Ian Kirk. Picture: SUPPLIED
Ian Kirk. Picture: SUPPLIED

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BUSINESS DAY TV: ‘You have to cope with the cards you are dealt’

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  • JSE-listed companies: Sanlam

SANLAM said it had R2.3bn in discretionary capital to invest in growth initiatives, and had an opportunity to raise more capital if there was a need.

Sanlam CEO Ian Kirk said the insurer had not raised capital for some time and the company had explored some options on how it would raise capital, if needed. He could not say if Sanlam was looking to issue bonds or shares to raise capital.

The company said that investment opportunities would remain under consideration this year and that the primary focus would be on positioning pan-African financial services offerings.

Mr Kirk said in SA, Sanlam would look to co-invest with Patrice Motsepe’s African Rainbow Capital, which is owned by Sanlam’s black economic empowerment partner Ubuntu-Botho.

Sanlam’s share price fell 6.2% to R59.32 after it released its results for the year ended-December on Thursday, a move that some analysts said was due to a correction in the stock, and not the "greatest" results the market was accustomed to.

Sanlam posted a 6% growth to 355.2c per share in net operating profit. One analyst said it was a bit of a mystery why the share price had fallen so much.

"The only reason I can think of is if you look at the operating earnings, they had given an update for the 10-month period. What they said at the time was the net result was up 8% in the first 10 months," he said. "If you look at the full year, it was up 6%. That means the operating earnings growth in the last two months (of the financial year), was down 4% year-on-year."

Another analyst said the Sanlam shares had shot up about 6% earlier in the week in line with Old Mutual, which is expected to announce some corporate action on Friday.

He said there was no reason Sanlam shares had shot up earlier in the week.

"I think it (the share price fall) is a bit of a correction, and the results weren’t that fantastic. There were a lot of once-off issues," the analyst said.

In its results presentation for the 12 months ended-December, Sanlam pointed to some once-off events that muted the results in some of its businesses.

The group said its Sanlam Emerging Markets business had been affected by several factors including bad debts provisioning in Shriram Equipment Finance in India, system-implementation issues in Kenya, and a tough business environment in Zambia. Sanlam Emerging Markets reported a 4% fall in net operating profit to R1.2bn. "Sanlam seems to have a promising partner in Shriram, and India is a market with a substantial runway for growth, so the outlook for long-term value creation remains reasonably positive," Justin Floor, an investment analyst at Kagiso Asset Management, said.

"The Zambian and Kenyan impacts should be seen in the context of a broader African portfolio — in any given year there is a chance that the elevated underlying operational, economic and political risk in Africa manifests in specific markets."

Mr Floor said Sanlam still had some very good businesses in SA. He said the real long-term growth potential sat in the underpenetrated markets in the rest of Africa.

The company said there was a shift in focus to "accelerated organic growth" at Sanlam Emerging Markets. It said this would be done through enhancing partnerships, and expanding the group’s product range.

Sanlam Personal Finance, the largest profit contributor, posted a 10% increase in net operating profit to R3.8bn.

Sanlam Investments reported a 3% fall to R1.4bn, affected by a withdrawal of some funds managed on behalf of the Public Investment Corporation.