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The Group has attributed the commendable performance to its strategy of diversification across geographies, market segments and product offering. This has once again enabled the delivery of overall solid growth and value creation for stakeholders.

The Group achieved operating earnings growth of 44% (43% on a per share basis) during the period, with organic growth of 40% augmented by an earnings contribution of R130 million from recent acquisitions, up from R33 million in 2013.

New business volumes (excluding white label) increased by 8% to R82 billion compared to the same period in 2013 (13% growth excluding Capricorn Unit Trust, the Namibian unit trust business disposed of in 2013).

The annualised Return on Group Equity Value (RoGEV) per share of 18% exceeded the target of 12,2% by a healthy margin. RoGEV is the Group’s primary performance target for measuring shareholder value creation.

Other highlights of the results are as follows:

  • Normalised headline earnings per share up 27%
  • Net fund inflows of R22 billion
  • Net value of new life business increased by 11% on a comparable basis

Commenting on the results, Sanlam Group Chief Executive, Dr Johan van Zyl said: “We are pleased with the performance of all the businesses across the Group despite the persisting challenging economic conditions. Commitment to executing on our strategy over the years, coupled with a focus on specific priorities identified for 2014, supported our sustained growth during the first six months of the year. The contributions of our investments in businesses in emerging markets have also reaffirmed our strategy.

“In line with our diversified business, we have recently refreshed our brand to better position and reflect the Group as well as enhance our appeal to the various market segments we serve as well as to our own staff and stakeholders.”

Sanlam Personal Finance (SPF) had a good first half, increasing new business volumes by 23%, with new life business and new investment business sales increasing by 14% and 33% respectively. Sanlam Sky’s individual recurring premium business grew by 6% overall, impacted by the prolonged industrial action in the platinum belt. Sales in other areas performed well. Glacier achieved strong growth of 30% in the affluent market segment. Gross operating profit (gross result from financial services) increased by 26%, supported by higher assets under management and good mortality experience.

Sanlam Emerging Markets (SEM) grew new business volumes by 50% excluding the discontinued operations in Namibia. Gross operating profit increased by 62%, with strong contributions from all regions. Transactions concluded in 2013 by SEM boosted the cluster’s performance in the first half, with the majority of the contribution from Shriram Transport Finance Company, Pacific & Orient and Capricorn Investment Holdings.

Sanlam Investments (SI) delivered a robust overall performance with a 7% increase in new business volumes. SI’s net fund inflows increased to R6,4 billion from R4,2 billion during the same period in 2013. Gross operating profit increased by 43%, supported by higher assets under management, performance fees and good mortality experience at Sanlam Employee Benefits.

Santam, which experienced a considerably improved claims experience during the reporting period, increased gross operating profit by 194% and written premiums by 10% excluding cell captive business (7% including cell captive business).

A total of R1,8 billion of discretionary capital was redeployed in the six months ended 30 June 2014, for, among others:

  • The acquisition of a 51% shareholding in MCIS Insurance, a life insurance business in Malaysia;
  • The acquisition of a 63% shareholding in the Soras Group of Rwanda for R255 million;
  • A R56 million acquisition of a 22% stake in the United Kingdom-based micro-insurance provider MicroEnsure;
  • A R130 million investment to increase the Group’s exposure to existing operations in Botswana, Tanzania and the UK; and
  • Bolstering the capital position of some of the Group’s South African operations.

Investment return earned on the discretionary capital portfolio, excess capital released from Group businesses and the 2013 dividend cover in excess of cash operating earnings added some R1,1 billion of surplus capital, leaving unallocated discretionary capital of R3,3 billion at 30 June 2014.

The Group remains focused on utilising the available discretionary capital on value-accretive investment opportunities in identified emerging markets.

Concluding, Dr Van Zyl said continued commitment to the Group’s strategy, putting client needs first; building the Sanlam brand and increasing the distribution footprint in key market segments would be the main focus areas to drive new business growth in the long term.

SENS Results Announcement (Group Financial Review)

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