SANLAM LIMITED - Trading Statement 2019 Interim Results

Trading Statement – 2019 Interim Results

Sanlam Limited
(Incorporated in the Republic of South Africa)
Registration number 1959/001562/06
JSE share code: SLM
A2X share code: SLM
NSX share code: SLA
ISIN: ZAE000070660
(“Sanlam” or “the Group”)

Trading Statement – 2019 Interim Results

Shareholders are advised that Sanlam is currently compiling its results for the six
months ended 30 June 2019. This trading statement provides an indication of a range
for headline earnings per ordinary share (HEPS) and earnings attributable to equity
holders of the Group per ordinary share (EPS) in terms of paragraph 3.4(b) of the JSE
Limited Listings Requirements. Sanlam's interim results will be released on the Stock
Exchange News Service of the JSE Limited (SENS) on Thursday, 5 September 2019.
The Group achieved satisfactory growth in net result from financial services as well as
investment return earned on its capital portfolios for the first half of the 2019 financial
year, contributing to estimated combined growth of between 8% and 18% from these
sources of earnings.

The Group also concluded a share issuance to a new Broad-Based Black Economic
Empowerment (B-BBEE) entity (B-BBEE Entity) as approved by Sanlam shareholders
in December 2018 and notified on SENS in March 2019 (B-BBEE Share Issuance). The
B-BBEE Share Issuance positions Sanlam as the foremost empowered insurance and
investment management group in South Africa.

Headline earnings for the six months to 30 June 2019 are impacted by the following:

•   A one-off expense of R1.7 billion recognised in terms of International Financial
    Reporting Standards (IFRS) 2 Share Based Payment in respect of the B-BBEE
    Share Issuance, as reported to shareholders in the four-month operational update
    on 5 June 2019.
•   The value of business acquired (VOBA) intangible assets recognised in 2018 upon
    the first-time consolidation of Saham Finances and Nucleus as Group subsidiaries
    contributed an additional amortisation charge of some R200 million in the first six
    months of 2019.
•   Profits and losses recognised in terms of IFRS 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 (Fund transfers),
    declined from a R209 million net profit in 2018 to a net loss of R102 million in 2019.
    The consolidated results of the B-BBEE Entity included in the 2019 Fund transfers
    comprises interest paid on the external funding and administration costs incurred of
    some R110 million.

Given the size of these items, headline earnings and earnings attributable to equity
holders of the Group for the six months to 30 June 2019 are expected to decrease by
between 25% and 35% compared to the first half of 2018. Excluding the one-off IFRS 2
charge, the amortisation of intangible assets and the Fund transfers referred to above,                                                                              
headline earnings and earnings attributable to equity holders of the Group would have
increased by between 8% and 18%, reflecting the solid underlying operational
performance by the Group.

The weighted average number of shares used for HEPS and EPS is not impacted by
the B-BBEE Share Issuance as the Sanlam shares held by the B-BBEE Entity is treated
as treasury shares upon consolidation. These shares will, however, be treated as
issued shares for purposes of the Group’s disclosed per share management
information, such as net result from financial services per share and Group Equity
Value per share.

Shareholders are advised that the Group expects HEPS and EPS for the 2019 interim
period, expressed as growth on the prior period, to fall within the following ranges:

                                Six months to         Six months to    Six months to
                                30 June 2019          30 June 2019     30 June 2018
                                  Expected           Expected range     Prior period
                               Decline on prior      cents per share     cents per
                                    period                                 share
 HEPS will decrease                   25% - 35%          163.2 – 188.3          251.0
 between
 Diluted HEPS will                     25% - 35%         161.6 - 186.5             248.6
 decrease between
 EPS will decrease                     25% - 35%         160.7 – 185.4             247.2
 between
 Diluted EPS will decrease             25% - 35%         159.2 - 183.7             244.9
 between

The financial information in this trading statement is the responsibility of the Sanlam
Board of Directors and has not been reviewed or reported on by the Group’s external
auditors. The pro forma financial information included in this trading statement is
prepared for illustrative purposes only and because of its nature may not fairly present
the Group’s financial position, changes in equity, results of operations or cash flows.

Cape Town
16 August 2019

Sponsor
The Standard Bank of South Africa Limited


Date: 16/08/2019 10:00:00
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