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Pioneer investment leads green buildings

FNB’s independently certified green headquarters. This building will be the first of its kind in Namibia.

FNB’s independently certified green headquarters. This building will be the first of its kind in Namibia.

With its new and unique green head office which is currently under construction, FNB Namibia recently said it is envisaging the development of the first independently certified green building to serve as an example to those that follow.

According to Susan Fick, Senior Manager Special Projects and Strategy, the bank is aiming for a 4-star green star rating in best practice.
“Green Star is a voluntary environmental rating system for buildings in Australia. It was launched in 2003 by the Green Building Council of Australia. The system considers a broad range of practices for reducing the environmental impact of buildings and to showcase innovation in sustainable building practices, while also considering occupant health and productivity and cost savings,” she said.
She noted that nine categories are assessed with the Green Star tools which includes management, indoor environment quality, energy, transport, water, materials, land use and ecology, emissions, and finally, innovation.
“The resulting score is translated into “Green Stars” as follows: Score 45-59: 4 Star Green Star signifies ‘Best Practice’ in environmentally sustainable design and/or construction,” she added.
Fick further said that this great step by FNB holds benefits on many levels.
She said, at the national level, it means essentially addressing market transformation. This is achieved by overcoming resistance to change. It means that, for example, thorough environmental management plans are in place, and waste management is enforced to ensure greater landfill diversion.
“Equally, a substantial portion of the building materials will be sourced from within Namibia. Skills transfers will occur at every level, empowering labour, professionals and professional associations, all contributing to reinforce the emerging green economy,” she added.
FNB also advised that at the city level, a better performing building using less energy, less water, while rejecting less sewage and light pollution, means that the existing urban infrastructure will be less burdened, allowing more developments to occur within the current infrastructure upgrade programme.
“From a building users and guests point of view, it means that the building will provide a comfortable, pleasant and stimulating working environment, with better access to external views, more natural light and fresh air, and radically improved indoor environmental quality, all contributing to high levels of productivity, in order to attract and retain talent.  A truly world class working environment,” she said.
The green star rating is not without its challenges. Fick said that FNB loves challenges and is well aware of the fact that the first certification in a country is always going to provide challenges as Green Star requires far greater reporting and documentation than used in the existing systems. With regard to costs she advised: “The original design already encompassed many aspects that address best practice with regards to electrical, water and waste management in terms of our FNB standards for new building developments. In pursuing and by achieving the 4-star Green Star rating we have added additional components adding an additional spend to the project.”

When asked about the long-term impact in terms of savings and carbon footprint Fick advised: “If we ignore all other benefits and only look at the energy saving component alone, even with a conservative view of a 15% saving in current costs the payback period achieved would be within 7 to 8 years. International and SA studies show this saving to be closer to 35% which would mean a payback period of only 4 years, at current expected electricity tariff increases. And we cannot ignore the savings even a 1% increased productivity would have on our salary bill that constitutes a large percentage of the bank’s total non-interest expenditure.”
FNB Namibia has requested that this project be certified from a sustainability point of view. “Our consultants WSP GREEN by DESIGN have worked relentlessly with the fledgling Green Building Council of Namibia (GBCN), to lay the necessary foundation to certify this project, enrolling the assistance of the Green Building Council of South Africa in a collaborative and mutually beneficial relationship, ”said Fick.

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Sanlam 2018 Annual Results

7 March 2019

 

Sanlam’s 2018 annual results provides testimony to its resilience amid challenging operating conditions and negative investment markets

Sanlam today announced its operational results for the 12 months ended 31 December 2018. The Group made significant progress in strategic execution during 2018. This included the acquisition of the remaining 53% stake in SAHAM Finances, the largest transaction concluded in the Group’s 100-year history, and the approval by Sanlam shareholders of a package of Broad-based Black Economic Empowerment (B-BBEE) transactions that will position the Group well for accelerated growth in its South African home market.

Operational results for 2018 included 14% growth in the value of new life insurance business (VNB) on a consistent economic basis and more than R2 billion in positive experience variances, testimony to Sanlam’s resilience in difficult times.

The Group relies on its federal operating model and diversified profile in dealing with the challenging operating environment, negative investment markets and volatile currencies. Management continues to focus on growing existing operations and extracting value from recent corporate transactions to drive enhanced future growth.

The negative investment market returns and higher interest rates in a number of markets where the Group operates had a negative impact on growth in operating earnings and some other key performance indicators. This was aggravated by weak economic growth in South Africa and Namibia and internal currency devaluations in Angola, Nigeria and Zimbabwe.

Substantial growth in Santam’s operating earnings (net result from financial services) and satisfactory growth by Sanlam Emerging Markets (SEM) and Sanlam Corporate offset softer contributions from Sanlam Personal Finance (SPF) and Sanlam Investment Group (SIG).

Key features of the 2018 annual results include:

Net result from financial services increased by 4% compared to the same period in 2017;

Net value of new covered business up 8% to R2 billion (up 14% on a consistent economic basis);

Net fund inflows of R42 billion compared to R37 billion in 2017;

Adjusted Return on Group Equity Value per share of 19.4% exceeded the target of 13.0%; and

Dividend per share of 312 cents, up 8%.

Sanlam Group Chief Executive Officer, Mr Ian Kirk said: “We are satisfied with our performance in a challenging operating environment. We will continue to focus on managing operations prudently and diligently executing on our strategy to deliver sustainable value to all our stakeholders. The integration of SAHAM Finances is progressing well. In addition, Sanlam shareholders approved the package of B-BBEE transactions, including an equity raising, at the extraordinary general meeting held on 12 December 2018. Our plan to implement these transactions this year remains on track.”

Sanlam Personal Finance (SPF) net result from financial services declined by 5%, largely due to the impact of new growth initiatives and dampened market conditions. Excluding the new initiatives, SPF’s contribution was 1% down on 2017 due to the major impact that the weak equity market performance in South Africa had on fund-based fee income.

SPF’s new business sales increased by 4%, an overall satisfactory result under challenging conditions. Sanlam Sky’s new business increased by an exceptional 71%. Strong growth of 13% in the traditional individual life channel was augmented by the Capitec Bank credit life new business recognised in the first half of 2018, and strong demand for the new Capitec Bank funeral product. The Recurring premium and Strategic Business Development business units also achieved strong growth of 20%, supported by the acquisition of BrightRock in 2017. Glacier new business grew marginally by 1%. Primary sales onto the Linked Investment Service Provider (LISP) platform improved by 5%, an acceptable result given the pressure on investor confidence in the mass affluent market. This was however, offset by lower sales of wrap funds and traditional life products.

The strong growth in new business volumes at Sanlam Sky had a major positive effect on SPF’s VNB growth, which increased by 7% (14% on a comparable basis).

Sanlam Emerging Markets (SEM) grew its net result from financial services by 14%. Excluding the impact of corporate activity, earnings were marginally up on 2017 (up 8% excluding the increased new business strain).

New business volumes at SEM increased by 20%. Namibia performed well, increasing new business volumes by 22% despite weak economic conditions. Both life and investment new business grew strongly. Botswana underperformed with the main detractor from new business growth being the investment line of business, which declined by 24%. This line of business is historically more volatile in nature.

The new business growth in the Rest of Africa portfolio was 68% largely due to corporate activity relating to SAHAM Finances, with the East Africa portfolio underperforming.

The Indian insurance businesses continued to perform well, achieving double-digit growth in both life and general insurance in local currency. The Malaysian businesses are finding some traction after a period of underperformance, increasing their overall new business contribution by 3%. New business production is not yet meeting expectations, but the mix of business improved at both businesses.

SEM’s VNB declined by 3% (up 6% on a consistent economic basis and excluding corporate activity). The relatively low growth on a comparable basis is largely attributable to the new business underperformance in East Africa.

Sanlam Investment Group’s (SIG) overall net result from financial services declined by 6%, attributable to lower performance fees at the third party asset manager in South Africa, administration costs incurred for system upgrades in the wealth management business and lower earnings from equity-backed financing transactions at Sanlam Specialised Finance. The other businesses did well to grow earnings, despite the pressure on funds under management due to lower investment markets.

New business volumes declined by 13% mainly due to market volatility and low investor confidence in South Africa. Institutional new inflows remained weak for the full year, while retail inflows also slowed down significantly after a more positive start to the year. The international businesses, UK, attracted strong new inflows (up 57%).

Sanlam Corporate’s net result from financial services increased by 4%, with the muted growth caused by a continuation of high group risk claims experience. Mortality and disability claims experience weakened further in the second half of the year, which is likely to require more rerating of premiums in 2019. The administration units turned profitable in 2018, a major achievement. The healthcare businesses reported satisfactory double-digit growth in earnings, while the Absa Consultants and Actuaries business made a pleasing contribution of R39 million.

New business volumes in life insurance more than doubled, reflecting an exceptional performance. Single premiums grew by 109%, while recurring premiums increased by a particularly satisfactory 56%.

The good growth in recurring and single premium business, combined with modelling improvements, supported a 64% (71% on a comparable economic basis) increase in the cluster’s VNB contribution.

Following a year of major catastrophe events in 2017, Santam experienced a relatively benign claims environment in 2018. Combined with acceptable growth in net earned premiums, it contributed to a 37% increase in gross result from financial services (41% after tax and non-controlling interest). The conventional insurance book achieved an underwriting margin of 9% in 2018 (6% in 2017).

As at 31 December 2018, discretionary capital amounted to a negative R3.7 billion before allowance for the planned B-BBEE share issuance. A number of capital management actions during 2018 affected the balance of available discretionary capital, including the US$1 billion (R13 billion) SAHAM Finances transaction. Cash proceeds from the B-BBEE share issuance will restore the discretionary capital portfolio to between R1 billion and R1.5 billion depending on the final issue price within the R74 to R86 price range approved by shareholders.

Looking forward, the Group said economic growth in South Africa would likely remain weak in the short to medium term future, and would continue to impact efforts to accelerate organic growth. The outlook for economic growth in other regions where the Group operates is more promising. Recent acquisitions such as the SAHAM transaction should also support operational performance going forward.

“We remain focused on executing our strategy. We are confident that we have the calibre of management and staff to prudently navigate the anticipated challenges going forward,” Mr Kirk concluded.

Details of the results for the 12 months ended 31 December 2018 are available at www.sanlam.com.