PDF Annual Financial Statements 2018

Annual Financial Statements

2018

CONTENTS

Directors' responsibility for financial reporting

1

Certificate by the Company Secretary

2

Directors' report

3

Independent auditors' report

4

Capital management

12

Risk management

17

Basis of presentation and accounting policies

57

Policy liabilities and profit entitlement

61

Group statement of financial position

64

Group statement of comprehensive income

65

Group statement of changes in equity

66

Group cash flow statement

68

Notes to the Group financial statements

69

Sanlam Limited statement of financial position

139

Sanlam Limited statement of comprehensive income

139

Sanlam Limited statement of changes in equity

140

Sanlam Limited cash flow statement

140

Sanlam Limited notes to the financial statements

141

Principal subsidiaries

144

DIRECTORS' RESPONSIBILITY FOR FINANCIAL REPORTING

The Board of Sanlam Limited takes responsibility for the integrity, objectivity and reliability of the group and company Annual Financial Statements of Sanlam Limited in accordance with International Financial Reporting Standards. Adequate accounting records have been maintained. The Board endorses the principle of transparency in financial reporting. The responsibility for the preparation and presentation of the Annual Financial Statements has been delegated to management.

The responsibility of the external auditors, Ernst & Young Inc., is to express an independent opinion on the fair presentation of the financial statements based on their audit of Sanlam Limited and the Group. The Audit, Actuarial and Finance committee has satisfied itself that the external auditors were independent of the company during the period under review.

The Audit, Actuarial and Finance committee has confirmed that effective systems of internal control and risk management are being maintained. There were no breakdowns in the functioning of the internal financial control systems during the year, which had a material impact on the Sanlam Limited group or company Annual Financial Statements. The Board is satisfied that the annual financial statements fairly present the financial position, the results of operations and cash flows in accordance with International Financial Reporting Standards (IFRS) and supported by reasonable and prudent judgements consistently applied.

The Board of Sanlam Limited takes responsibility for the integrity, objectivity and reliability of the Shareholders' Information included in the Integrated Report. The responsibility for the preparation and presentation of the Shareholders' Information had been delegated to management.

The responsibility of the external auditors, Ernst & Young Inc., is to express an independent opinion on the preparation of the Shareholders' Information.

A full description of how the Audit, Actuarial and Finance Committee carried out its functions is included in the Corporate Governance report online.

The Board is of the opinion that Sanlam Limited is financially sound and operates as a going concern. The Annual Financial Statements have accordingly been prepared on this basis.

The Annual Financial Statements, the Corporate Governance report, the Remuneration report and the Shareholders' Information on pages 173 to 236 of the Integrated Report were approved by the Board and signed on its behalf by:

Johan van Zyl Chair

Cape Town 6 March 2019

Ian Kirk Group Chief Executive

ANNUAL FINANCIAL STATEMENTS 2018

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CERTIFICATE BY COMPANY SECRETARY

In my capacity as Company Secretary, I hereby certify, in terms of the Companies Act, that for the year ended 31 December 2018, the company has lodged with the Registrar of Companies all such returns as are required of a public company in terms of this Act, and that all such returns are, to the best of my knowledge and belief, true, correct and up to date.

Sana-Ullah Bray Company Secretary 6 March 2019

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SANLAM

DIRECTORS' REPORT

For the year ended 31 December 2018

NATURE OF BUSINESS The Sanlam Group is one of the largest established financial services groups in Africa. Its core activities are set out in the Integrated Report.

Sanlam Limited is a public company incorporated in terms of the Companies Act No 71 of 2008, as amended, in South Africa and listed on the JSE Limited and the Namibian Stock Exchange.

CORPORATE GOVERNANCE The Board of Sanlam endorses the Code of Corporate Practice and Conduct recommended in the King IV Report on Corporate GovernanceTM for South Africa, 2016 (King IVTM)1. Disclosures with regard to compliance with the Code are provided in the Corporate Governance report.

GROUP RESULTS Profit attributable to shareholders increased from R10 923 million in 2017 to R11 627 million in 2018, largely due to a robust operational performance and a deemed profit on disposal of associated companies and subsidiaries of some R3,1 billion recognised in terms of IFRS upon associated companies becoming subsidiaries. The acquisition of the remaining 53% stake in Saham Finances was the largest contributor to the deemed profit. Further details regarding the Group's results and prospects are included in the Financial Review in the Integrated Report. The information in the Corporate Governance and Remuneration reports, requiring disclosure in the Directors' report in terms of the Companies Act and JSE Listings Requirements, has been audited. The holding company's interest in the after tax profit of the Group subsidiaries, summarised per cluster, is set out in the shareholder's fund income statement on page 200 of the Integrated Report.

SHARE CAPITAL The issued ordinary share capital of the Company is 2 232 million shares. Refer to page 96 for further information.

DIVIDEND The Board has declared a normal cash dividend of 312 cents per share (2018: normal dividend of 290 cents), payable on 15 April 2019, to shareholders registered on 9 April 2019. All payments through electronic bank transfer will take place on this date.

SUBSIDIARIES Details of the Company's principal subsidiaries are set out on page 144.

DIRECTORS' INTERESTS IN CONTRACTS No material contracts involving directors' interests were entered into in the year under review.

INTEREST OF DIRECTORS AND OFFICERS IN SHARE CAPITAL Details of the shareholding by directors at the date of this report are provided in the online Remuneration Report on pages 33 and 34.

DIRECTORS AND SECRETARY Particulars of the directors and Company Secretary at the date of this report, as well as changes in directorships, are set out on pages 164, 166 to 172, and 248 of the Integrated Report. Also refer to the online Governance Report.

SUBSEQUENT EVENTS No other material facts or circumstances have arisen between the date of the statement of financial position and this report which materially affects the financial position of the Sanlam Limited Group at 31 December 2018 as reflected in these financial statements.

APPROVAL OF ANNUAL FINANCIAL STATEMENTS The directors have approved the annual financial statements as reflected on page 1, including the certificate by the Company Secretary on page 2, the Audit committee report for the 2018 financial year on page 29 of the online Governance Report and the analysis of shareholders on page 240 of the Integrated Report.

NOTICE IN TERMS OF SECTION 45(5) OF THE COMPANIES ACT, 2008 (THE ACT) The Company is from time to time, as an essential part of conducting the business of the Sanlam Group, required to provide financial assistance to Group companies as part of its day-to-day operations in the form of loan funding, guarantees or general financial assistance as contemplated in section 45 of the Act. In accordance with section 45(5) of the Act this serves to give notice that the Sanlam Board, in line with existing practice, approved that the Company may, in accordance with and subject to the provisions of section 45 of the Act and in terms of the special resolution passed at the Company's annual general meeting in 2018, provide such direct or indirect financial assistance to related and inter-related companies and corporations as described in section 45 of the Act. The amount and format of financial assistance which may be granted pursuant to the resolution is subject to ongoing review by the Sanlam Board and may in total exceed the reporting threshold of 0,1% of the Sanlam Group's net asset value provided for in the Act.

1 Copyright and trademarks are owned by the Institute of Directors in Southern Africa (NPC) and all of its rights are reserved.

ANNUAL FINANCIAL STATEMENTS 2018

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