SANTAM WARNS OF A 38% DROP IN ITS EARNINGS

SANTAM said yesterday that its half-year earnings were likely to fall by as much as 38 percent, hurt by a weak operating environment in the country as a result of the Covid-19 outbreak. In a trading statement the group said that it expected its headline earnings per share (Heps) to decline by between 28 and 38 percent, to be between 614 cents a share and 713c, down from last year’s Heps of 990c while its earnings per share (Eps) were expected to fall by between 93 and 103 percent, to reflect a loss of 30c or 69c in earnings. Last year the group reported Eps of 990c. “The decrease in Heps has been driven by lower underwriting and investment results. The net underwriting margin is expected to be at the low end of the long-term target of 4 to 8 percent of net earned premiums,” the group said. In addition, Eps were also impacted by an impairment of the investment in Saham, a joint-venture with Sanlam. “The lower valuations resulted in an impairment of the equity accounted carrying value of Saham of R690 million, following the impairment of Saham intangible assets,” the group said. Santam said impairment charges were excluded from Heps and only affected Eps. It added that the foreign currency translation gains in respect of the Saham investment, which were recognised directly against equity, limited the overall reduction in net asset value to R150m. Santam will release its half-year results on September 3.

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