Johannesburg - Sanlam, the financial services group, saw its share price trade lower yesterday on the JSE after the group released a disappointing set of results.
Sanlam reported a 7 percent decline in normalised headline earnings to R4.26 billion for the six months to June, from R4.59bn reported in June last year. As a result the share price lost its strength and reached its lowest level for the day. It lost 4.62 percent to trade at R63.78 in the afternoon. However, it closed at R65.15 per share, 2.57 percent lower on the day.
Sanlam partly attributed the drop in earnings to volatile investment markets, which affected its capital portfolio.
Intense volatility
“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 percent 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 company said in a statement.
However, the group managed to show some positive signs in some of its business. Sanlam achieved an overall growth of 15 percent in new business volumes for the six months and generated net funds inflows of R22bn as compared to R7bn as compared to last year.
Sanlam operates in Africa, Europe, the UK, US, India and Malaysia. It has been expanding in African and Asian countries as it seeks to enter regions that may help boost profit because of slowing growth in South Africa.
Healthy margin
The group equity value amounted to R106.6bn, or 5 212c per share at the end of June, including the dividend of 245c per share paid during the year. Sanlam also achieved a return on group equity value per share of 7.9 percent for the first six months of this year. “This exceeds the 2016 six-month target of 6.8 percent by a healthy margin,” the group said.
Sanlam started the year with unallocated discretionary capital of R2.3bn, which the group said was only utilised for only for small transactions. During the period the capital increased to R3.1bn at the end of June. “We remain focused on utilising the available discretionary capital for value-accretive investment opportunities,” said the group.
In June, Sanlam Emerging Markets announced that it had concluded an agreement to acquire a 63 percent interest in Soras Group, Rwanda’s largest insurance company, for $24.3 million (R343m).
BUSINESS REPORT