
Wealth Management(3) - - - - 7 305 6 198 7 305 6 198
International(3) 2 113 1 911 - - 10 055 8 783 12 168 10 694
Capital Management - - - - 32 3 32 3
Santam - - 6 289 5 786 - - 6 289 5 786
Total payments to clients 29 147 25 152 7 414 6 404 71 615 75 526 108 176 107 082
(1) Life insurance business relates to business written under a life licence that is included in the calculation of embedded value of
covered business.
(2) Includes life licence and investment business. Life licence business relates to investment products provided by means of a life
insurance policy where there is very little or no insurance risk. Life licence business is excluded from the calculation of embedded
value of covered business.
(3) Comparative information has been adjusted for the reallocation of business units between the International and Wealth Management
sub-clusters.
1.3 Analysis of net inflow/(outflow) of funds
Life General Investment
insurance(1) insurance business(2) Total
R million 2016 2015 2016 2015 2016 2015 2016 2015
Sanlam Personal Finance 3 950 4 350 - - 4 535 5 838 8 485 10 188
Sanlam Sky 1 556 1 373 - - - - 1 556 1 373
Individual life (2 496) (1 503) - - (80) (10) (2 576) (1 513)
Glacier 4 890 4 480 - - 4 615 5 848 9 505 10 328
Sanlam Emerging Markets 1 784 1 797 621 194 352 (10 972) 2 757 (8 981)
Namibia 249 146 - - 254 (187) 503 (41)
Botswana 569 829 35 18 (5) (10 830) 599 (9 983)
Rest of Africa 739 618 480 136 103 45 1 322 799
India 197 109 (6) 11 - - 191 120
South-East Asia 30 95 112 29 - - 142 124
Sanlam Investments 300 (325) - - 6 793 2 585 7 093 2 260
Sanlam Employee Benefits 179 (401) - - - - 179 (401)
Investment Management 121 76 - - 6 825 2 588 6 946 2 664
Investment Management SA - - - - 8 530 4 203 8 530 4 203
Wealth Management(3) - - - - 867 4 097 867 4 097
International(3) 121 76 - - (2 572) (5 712) (2 451) (5 636)
Capital Management - - - - (32) (3) (32) (3)
Santam - - 3 411 3 302 - - 3 411 3 302
Total net inflows/(outflows) 6 034 5 822 4 032 3 496 11 680 (2 549) 21 746 6 769
(1) Life insurance business relates to business written under a life licence that is included in the calculation of embedded value of covered
business.
(2) Includes life licence and investment business. Life licence business relates to investment products provided by means of a life insurance
policy where there is very little or no insurance risk. Life licence business is excluded from the calculation of embedded value of
covered business.
(3) Comparative information has been adjusted for the reallocation of business units between the International and Wealth Management
sub-clusters.
2. Cluster information
2.1 Sanlam Personal Finance
Key performance indicators
Analysis of Group Equity Value (GEV)
R million GEV Net GEV
at the capital at the
beginning invest- Dividend end of RoGEV
of period Earnings ment paid period (%)
30 June 2016 - reviewed
Covered business 34 526 4 427 19 (1 872) 37 100 12,8
Other operations 3 723 844 (21) (238) 4 308 22,7
Glacier 1 605 623 - (84) 2 144 38,8
Sanlam Personal Loans 913 108 - (82) 939 11,8
Afrocentric 703 43 - (43) 703 6,1
Other 502 70 (21) (29) 522 13,9
Group Equity Value 38 249 5 271 (2) (2 110) 41 408 13,8
31 December 2015 - audited
Covered business 35 444 4 363 (1 835) (3 446) 34 526 12,3
Non-life operations 3 009 295 769 (350) 3 723 9,8
Glacier 1 542 257 - (194) 1 605 16,7
Sanlam Personal Loans 907 111 - (105) 913 12,2
Afrocentric - - 703 - 703
Other 560 (73) 66 (51) 502 (13,0)
Group Equity Value 38 453 4 658 (1 066) (3 796) 38 249 12,1
Business volumes
Life business Investment business Total
R million 2016 2015 2016 2015 2016 2015
New business volumes
Sanlam Sky 588 546 - - 588 546
Individual life 450 443 - - 450 443
Group life 138 103 - - 138 103
Individual life 5 870 5 893 105 155 5 975 6 048
Recurring premiums 782 696 15 13 797 709
Single premiums 5 088 5 197 90 142 5 178 5 339
Glacier 8 649 7 107 16 694 15 461 25 343 22 568
Total 15 107 13 546 16 799 15 616 31 906 29 162
Value of new covered business
Value of Present value of new New business
new business business premiums margin (%)
R million 2016 2015 2016 2015 2016 2015
Sanlam Sky 129 149 2 081 1 942 6,20 7,67
Individual life 251 234 9 601 9 222 2,61 2,54
Glacier 119 99 8 356 7 099 1,42 1,39
Total 499 482 20 038 18 263 2,49 2,64
Analysis of earnings
Life insurance Non-life operations Total
R million 2016 2015 2016 2015 2016 2015
Gross result from financial services 2 608 2 445 357 273 2 965 2 718
Sanlam Sky 611 569 - - 611 569
Individual life and investment 1 827 1 723 28 10 1 855 1 733
Investment products 695 591 - - 695 591
Risk products 248 329 - - 248 329
Asset mismatch reserve release 227 242 - - 227 242
Annuities, combined products and other 657 561 28 10 685 571
Glacier 109 91 140 118 249 209
Sanlam Personal Loans 61 62 113 114 174 176
Other operations - - 76 31 76 31
Tax on result from financial services (736) (687) (94) (71) (830) (758)
Non-controlling interests - - (2) (5) (2) (5)
Net result from financial services 1 872 1 758 261 197 2 133 1 955
Net investment return 71 377 372 (107) 443 270
Net other earnings (21) (24) (3) - (24) (24)
Normalised attributable earnings 1 922 2 111 630 90 2 552 2 201
2.2 Sanlam Emerging Markets
Analysis of Group Equity Value (GEV)
GEV Net GEV
at the capital at the
beginning invest- Dividend end of RoGEV
R million of period Earnings ment paid period (%)
30 June 2016 - reviewed
Covered business 5 486 (43) 916 (270) 6 089 (0,8)
Other operations 12 561 339 3 705 (359) 16 246 2,3
Shriram Capital 7 594 373 24 (26) 7 965 4,9
Saham Finances - 111 3 411 - 3 522 4,9
Letshego 1 106 129 120 1 1 356 11,1
Pacific & Orient 812 (50) - (27) 735 (6,2)
Capricorn Investment Holdings 877 128 - 3 1 008 14,6
Sanlam Emerging Markets other operations 2 172 (352) 150 (310) 1 660 (16,2)
Group Equity Value 18 047 296 4 621 (629) 22 335 1,5
31 December 2015 - audited
Covered business 5 116 1 403 (430) (603) 5 486 27,4
Other operations 9 455 2 966 831 (691) 12 561 31,2
Shriram Capital 5 595 2 068 28 (97) 7 594 37,0
Letshego 923 229 - (46) 1 106 24,8
Pacific & Orient 704 128 - (20) 812 18,2
Capricorn Investment Holdings 845 47 - (15) 877 5,6
Sanlam Emerging Markets other operations 1 388 494 803 (513) 2 172 34,7
Group Equity Value 14 571 4 369 401 (1 294) 18 047 29,9
Business volumes
Value of Present value
New business Net fund new covered of new busines New business
volumes flows business premiums margin (%)
R million 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015
Namibia 1 631 1 286 503 (41) 71 39 1 651 439 4,30% 8,88%
Botswana 2 633 2 449 599 (9 983) 109 94 1 530 1 428 7,12% 6,58%
Rest of Africa 2 135 885 1 322 799 60 59 1 248 897 4,81% 6,58%
India 558 391 191 120 4 4 358 206 1,12% 1,94%
South-East Asia 430 384 142 124 33 26 901 629 3,66% 4,13%
Total 7 387 5 395 2 757 (8 981) 277 222 5 688 3 599 4,87% 6,17%
Analysis of earnings
R million 2016 2015
Net result from financial services 788 562
Life insurance 270 263
General insurance 157 73
Investment management 22 21
Credit and banking 354 204
Other (15) 1
Net investment return 60 170
Net investment income 85 80
Net investment surpluses (25) 90
Net other earnings (120) (25)
Normalised attributable earnings 728 707
Analysis of net result from financial services
Life insurance Non-life operations Total
R million 2016 2015 2016 2015 2016 2015
Namibia 79 59 71 57 150 116
Botswana 126 107 76 63 202 170
Rest of Africa 86 70 68 11 154 81
India (11) 8 278 146 267 154
South-East Asia (10) 19 34 22 24 41
Corporate and other - - (9) - (9) -
Net result from financial services 270 263 518 299 788 562
2.3 Sanlam Investments
Analysis of Group Equity Value (GEV)
GEV Net GEV
at the capital at the
beginning invest- Dividend end of RoGEV
R million of period Earnings ment paid period (%)
2016
Investment Management 16 050 (133) 156 (317) 15 756 (0,8)
Investment Management SA 6 102 606 191 (262) 6 637 9,9
Wealth Management 1 759 250 6 (21) 1 994 14,2
International 8 189 (989) (41) (34) 7 125 (12,1)
Covered business 1 633 (169) 4 (38) 1 430 (10,3)
Other operations 6 556 (820) (45) 4 5 695 (12,5)
Sanlam Employee Benefits 5 577 (69) (20) (141) 5 347 (1,2)
Sanlam Capital Management 785 112 - (220) 677 14,3
Group Equity Value 22 412 (90) 136 (678) 21 780 (0,4)
2015
Sanlam Investment Management 12 797 3 130 1 144 (1 021) 16 050 24,5
Investment Management SA 4 823 1 059 566 (346) 6 102 20,1
Wealth Management(1) 1 497 390 19 (147) 1 759 25,9
International 6 477 1 681 559 (528) 8 189 26,0
Covered business 1 193 277 237 (74) 1 633 23,2
Other operations(1) 5 284 1 404 322 (454) 6 556 26,7
Sanlam Employee Benefits 6 640 994 (1 696) (361) 5 577 15,0
Sanlam Capital Management 685 262 - (162) 785 38,2
Group Equity Value 20 122 4 386 (552) (1 544) 22 412 21,3
(1) Comparative information has been adjusted for the reallocation of business units between the International and Wealth Management
sub-clusters.
Business volumes
New business volumes Net fund flows
R million 2016 2015 2016 2015
Investment Management 64 218 55 052 6 946 2 664
Investment Management SA 46 572 39 909 8 530 4 203
Wealth Management(1) 8 172 10 295 867 4 097
International(1) 9 474 4 848 (2 451) (5 636)
Sanlam Employee Benefits 2 142 1 182 179 (401)
Sanlam Capital Management - - (32) (3)
Total 66 360 56 234 7 093 2 260
(1) Comparative information has been adjusted for the reallocation of business units between the International and Wealth Management
sub-clusters.
Value of new Present value of new New business
covered business business premiums margin (%)
R million 2016 2015 2016 2015 2016 2015
Investment Management 11 10 2 209 1 890 0,50% 0,53%
Investment Management SA
Wealth Management(1)
International(1) 11 10 2 209 1 890 0,50% 0,53%
Sanlam Employee Benefits 11 16 2 800 2 114 0,39% 0,76%
Sanlam Capital Management
Total 22 26 5 009 4 004 0,44% 0,65%
(1) Comparative information has been adjusted for the reallocation of business units between the International and Wealth Management
sub-clusters.
Analysis of earnings
Investment Capital
Management Management
R million 2016 2015 2016 2015
Financial services income* 2 349 2 174 419 300
Sales remuneration (117) (96) - -
Income after sales remuneration 2 232 2 078 419 300
Underwriting policy benefits - - - -
Administration cost* (1 681) (1 508) (210) (174)
Result from financial services before performance fees 551 570 209 126
Net performance fees 27 22 - 9
Result from financial services 578 592 209 135
Tax on result from financial services (148) (136) (46) (9)
Non-controlling interest (13) (18) - -
Net result from financial services 417 438 163 126
Net investment return 10 (2) - -
Net investment income 9 7 - -
Net investment surpluses 1 (9) - -
Net other earnings (85) (78) - -
Normalised attributable earnings 342 358 163 126
* Financial services income and administration costs in the shareholders' fund income statement includes performance fees and
related administration costs.
Analysis of earnings
Sanlam Employe Intra-cluster
Benefits consolidation Total
R million 2016 2015 2016 2015 2016 2015
Financial services income* 1 905 1 695 (8) (15) 4 665 4 154
Sales remuneration (28) (27) - - (145) (123)
Income after sales remuneration 1 877 1 668 (8) (15) 4 520 4 031
Underwriting policy benefits (1 198) (1 033) - - (1 198) (1 033)
Administration cost* (483) (429) 8 15 (2 366) (2 096)
Result from financial services before performance fees 196 206 - - 956 902
Net performance fees - - - - 27 31
Result from financial services 196 206 - - 983 933
Tax on result from financial services (55) (58) - - (249) (203)
Non-controlling interest - - - - (13) (18)
Net result from financial services 141 148 - - 721 712
Net investment return 20 212 - - 30 210
Net investment income 67 92 - - 76 99
Net investment surpluses (47) 120 - - (46) 111
Net other earnings - - - - (85) (78)
Normalised attributable earnings 161 360 - - 666 844
* Financial services income and administration costs in the shareholders' fund income statement includes performance fees and
related administration costs.
Investment Management
Analysis of net result from financial services
Reviewed
R million 2016 2015
Investment Management 379 402
Investment Management SA 231 223
Wealth Management(1) 61 64
International(1) 92 120
Support Services (5) (5)
Capital Management 163 126
Asset management operations 542 528
Covered business:
Sanlam Employee Benefits 141 148
Sanlam UK 38 36
Sanlam Investments total 721 712
Assets under management - reviewed
Assets under management Fee income Administration cost
June December* June December* June December*
2016 2015 2016 2015 2016 2015
R million R million % % % %
Investment Management 791 496 782 685
Investment Management SA 668 657 623 414 0,30 0,31 0,20 0,22
Wealth Management(1) 144 151 139 283 0,73 0,65 0,57 0,51
International(1) 149 663 182 334 0,69 0,78 0,53 0,63
Intra-cluster eliminations (170 975) (162 346)
Capital Management 3 890 3 860 0,84 0,74 0,68 0,70
Asset management operations 795 386 786 545
Covered business:
Sanlam Employee Benefits 79 907 76 191
Sanlam UK 45 652 51 787
Sanlam Investments total 920 945 914 523
* Audited
(1) Comparative information has been adjusted for the reallocation of business units between the International and Wealth Management
sub-clusters.
Asset mix of assets under management
Fixed
R million interest Equities Offshore Properties Cash Total
June 2016 - reviewed
Investment Management SA 160 854 302 394 69 299 18 220 117 890 668 657
Wealth Management(1) - 107 397 32 272 - 4 482 144 151
International(1) - - 149 663 - - 149 663
Capital Management - 3 228 652 - 10 3 890
Intra-cluster consolidation (170 975)
Assets under management -
Sanlam Investments 160 854 413 019 251 886 18 220 122 382 795 386
December 2015 - audited
Investment Management SA 143 451 276 206 70 838 17 088 115 831 623 414
Wealth Management(1) - 103 407 32 260 - 3 616 139 283
International(1) - - 182 334 - - 182 334
Capital Management - 3 122 728 - 10 3 860
Intra-cluster consolidation (162 346)
Assets under management - Sanlam Investments 143 451 382 735 286 160 17 088 119 457 786 545
(1) Comparative information has been adjusted for the reallocation of business units between the International and Wealth Management
sub-clusters.
Analysis of covered business
Sanlam Employee Benefits
June - Reviewed
R million 2016 2015
Analysis of attributable earnings
Net result from financial services 141 148
Risk underwriting 36 83
Investment and other 91 58
Working capital management 25 21
Administration (11) (14)
Net investment return 20 212
Net investment income 67 92
Net investment surpluses (47) 120
Normalised attributable earnings 161 360
Analysis of premiums
Recurring premiums 121 76
Guaranteed 75 18
Risk 46 58
Single premiums 2 021 1 106
Guaranteed 843 521
Risk - 65
Retirement 1 012 36
Annuity 106 349
Special structures 60 135
Sanlam Investments and Pensions (included in Investment Management above)
June - Reviewed
R million 2016 2015
Analysis of attributable earnings
Financial services income 186 132
Sales remuneration (76) (57)
Income after sales remuneration 110 75
Administration costs (72) (39)
Gross result from financial services 38 36
Tax on result from financial services - -
Net result from financial services 38 36
Net investment return 2 -
Normalised attributable earnings 40 36
2.4 Santam
June - Reviewed
R million 2016 2015
Business volumes
Gross written premiums 12 134 11 270
Net earned premiums 9 700 9 088
Net fund flows 3 411 3 302
Analysis of earnings
Gross result from financial services 983 1 055
Net result from financial services 388 413
Ratios
Admin cost ratio 17,8% 18,2%
Claims ratio 64,8% 63,7%
Underwriting margin 6,4% 8,9%
2.5 Valuation methodology
The fair value of the unlisted Sanlam Investments businesses has been determined by the application of the
following valuation methodologies:
Fair value
R million June December
2016 2015
Reviewed Audited
Discounted cash flows 33 389 28 915
Sanlam Investments 13 567 13 785
Investment Management SA 6 051 5 557
Wealth Management(2) 2 051 2 868
International(2) 5 388 5 175
Capital Management 77 185
Sanlam Emerging Markets 15 514 11 407
Shriram Capital(1) 7 965 7 594
Saham Finances 3 522 -
Letshego(1) 1 356 1 106
Pacific & Orient 735 812
Capricorn Investment Holdings(1) 1 008 877
Other operations 928 1 018
Sanlam Personal Finance 4 308 3 723
Glacier 2 144 1 605
Sanlam Personal Loans 939 913
Afrocentric 703 703
Other operations 522 502
Net asset value 2 168 2 571
Sanlam Investments 1 436 1 417
Investment Management SA(2) 586 545
Wealth Management(2) (57) (49)
International(2) 307 321
Capital Management 600 600
Sanlam Emerging Markets 732 1 154
Total 35 557 31 486
(1) Includes the listed businesses at directors’ valuation of R6 646 million (2015: R6 183 million) for Shriram Capital,
R1 356 million (2015: R1 106 million) for Letshego and R1 008 million (2015: R877 million) for Capricorn Investment
Holdings. The listed value of these operations are R7 939 million (2015: R6 634 million), R1 157 million (2015:
R1 250 million) and R1 189 million (2015: R1 169 million) respectively.
(2) Comparative information has been adjusted for the reallocation of business units between the International and
Wealth Management sub-clusters.
The main assumptions applied in the primary valuation for the unlisted businesses are presented below. The sensitivity
analysis is based on the following changes in assumptions:
Change in assumption
June 2016
Reviewed
Risk discount rate (RDR) 1,0
Perpetuity growth rate (PGR) 1,0
R million Weighted average assumption Base value Decrease in Increase in
assumption assumption
Discounted cash flows RDR = 14,0% (Dec 2015: 15,4%) 33 389 38 183 29 763
Perpetuity growth rate PGR = 2,5 - 5% (Dec 2015: 2,5 - 5%) 33 389 31 508 35 949
3. Normalised diluted earnings per share
Cents June June
2016 2015
Reviewed Reviewed
Normalised diluted earnings per share:
Net result from financial services 196,8 177,0
Headline earnings 208,0 224,2
Profit attributable to shareholders’ fund 204,1 223,1
R million
Analysis of normalised earnings (refer shareholders’ fund income statement):
Net result from financial services 4 028 3 622
Headline earnings 4 256 4 588
Profit attributable to shareholders’ fund 4 176 4 565
Reconciliation of normalised headline earnings:
Headline earnings per note 1 4 322 4 726
Less: Fund transfers (66) (138)
Normalised headline earnings 4 256 4 588
Million
Adjusted number of shares:
Weighted average number of shares for diluted earnings per share (refer note 1) 2 018,8 2 027,1
Add: Weighted average Sanlam shares held by policyholders 27,5 19,3
Adjusted weighted average number of shares for normalised diluted earnings per share 2 046,3 2 046,4
4. Value per share
Fair value per share is calculated on the Group shareholders’ fund at fair value of R76 080 million (December 2015:
R74 660 million), divided by 2 045.3 million (December 2015: 2 046.6 million) shares.
Net asset value per share is calculated on the Group shareholders’ fund at net asset value of R52 551 million
(December 2015: R55 464 million), divided by 2 045.3 million (December 2015: 2 046.6 million) shares.
Equity value per share is calculated on the Group Equity Value of R106 599 million (December 2015: R103 506 million),
divided by 2 045.3 million (December 2015: 2 046.6 million) shares.
Million June December
2016 2015
Reviewed Audited
Number of shares for value per share
Number of ordinary shares in issue 2 166,5 2 166,5
Shares held by subsidiaries in shareholders’ fund (141,2) (141,2)
Outstanding shares in respect of Sanlam Limited long-term incentive schemes 20,0 21,3
Adjusted number of shares for value per share 2 045,3 2 046,6
5. Share repurchases
The Sanlam shareholders granted general authorities to the Group at the 2016 and 2015 annual general meetings to repurchase
Sanlam shares in the market. The Group did not acquire shares during 2016.
Embedded value of covered business
at 30 June 2016
June December
Reviewed Audited
R million Note 2016 2015
Sanlam Personal Finance 37 100 34 526
Adjusted net worth 8 328 8 287
Net value of in-force covered business 28 772 26 239
Value of in-force covered business 30 683 28 139
Cost of capital (1 911) (1 900)
Sanlam Emerging Markets 6 089 5 486
Adjusted net worth 2 631 2 323
Net value of in-force covered business 3 458 3 163
Value of in-force covered business 5 718 5 317
Cost of capital (626) (525)
Non-controlling interests (1 634) (1 629)
Sanlam UK(1) 1 430 1 633
Adjusted net worth 675 778
Net value of in-force covered business 755 855
Value of in-force covered business 941 1 066
Cost of capital (186) (211)
Sanlam Employee Benefits(1) 5 347 5 577
Adjusted net worth 3 720 3 720
Net value of in-force covered business 1 627 1 857
Value of in-force covered business 2 672 2 804
Cost of capital (1 045) (947)
Embedded value of covered business 49 966 47 222
Adjusted net worth(2) 15 354 15 108
Net value of in-force covered business 1 34 612 32 114
Embedded value of covered business 49 966 47 222
(1) Sanlam UK and Sanlam Employee Benefits are part of the Sanlam Investments cluster.
(2) Excludes subordinated debt funding of Sanlam Life.
Change in embedded value of covered business
for the six months ended 30 June 2016
Six months reviewed
2016
Value of Cost of Adjusted
R million Note Total in-force capital net worth
Embedded value of covered business at
beginning of the year 47 222 35 506 (3 392) 15 108
Value of new business 2 702 1 815 (107) (1 006)
Net earnings from existing covered business 2 339 (982) 63 3 258
Expected return on value of in-force business 2 197 2 112 85 -
Expected transfer of profit to adjusted net worth - (3 007) - 3 007
Operating experience variances 3 75 (150) (8) 233
Operating assumption changes 4 67 63 (14) 18
Expected investment return on adjusted net worth 604 - - 604
Embedded value earnings from operations 3 645 833 (44) 2 856
Economic assumption changes 5 764 753 25 (14)
Tax changes 6 488 724 (107) (129)
Investment variances - value of in-force 190 192 (55) 53
Investment variances - investment return
on adjusted net worth (528) - - (528)
Goodwill from business (172) (172) - -
Exchange rate movements (241) (278) 37 -
Embedded value earnings from covered business 4 146 2 052 (144) 2 238
Acquired value of in-force 853 541 - 312
Transfers from/(to) other Group operations 49 49 - -
Transfers from covered business (2 304) - - (2 304)
Embedded value of covered business at
the end of the period 49 966 38 148 (3 536) 15 354
Analysis of earnings from covered business
Sanlam Personal Finance 4 427 2 495 (11) 1 943
Sanlam Emerging Markets (43) (186) (60) 203
Sanlam UK (169) (125) 25 (69)
Sanlam Employee Benefits (69) (132) (98) 161
Embedded value earnings from covered business 4 146 2 052 (144) 2 238
Six months reviewed
2015
Value of Cost of Adjusted
R million Note Total in-force capital net worth
Embedded value of covered business at beginning of the year 48 393 34 299 (3 092) 17 186
Value of new business 2 655 1 654 (79) (920)
Net earnings from existing covered business 2 256 (836) 16 3 076
Expected return on value of in-force business 1 820 1 727 93 -
Expected transfer of profit to adjusted net worth - (2 639) - 2 639
Operating experience variances 3 408 20 (19) 407
Operating assumption changes 4 28 56 (58) 30
Expected investment return on adjusted net worth 608 - - 608
Embedded value earnings from operations 3 519 818 (63) 2 764
Economic assumption changes 5 (397) (374) (19) (4)
Tax changes 6 - - - -
Investment variances - value of in-force 132 107 (31) 56
Investment variances - investment return on adjusted net worth 94 - - 94
Goodwill from business (14) (14) - -
Exchange rate movements (15) (7) (8) -
Embedded value earnings from covered business 3 319 530 (121) 2 910
Acquired value of in-force 18 12 - 6
Transfers from/(to) other Group operations - - - -
Transfers from covered business (2 724) - - (2 724)
Embedded value of covered business at the end of the period 49 006 34 841 (3 213) 17 378
Analysis of earnings from covered business
Sanlam Personal Finance 2 822 655 30 2 137
Sanlam Emerging Markets 290 (13) (38) 341
Sanlam UK 7 46 (110) 71
Sanlam Employee Benefits 200 (158) (3) 361
Embedded value earnings from covered business 3 319 530 (121) 2 910
Value of new business
for the six months ended 30 June 2016
Six months - Reviewed
R million Note 2016 2015
Value of new business (at point of sale):
Gross value of new business 917 817
Sanlam Personal Finance 557 530
Sanlam Emerging Markets 312 244
Sanlam UK 12 11
Sanlam Employee Benefits 36 32
Cost of capital (119) (87)
Sanlam Personal Finance (58) (48)
Sanlam Emerging Markets (35) (22)
Sanlam UK (1) (1)
Sanlam Employee Benefits (25) (16)
Value of new business 798 730
Sanlam Personal Finance 499 482
Sanlam Emerging Markets 277 222
Sanlam UK 11 10
Sanlam Employee Benefits 11 16
Value of new business attributable to:
Shareholders’ fund 2 702 655
Sanlam Personal Finance 499 482
Sanlam Emerging Markets 181 147
Sanlam UK 11 10
Sanlam Employee Benefits 11 16
Non-controlling interest 96 75
Sanlam Personal Finance - -
Sanlam Emerging Markets 96 75
Sanlam UK - -
Sanlam Employee Benefits - -
Value of new business 798 730
Geographical analysis:
South Africa 510 498
Africa 239 192
Other international 49 40
Value of new business 798 730
Six months - Reviewed
R million Note 2016 2015
Analysis of new business profitability:
Before non-controlling interest:
Present value of new business premiums 30 735 25 866
Sanlam Personal Finance 20 038 18 263
Sanlam Emerging Markets 5 688 3 599
Sanlam UK 2 209 1 890
Sanlam Employee Benefits 2 800 2 114
New business margin 2,60% 2,82%
Sanlam Personal Finance 2,49% 2,64%
Sanlam Emerging Markets 4,87% 6,17%
Sanlam UK 0,50% 0,53%
Sanlam Employee Benefits 0,39% 0,76%
After non-controlling interest:
Present value of new business premiums 28 759 24 633
Sanlam Personal Finance 20 038 18 263
Sanlam Emerging Markets 3 712 2 366
Sanlam UK 2 209 1 890
Sanlam Employee Benefits 2 800 2 114
New business margin 2,44% 2,66%
Sanlam Personal Finance 2,49% 2,64%
Sanlam Emerging Markets 4,88% 6,21%
Sanlam UK 0,50% 0,53%
Sanlam Employee Benefits 0,39% 0,76%
Value of new business continued
for the six months ended 30 June 2016
1. Value of in-force sensitivity analysis
Gross Net Change
value of value of from
in-force Cost of in-force base
business capital business value
R million R million R million %
Base value at 30 June 2016 38 148 (3 536) 34 612
- Risk discount rate increase by 1% 36 051 (4 077) 31 974 (8)
Base value at 31 December 2015 35 506 (3 392) 32 114
- Risk discount rate increase by 1% 33 675 (4 025) 29 650 (8)
2. Value of new business sensitivity analysis
Gross Net Change
value of value of from
in-force Cost of new base
business capital business value
R million R million R million %
Base value at 30 June 2016 809 (107) 702
- Risk discount rate increase by 1% 702 (124) 578 (18)
Base value at 30 June 2015 734 (79) 655
- Risk discount rate increase by 1% 643 (103) (540) (18)
3. Operating experience variances
Value of Cost of Adjusted
R million Total in-force capital net worth
Six months reviewed
2016
Risk experience 80 (20) (3) 103
Persistency (99) (56) 2 (45)
Maintenance expenses (57) (1) - (56)
Working capital and other 151 (73) (7) 231
Total operating experience variances 75 (150) (8) 233
2015
Risk experience 377 85 - 292
Persistency 88 85 (18) 21
Maintenance expenses (5) (2) (1) (2)
Working capital and other (52) (148) - 96
Total operating experience variances 408 20 (19) 407
4. Operating assumption changes
Value of Cost of Adjusted
R million Total in-force capital net worth
Six months reviewed
2016
Risk experience 50 3 - 47
Persistency (50) (16) - (34)
Maintenance expenses 80 59 (2) 23
Modelling improvements and other (13) 17 (12) (18)
Total operating assumption changes 67 63 (14) 18
2015
Risk experience (28) (30) 1 1
Persistency 2 4 - (2)
Maintenance expenses (55) (55) (2) 2
Modelling improvements and other 109 137 (57) 29
Total operating assumption changes 28 56 (58) 30
5. Economic assumption changes
Six months reviewed
2016
Investment yields 759 748 25 (14)
Long-term asset mix assumptions
and other 5 5 - -
Total economic assumption changes 764 753 25 (14)
2015
Investment yields (395) (372) (19) (4)
Long-term asset mix assumptions
and other (2) (2) - -
Total economic assumption changes (397) (374) (19) (4)
6. Tax changes
Six months - Reviewed
2016
Value of Cost of Adjusted
R million Total in-force capital net worth
Risk Policy Fund (RPF) 719 719 - -
Capital Gains Tax inclusion rate (234) 3 (108) (129)
Other 3 2 1 -
Total tax changes 488 724 (107) (129)
7. Economic assumptions
June December
Reviewed Audited
% 2016 2015 2015
Gross investment return, risk discount
rate and inflation
Sanlam Life
Point used on the relevant yield curve 9 year 9 year 9 year
Fixed-interest securities 9,0 8,5 10,1
Equities and offshore investments 12,5 12,0 13,6
Hedged equities 8,4 9,0 9,5
Property 10,0 9,5 11,1
Cash 8,0 7,5 9,1
Inflation rate(1) 7,0 6,5 8,1
Risk discount rate 11,5 11,0 12,6
(1) Expense inflation of 9,0% (Dec 2015: 10,1%) assumed
for retail business administered on old platforms
SDM Limited
Point used on the relevant yield curve 5 year 5 year 5 year
Fixed-interest securities 8,5 8,0 9,6
Equities and offshore investments 12,0 11,5 13,1
Hedged equities n/a n/a n/a
Property 9,5 9,0 10,6
Cash 7,5 7,0 8,6
Inflation rate 6,5 6,0 7,6
Risk discount rate 11,0 10,5 12,1
Sanlam Investments and Pensions
Point used on the relevant yield curve 15 year 15 year 15 year
Fixed-interest securities 1,5 2,5 2,4
Equities and offshore investments 4,8 5,7 5,6
Hedged equities n/a n/a n/a
Property 4,8 5,7 5,6
Cash 1,5 2,5 2,4
Inflation rate 2,9 3,3 3,2
Risk discount rate 5,3 6,2 6,1
Botswana Life Insurance
Fixed-interest securities 7,0 7,5 7,5
Equities and offshore investments 10,5 11,0 11,0
Hedged equities n/a n/a n/a
Property 8,0 8,5 8,5
Cash 6,0 6,5 6,5
Inflation rate 4,0 4,5 4,5
Risk discount rate 10,5 11,0 11,0
Illiquidity premiums
Investment returns on non-participating and inflation-linked annuities, as well as guarantee plans
include assumed illiquidity premiums due to matching assets being held to maturity.
Assumed illiquidity premiums generally amount to between 25bps and 70bps (December 2015: 25bps and
60bps) for non-participating annuities, between 25bps and 75bps (December 2015: 25bps to 75bps) for
inflation-linked annuities and capped at 120bps reflecting both illiquidity premium and credit risk
premium (December 2015: 80bps for illiquidity premium only) for guarantee plans.
Asset mix for assets supporting required capital
Fixed-
interest Hedged
securi- Equities Offshore equities Property Cash Total
R million ties-% % % % % % %
June 2016 -
Reviewed
Required capital
South Africa 12 038 - 4 7 73 - 16 100
Namibia 514 6 35 - - - 59 100
Botswana 326 - 50 - - - 50 100
Ghana 58 35 40 - - 20 5 100
Kenya 82 100 - - - - - 100
Other Africa 598 39 11 - - 5 45 100
India 84 53 45 - - - 2 100
South-East Asia 276 75 15 - - - 10 100
Other International 575 - - - - - 100 100
Total required
capital 14 551
Free surplus 803
Adjusted net worth 15 354
December 2015 -
Reviewed
Required capital
South Africa 11 998 - 4 7 73 - 16 100
Namibia 496 6 35 - - - 59 100
Botswana 279 - 50 - - - 50 100
Ghana 58 35 40 - - 20 5 100
Kenya 83 35 40 - - 15 10 100
Other Africa 301 28 8 - - 5 59 100
India 64 59 8 - - - 33 100
South-East Asia 205 75 15 - - - 10 100
Other International 670 - - - - - 100 100
Total required
capital 14 154
Free surplus 954
Adjusted net worth 15 108
Asset mix for assets supporting required capital (continued)
December
June - Reviewed Audited
% 2016 2015 2015
Return on required capital
Sanlam Life
Gross return on required capital 8,7 9,5 9,8
Net return on required capital 7,0 7,6 8,4
SDM Limited
Gross return on required capital 9,8 9,3 10,9
Net return on required capital 7,6 7,4 8,7
Sanlam Investments and Pensions
Gross return on required capital 1,5 2,5 2,4
Net return on required capital 1,2 2,0 1,9
Botswana Life Insurance
Gross return on required capital 6,9 8,8 8,8
Net return on required capital 5,2 6,6 6,6
Sanlam Life Namibia Limited
Gross return on required capital 9,9 9,4 11,0
Net return on required capital 8,7 8,2 9,7
Sanlam Namibia Limited
Gross return on required capital 8,7 8,2 9,9
Net return on required capital 7,6 7,1 8,6
Independent auditors’ review report on interim condensed consolidated financial statements
To the shareholders of Sanlam Limited
Introduction
We have reviewed the condensed consolidated financial statements of Sanlam Limited, contained in the accompanying
interim report, which comprise the condensed consolidated statement of financial position as at 30 June 2016 and
condensed consolidated statements of comprehensive income, changes in equity and cash flow for the six-month
period then ended and selected explanatory notes set out below and the basis of accounting.
Directors’ responsibility for the interim financial statements
The directors of Sanlam Limited are responsible for the preparation and presentation of these interim condensed
consolidated financial statements in accordance with the International Financial Reporting Standard, (IAS 34) -
“Interim Financial Reporting”, the SAICA Financial Reporting Guides, as issued by the Accounting Practices
Committee and the Financial Pronouncements as issued by the Financial Reporting Standards Council and the
requirements of the Companies Act of South Africa, and for such internal control as the directors determine
is necessary to enable the preparation of interim financial statements that are free from material misstatement,
whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express a conclusion on these interim condensed consolidated financial statements.
We conducted our review in accordance with International Standard of Review Engagements (ISRE) 2410, “Review of
Interim Financial Information Performed by the Independent Auditor of the Entity.” ISRE 2410 requires us to
conclude whether anything has come to our attention that causes us to believe that the interim financial
statements are not prepared in all material respects in accordance with the applicable financial reporting
framework. This standard also requires us to comply with relevant ethical requirements.
A review of interim financial information in accordance with ISRE 2410 is a limited assurance engagement.
We perform procedures, primarily consisting of making inquiries of management and others within the entity,
as appropriate, and applying analytical procedures, and evaluate the evidence obtained.
The procedures performed in a review is substantially less than and differ in nature from those performed
in an audit conducted in accordance with International Standards on Auditing. Accordingly, we do not
express an audit opinion on these financial statements.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim
condensed consolidated financial statements of Sanlam Limited for the six-month period ended 30 June 2016 is
not prepared, in all material respects, in accordance with the International Financial Reporting Standard,- (IAS 34)
“Interim Financial Reporting”, the SAICA Financial Reporting Guides as issued by the Accounting Practices
Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and the
requirements of the Companies Act of South Africa.
Ernst & Young Inc.
Director: Johanna Cornelia de Villiers
Registered Auditor
Chartered Accountant (SA)
Ernst & Young House
35 Lower Long Street
Cape Town
7 September 2016
Group statement of financial position
at 30 June 2016
R million Reviewed Audited
June December
2016 2015
Assets
Equipment 844 892
Owner-occupied properties 1 317 1 329
Goodwill 3 727 3 895
Other intangible assets 459 487
Value of business acquired 1 733 1 943
Deferred acquisition costs 3 502 3 463
Long-term reinsurance assets 993 945
Investments 603 131 590 894
Properties 11 766 11 606
Equity-accounted investments 21 639 15 999
Equities and similar securities 185 665 189 214
Interest-bearing investments 171 067 165 261
Structured transactions 15 732 14 179
Investment funds 162 350 157 288
Cash, deposits and similar securities 34 912 37 347
Deferred tax 573 368
Assets of disposal groups classified as held for sale 125 540
General insurance technical assets 4 686 4 251
Working capital assets 68 733 65 501
Trade and other receivables 51 983 45 360
Cash, deposits and similar securities 16 750 20 141
Total assets 689 823 674 508
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 22 22
Treasury shares (3 805) (3 683)
Other reserves 11 011 12 505
Retained earnings 43 423 44 777
Shareholders’ fund 50 651 53 621
Non-controlling interests 6 168 6 571
Total equity 56 819 60 192
Long-term policy liabilities 490 817 480 910
Insurance contracts 187 006 183 972
Investment contracts 303 811 296 938
Term finance 6 278 5 637
Margin business 1 542 1 737
Other interest-bearing liabilities 4 736 3 900
Structured transaction liabilities 1 208 2 374
External investors in consolidated funds 57 422 53 641
Cell owners’ interest 1 060 980
Deferred tax 2 354 2 180
General insurance technical provisions 14 323 13 523
Working capital liabilities 59 542 55 071
Trade and other payables 57 626 52 751
Provisions 326 319
Taxation 1 590 2 001
Total equity and liabilities 689 823 674 508
Group statement of comprehensive income
for the six months ended 30 June 2016
Reviewed Reviewed
R million Note 2016 2015
Net income 49 796 46 424
Financial services income 28 514 26 259
Reinsurance premiums paid (3 828) (3 386)
Reinsurance commission received 657 608
Investment income 14 494 12 933
Investment surpluses 11 940 12 173
Finance cost - margin business (54) (52)
Change in fair value of external
investors’ liability (1 927) (2 111)
Net insurance and investment
contract benefits and claims (31 237) (28 231)
Long-term insurance and investment
contract benefits (25 403) (22 862)
General insurance claims (8 658) (7 353)
Reinsurance claims received 2 824 1 984
Expenses (12 088) (10 877)
Sales remuneration (3 937) (3 388)
Administration costs (8 151) (7 489)
Impairments (147) (36)
Amortisation of intangibles (153) (166)
Net operating result 6 171 7 114
Equity-accounted earnings 985 642
Finance cost - other (311) (260)
Profit before tax 6 845 7 496
Taxation (2 133) (1 999)
Shareholders’ fund (1 793) (1 502)
Policyholders’ fund (340) (497)
Profit for the period 4 712 5 497
Other comprehensive income: to be recycled
through profit or loss in subsequent periods
Movement in foreign currency translation reserve (1 591) 386
Other comprehensive income of equity
accounted investments (34) -
Movement in cash flow hedge (428) -
Comprehensive income for the period 2 659 5 883
Allocation of comprehensive income:
Profit for the period 4 712 5 497
Shareholders’ fund 4 242 4 703
Non-controlling interests 470 794
Comprehensive income for the period 2 659 5 883
Shareholders’ fund 2 372 5 096
Non-controlling interests 287 787
Earnings attributable to shareholders
of the company (cents):
Profit for the period
Basic earnings per share 1 212,2 234,5
Diluted earnings per share 1 210,1 232,0
Group statement of changes in equity
for the six months ended 30 June 2016
Reviewed Reviewed
R million 2016 2015
Shareholders’ fund
Balance at beginning of the period 53 621 46 037
Comprehensive income 2 372 5 096
Profit for the period 4 242 4 703
Other comprehensive income (1 870) 393
Net acquisition of treasury shares(1) (566) (447)
Share-based payments 168 205
Acquisitions, disposals and other movements in interests (28) (244)
Dividends paid(2) (4 916) (4 526)
Balance at end of the period 50 651 46 121
Non-controlling interests
Balance at beginning of the period 6 571 5 198
Comprehensive income 287 787
Profit for the period 470 794
Other comprehensive income (183) (7)
Net acquisition of treasury shares(1) (40) (6)
Share-based payments 19 41
Acquisitions, disposals and other movements in interests (34) 293
Dividends paid (635) (657)
Balance at end of the period 6 168 5 656
Shareholders’ fund 53 621 46 037
Non-controlling interests 6 571 5 198
Total equity at beginning of the period 60 192 51 235
Shareholders’ fund 50 651 46 121
Non-controlling interests 6 168 5 656
Total equity at end of the period 56 819 51 777
(1) Comprises movement in cost of shares held by subsidiaries, the share incentive trust and other
consolidated funds.
(2) Dividend of 245 cents per share declared and paid during 2016 in respect of the 2015 financial
year (2015: 225 cents).
Group cash flow statement
for the six months ended 30 June 2016
R million Reviewed Reviewed
2016 2015
Cash flow from operating activities (3 231) 5 628
Cash flow from investment activities (2 679) (3 127)
Cash flow from financing activities 25 (909)
Net increase in cash and cash equivalents (5 885) 1 592
Net foreign exchange difference 58 -
Cash, deposits and similar securities at
beginning of the period 57 343 41 431
Cash, deposits and similar securities at
end of the period 51 516 43 023
Notes to the interim condensed consolidated financial statements
for the six months ended 30 June 2016
1. Earnings per share
For basic earnings per share the weighted average number of ordinary shares is adjusted for the
treasury shares held by subsidiaries, consolidated investment funds and policyholders. Basic
earnings per share is calculated by dividing earnings by the adjusted weighted average number
of shares in issue.
For diluted earnings per share the weighted average number of ordinary shares is adjusted for
the shares not yet issued under the Sanlam Share Incentive Scheme and treasury shares held by
subsidiaries, consolidated investment funds and policyholders. Diluted earnings per share is
calculated by dividing earnings by the adjusted diluted weighted average number of shares
in issue.
Refer above for normalised earnings per share, which is based on the economic earnings
attributable to the shareholders’ fund, and should also be used when evaluating the Group’s
economic performance.
Reviewed Reviewed
Cents 2016 2015
Basic earnings per share:
Headline earnings 216,2 235,7
Profit attributable to shareholders’ fund 212,2 234,5
Diluted earnings per share:
Headline earnings 214,1 233,1
Profit attributable to shareholders’ fund 210,1 232,0
R million
Analysis of earnings:
Profit attributable to shareholders’ fund 4 242 4 703
Less: Net loss/(profit) on disposal of operations (34) 1
Loss/(profit) on disposal of subsidiaries
and associated companies (37) 2
Tax on loss/(profit) on disposal of subsidiaries
and associated companies 3 -
Non-controlling interests - (1)
Less: Equity-accounted non-headline earnings 3 -
Plus: Impairments 111 22
Gross impairments 147 36
Tax on impairments (12) -
Non-controlling interests (24) (14)
Headline earnings 4 322 4 726
Million
Number of shares:
Number of ordinary shares in issue at
beginning of the period 2 166,5 2 166,5
Less: Weighted Sanlam shares held by subsidiaries
and consolidated investment funds
(including policyholders) (167,7) (161,1)
Adjusted weighted average number of shares
for basic earnings per share 1 998,8 2 005,4
Add: Number of shares in respect of Sanlam
Limited long-term incentive schemes 20,0 21,7
Adjusted weighted average number of
shares for diluted earnings per share 2 018,8 2 027,1
2. Reconciliation of segmental information
Reviewed Reviewed
R million 2016 2015
Segment financial services income
(per shareholders’ fund income statement) 26 660 24 087
Sanlam Personal Finance 8 079 7 500
Sanlam Emerging Markets 3 687 2 926
Sanlam Investments 4 707 4 214
Santam 10 067 9 335
Corporate, consolidation and other 120 112
IFRS adjustments 1 854 2 172
Total financial services income 28 514 26 259
Segment results (per shareholders’ fund
income statement after tax and
non-controlling interest) 4 176 4 565
Sanlam Personal Finance 2 552 2 201
Sanlam Emerging Markets 728 707
Sanlam Investments 666 844
Santam 481 592
Corporate, consolidation and other (251) 221
Non-controlling interests
included in segment result 470 794
Fund transfers 66 138
Total profit for the period 4 712 5 497
Additional segmental information is provided in the Shareholders’ information.
3. Contingent liabilities
Shareholders are referred to the contingent liabilities disclosed in the 2015 annual report.
The circumstances surrounding the contingent liabilities remain materially unchanged.
4. Subsequent events
No material facts or circumstances have arisen between the dates of the statement of financial
position and this report that affect the financial position of the Sanlam Group at 30 June 2016
as reflected in these financial statements.
5. Fair value disclosures
Determination of fair value and fair value hierarchy
Below follows required disclosure of fair value measurements, using a three-level fair value hierarchy
that reflects the significance of the inputs used in determining the measurements. It should be noted
that these disclosure only cover assets and liabilities measured at fair value.
Included in level 1 category are assets and liabilities that are measured by reference to unadjusted,
quoted prices in an active market for identical assets and liabilities.
Included in level 2 category are assets and liabilities measured using inputs other than quoted prices
included within level 1 that are observable for the asset or liability, either directly (i.e. as prices)
or indirectly (i.e. derived from prices). For example, instruments measured using a valuation technique
based on assumptions that are supported by prices from observable current market transactions are
categorised as level 2.
Assets and liabilities measured using inputs that are not based on observable market data are
categorised as level 3.
R million Level 1 Level 2 Level 3 Total
Recurring fair value measurements
30 June 2016 - reviewed
Equities and similar securities 182 535 2 714 416 185 665
Interest-bearing investments 69 172 98 172 483 167 827
Structured transactions 6 373 9 353 6 15 732
Investment funds 136 934 24 891 525 162 350
Trading account assets 4 990 18 104 - 23 094
Cash, deposits and similar securities 19 579 15 166 - 34 745
Total assets at fair value 419 583 168 400 1 430 589 413
Investment contract liabilities - 301 198 2 613 303 811
Term finance 4 021 98 217 4 336
Term finance valued at stock exchange prices 4 021 - - 4 021
Term finance based on internal valuation - 98 217 315
Structured transactions liabilities - 1 208 - 1 208
Trading account liabilities 1 952 20 427 - 22 379
External investors in consolidated funds 56 561 207 654 57 422
Total liabilities at fair value 62 534 323 138 3 484 389 156
31 December 2015 - audited
Equities and similar securities 186 222 2 562 430 189 214
Interest-bearing investments 72 478 91 049 490 164 017
Structured transactions 6 391 7 788 - 14 179
Investment funds 132 186 24 595 507 157 288
Trading account assets 5 549 24 243 - 29 792
Cash, deposits and similar securities 25 769 11 573 - 37 342
Total assets at fair value 428 595 161 810 1 427 591 832
Investment contract liabilities - 293 760 3 178 296 938
Term finance 2 937 104 359 3 400
Term finance valued at stock exchange prices 2 937 - - 2 937
Term finance based on internal valuation - 104 359 463
Structured transactions liabilities - 2 374 - 2 374
Trading account liabilities 170 33 416 - 33 586
External investors in consolidated funds 53 437 204 - 53 641
Total liabilities at fair value 56 544 329 858 3 537 389 939
Reconciliation of movements in level 3 assets and liabilities measured at fair value.
Equities Interest- Struc-
and bearing tured Invest-
similar invest- trans- ment Total
R million securities ments actions funds assets
Assets
30 June 2016 - reviewed
Balance at 1 January 2016 430 490 - 507 1 427
Total gain/(loss) in statement of
comprehensive income (15) (58) 6 77 10
Acquisitions/issues 21 54 - - 75
Disposals (19) - - (59) (78)
Foreign exchange movements (1) (11) - - (12)
Transfers in - 8 - - 8
Balance at 30 June 2016 416 483 6 525 1 430
31 December 2015 - audited
Balance at 1 January 2015 395 396 - 452 1 243
Total gain in statement of
comprehensive income 23 41 - 60 124
Acquisitions 64 - - 2 66
Disposals (70) (1) - (7) (78)
Foreign exchange movements 18 54 - - 72
Balance at 31 December 2015 430 490 - 507 1 427
External Invest-
investors in ment
consolidated contract Term Total
R million funds liabilities finance liabilities
Liabilities
30 June 2016 - reviewed
Balance at 1 January 2016 - 3 178 359 3 537
Total gain in statement of
comprehensive income (17) (125) - (142)
Acquisitions - 147 - 147
Disposals - (245) (134) (379)
Foreign exchange movements - (342) (8) (350)
Transfers in(1) 671 - - 671
Balance at 30 June 2016 654 2 613 217 3 484
31 December 2015 - audited
Balance at 1 January 2015 - 2 552 347 2 899
Total loss in statement of
comprehensive income - 152 21 173
Acquisitions - 73 - 73
Disposals - (193) (101) (294)
Foreign exchange movements - 594 92 686
Balance at 31 December 2015 - 3 178 359 3 537
(1) The market for the shares to which the external investors in consolidated funds relate became
inactive in the current period.
Six months Full year
Reviewed Audited
2016 2015
Gains and losses on level 3 instruments
(realised and unrealised) included in
profit and loss
Total gains or losses included in
profit or loss for the period 152 (7)
Total unrealised gains or losses included
in profit or loss for the period for assets
held at the end of the reporting period 159 (47)
Transfers between categories
R million Cash,
Equities Interest- Struc- deposits
and bearing tured Invest- and
similar invest- trans- ment similar Total
securities ments actions funds securities assets
Financial assets
Six months Reviewed - 2016
Transfer from level 1 to level 2 - 2 576 10 - - 2 586
Transfer from level 2 to level 1 - 843 - - - 843
Full year Audited - 2015
Transfer from level 1 to level 2 - 2 603 - - 1 331 3 934
Transfer from level 2 to level 1 - 313 142 469 153 1 077
Investments traded in a market that became inactive during the year have been transferred from level 1 to level 2.
Conversely, investments traded in a market that became active have been transferred from level 2 to level 1.
Valuation techniques used in determining the fair value of financial assets and liabilities
Significant
Applicable unobservable
Instrument to level Valuation basis Main assumptions input
Equities and similar 2 and 3 Discounted cash flow model Bond and interbank Cost of capital
securities (DCF), Earnings multiple swap interest rate curve, Earnings multiple
Cost of capital,
Consumer price index
Interest-bearing 2 and 3 DCF, Bond and interbank Earnings multiple
investments (including Earnings multiple, Quoted swap interest rate curve,
insurance policies) put/surrender price by Cost of capital,
issuer Consumer price index
Trading account assets 2 DCF Forward rate n/a
and liabilities Credit risk spread
Liquidity spread
Investment contract 2 and 3 Current unit price of Bond and interbank swap Earnings multiple
liabilities and underlying unitised asset, interest rate curve, Cost of
investment funds multiplied by the number capital, Consumer price index
units held. Bond interest rate curve
Earnings multiple
DCF n/a
Term finance 2 and 3 DCF Bond & forward rate Credit Liquidity spread
ratings of issuer Liquidity
spread Agreement interest
curves
Structured transactions 2 and 3 Option pricing models Bond and interbank swap n/a
assets and liabilities DCF interest rate curve Forward
equity and currency rates
Volatility risk adjustments
External investors in 2 and 3 Current unit price of Based on underlying assets Based on underlying assets
consolidated funds underlying unitised as discussed above as discussed above
asset, multiplied by
the number of units held
Cash, deposits and 2 Mark-to-market Bond and interbank swap n/a
similar securities Yield curve interest rate curve
Sensitivity of level 3 assets and liabilities measured at fair value to changes in key assumptions
Effect of Effect of
Effect of Effect of a 1% a 1%
a 10% a 10% increase decrease
increase decrease in in
Carrying in in Carrying discount discount
R million amount(1) multiple multiple amount(2) rate rate
Six months - reviewed
30 June 2016
Other investments
Equities and similar securities 395 40 (40) 21 (2) 2
Interest-bearing investments 483 48 (48) - - -
Structured transactions 6 - - - - -
Investment funds 525 53 (53) - - -
Total assets 1 409 141 (141) 21 (2) 2
Liabilities
Investment contract liabilities 2 613 261 (261) - - -
Term finance 217 22 (22) - - -
External investors in consolidated funds 654 65 (65) - - -
Total liabilities 3 484 348 (348) - - -
Full year - audited
31 December 2015
Other investments
Equities and similar securities 399 40 (40) 31 (6) 5
Interest-bearing investments 490 49 (49) - - -
Investment funds 507 51 (51) - - -
Total assets 1 396 140 (140) 31 (6) 5
Liabilities
Investment contract liabilities 3 178 318 (318) - - -
Term finance 359 36 (36) - - -
Total liabilities 3 537 354 (354) - - -
(1) Represents mainly private equity investments valued on earnings multiple, with sensitivities based on the full valuation.
(2) Represents mainly instruments valued on a discounted cash flow basis, with sensitivities based on changes in the
discount rate.
6. Business combinations
There were no material business combinations during 2016.
7. Acquisition of associated companies
During the period, the Group finalised the Saham Finances acquisition at a cost of R6 217 million. The hedge reserve of
R542 million has been released to reduce the initial cost of the investment.
Administration
Registered name
Sanlam Limited
(Registration number 1959/001562/06)
(Tax reference number: 9536/346/84/5)
JSE share code (primary listing): SLM
NSX share code: SLA
ISIN: ZAE000070660
Incorporated in South Africa
Group Company Secretary
Sana-Ullah Bray
Registered Office
2 Strand Road, Bellville 7530,
South Africa
Telephone +27 (0)21 947 9111
Fax +27 (0)21 947 3670
Postal address
PO Box 1, Sanlamhof 7532,
South Africa
Sponsor
Deutsche Securities (SA) Proprietary Limited
Internet address
http://www.sanlam.co.za
Transfer secretaries
Computershare Investor Services (Pty) Limited
(Registration number 2004/003647/07)
70 Marshall Street, Johannesburg 2001, South Africa
PO Box 61051, Marshalltown 2107, South Africa
Telephone +27 (0)11 370 5000
Fax +27 (0)11 688 5200
Directors
DK Smith (Chairman), PT Motsepe (Deputy Chairman), Ian Kirk(1) (Group Chief Executive),
MM Bakane-Tuoane, CB Booth(2), AD Botha, PR Bradshaw(2), JP Möller(1), MV Moosa, TI Mvusi(1),
SA Nkosi, K Nondumo, P de V Rademeyer, Y Ramiah(1), RV Simelane, CG Swanepoel, PL Zim, J van Zyl(3)
(1) Executive
(2) British
(3) Appointed 18 January 2016
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