JSE-listed financial services group Sanlam expects its earnings to fall by at least 3% for the six months to the end of June. File picture: David Ritchie
DURBAN - JSE-listed financial services group Sanlam expects its earnings to fall by at least 35percent for the six months to the end of June, negatively impacted by a once-off expense of R1.7billion recognised in terms of IFRS2 in respect of the broad-based black economic empowerment (B-BBEE) share issuance.

As a result, Sanlam expects its diluted earnings per share to decline by between 25 and 35percent to between 159.2cents and 183.7c a share, down from last year’s 244.9c.

Its diluted headline earnings per share are also expected to fall by between 25and 35percent to between 161.6c and 186.5c, down from last year’s 248.6c.

Sanlam said on Friday that its earnings during the period would also be affected by the first-time consolidation of Saham Finances and Nucleus as group subsidiaries, which contributed an additional amortisation charge of R200m.

Sanlam acquired the remaining 53.37percent stake in Moroccan insurance firm Saham Finances in October last year for $1.1bn (R16.79bn).

The group will also report a net loss of R102m compared with last year’s net profit in respect of the treatment of Sanlam shares held in policyholder portfolios as treasury shares, the movement in deferred tax assets recognised in respect of assessed losses in policyholder funds and the consolidation of the Sanlam Foundation and B-BBEE entity and R110m incurred on interest paid and administration costs.

The group added that excluding the one-off IFRS2 charge, the amortisation of intangible assets and the fund transfers, headline earnings and earnings attributable to equity holders of the group would have increased by 8 to 18percent.

Despite the expected fall in earnings, the group said it achieved satisfactory growth in net results from financial services and investment returns on capital portfolios for the first half of 2019. Sanlam will release its results on September 5.

Sanlam shares remained unchanged to close at R69.90 on the JSE on Friday.

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