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LBH
LBH
LBH- Liberty Holdings - Unaudited interim results: six months ended 30 June 2007
Liberty Holdings Limited
(the company)
Incorporated in the Republic of South Africa
(Registration number: 1968/002095/06)
Alpha code: LBH
Issuer code: LIBU
ISIN code: ZAE000004032
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007
Commentary on results
Liberty Holdings Limited (Liberty Holdings) is the holding company of Liberty
Group Limited. Liberty Holdings carries on no business other than that related
to its investment in Liberty Group Limited. At 30 June 2007 Liberty Holdings
held a 50,26% interest in Liberty Group Limited (31 December 2006: 51,99%). The
dilution of ownership arose mainly from Liberty Group Limited`s issue of shares
as part of the settlement agreed for the acquisition of STANLIB`s ordinary
shares not previously owned.
Shareholders are consequently referred to the interim results announcement
published by Liberty Group Limited on 8 August 2007 (available at
www.liberty.co.za), for further details and a review of their operations and
prospects, the results of which are consolidated into Liberty Holdings.
On 7th August 2007 Liberty Group Limited declared a capital reduction of 144
cents per ordinary share in lieu of an interim dividend. The Board of Directors
has deferred the distribution of the Liberty Group Limited capital reduction
pending the receipt of these proceeds and finalisation of the amendments to
Secondary Tax on Companies recently announced by the Minister of Finance.
Accounting policies and restatements
The results have been prepared in accordance with International Financial
Reporting Standards (IFRS), consistent with the accounting policies applied for
the year ended 31 December 2006, except for a change in accounting policy for
business combinations involving businesses under common control and the adoption
of IFRS 7: Financial Instruments: Disclosures. The resultant restatements
arising from these new accounting policies as well as certain IFRS
reclassifications can be found in the addendum attached to the interim results
announcement on www.libertyholdings.co.za.
Derek Cooper
Chairman
14 August 2007
Transfer Secretaries
Computershare Investor Services 2004 (Pty) Limited
(Registration number: 2004/003647/07)
Ground Floor, 70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Telephone +27 11 370 5000
Sponsor
Merrill Lynch
Global Markets & Investment Banking Group
Merrill Lynch South Africa (Pty) Ltd
Registration number 1995/001805/07
Registered Sponsor and Member of the JSE Securities Exchange South Africa
Condensed group balance sheet
as at 30 June 2007
Unaudited Audited
Unaudited as restated as restated
30 June 30 June 31 December
2007 2006 2006
Rm Rm Rm
Assets
Investments 206 996 161 645 188 691
Intangible assets 1 234 1 432 1 331
Reinsurance assets 851 977 1 065
Deferred taxation 75 116 40
Prepayments, insurance and other 4 741 4 733 3 189
receivables
Cash and cash equivalents 2 068 10 199 5 242
Other assets 997 668 872
Total assets 216 962 179 770 200 430
Liabilities
Policyholders` liabilities 182 817 150 282 168 898
Insurance contracts 129 655 109 687 122 875
Investment contracts with 2 883 1 588 1 719
discretionary participation
features
Investment contracts through 50 279 39 007 44 304
profit or loss
Financial liabilities 2 718 2 368 2 357
Third party liabilities arising on 8 560 7 810 8 559
consolidation of mutual funds
Deferred taxation 3 366 2 781 3 262
Insurance and other payables 6 166 4 817 4 247
Other liabilities 1 728 978 1 186
Total liabilities 205 355 169 036 188 509
Equity
Ordinary shareholders` funds 4 894 4 691 5 247
Minority interests 6 713 6 043 6 674
Total equity 11 607 10 734 11 921
Total equity and liabilities 216 962 179 770 200 430
Condensed group income statement
for the six months ended 30 June 2007
Unaudited Audited
Unaudited as restated as restated
30 June 30 June 31 December
2007 2006 2006
Rm Rm Rm
Total revenue 28 309 24 395 59 180
Net insurance benefits and claims (17 577) (15 804) (38 140)
Fair value adjustment to (4 217) (2 730) (8 276)
policyholders` liabilities under
investment contracts
Fair value adjustment on third (1) (731) (1 480)
party mutual fund liabilities
Acquisition costs associated with (1 355) (1 196) (2 413)
insurance and investment contracts
Expenses (2 152) (1 905) (3 903)
Preference dividend in subsidiary (136) (71) (184)
Profit on sale of subsidiaries 2 378 374
Equity accounted earnings from 17 53 150
joint ventures
Profit before taxation 2 890 2 389 5 308
Taxation (1 225) (962) (2 307)
Total earnings 1 665 1 427 3 001
Attributable to:
Equity holders 798 663 1 386
Minority interests 867 764 1 615
1 665 1 427 3 001
Earnings per share Cents Cents Cents
Basic 1 721,1 1 415,5 2 968,9
Fully diluted 1 721,1 1 415,4 2 968,0
Reconciliation of headline earnings Rm Rm Rm
Total earnings attributable to 798 663 1 386
equity holders
Profit on sale of subsidiaries (1) (197) (194)
Headline earnings 797 466 1 192
Insurance operations 495 377 725
Shareholders` fund investments 302 89 467
Headline earnings per share Cents Cents Cents
Basic 1 718,4 993,7 2 552,2
Fully diluted 1 718,4 993,6 2 552,1
Condensed statement of changes in group shareholders` funds
for the six months ended 30 June 2007
Unaudited Audited
Unaudited as restated as restated
30 June 30 June 31 December
2007 2006 2006
Rm Rm Rm
As previously reported 12 230 11 132 11 132
Common control transaction transfer (309) (309) (309)
of goodwill to equity
Restated balance at 1 January 11 921 10 823 10 823
Excess purchase price over NAV of (2 194)
STANLIB
Total earnings 1 665 1 427 3 001
Acquisition of minorities in (166) (166)
Prefsure Holdings Limited
Capital reduction in subsidiary (390) (390)
Ordinary dividends (319) (762) (959)
Minority share of subsidiary (308) (298) (485)
dividend
Preference dividend (1) (2) (2)
Unincorporated property (64) (108) (190)
partnerships - minority movements
Subscriptions for shares 1 1
Black Economic Empowerment 54 52 89
transaction
Share-based payments 27 26 51
Owner-occupied properties - net 15 13 35
fair value adjustments
Treasury shares (51) 44 13
Foreign currency translation 16 42 48
movement on subsidiaries
Issue of shares in subsidiary 846 32 52
Shareholders` funds 11 607 10 734 11 921
Ordinary shareholders` funds 4 894 4 691 5 247
Minority interests 6 713 6 043 6 674
Condensed group cash flow statement
for the six months ended 30 June 2007
Unaudited Audited
Unaudited as restated as restated
30 June 30 June 31 December
2007 2006 2006
Rm Rm Rm
Operating activities 5 467 128 4 578
Investing activities (9 517) (1 953) (11 398)
Financing activities 751 (445) (393)
Net decrease in cash and cash (3 299) (2 270) (7 213)
equivalents
Cash and cash equivalents at 5 242 12 455 12 455
beginning of period
Cash acquired on acquisition of 166
STANLIB Limited
Cash disposed of on sale of Saambou (41)
Life Assurers Limited
Foreign exchange movements on cash 14
balances
Cash and cash equivalents at end of 2 068 10 199 5 242
period
Commitments
as at 30 June 2007
Unaudited Unaudited Audited
30 June 30 June 31 December
2007 2006 2006
Rm Rm Rm
Capital commitments 288 287 1 987
STANLIB Limited acquisition 1 575
Equipment 89 163 101
Investment and owner-occupied 199 124 311
property
Under contracts 33 132 139
Authorised by the directors but not 255 155 1 848
contracted
288 287 1 987
Funding for the 30 June 2007 commitments will be from shareholders` funds and
where applicable with proportionate recovery from minority interests.
Related parties
as at 30 June 2007
There have been no significant changes to the nature of the related party
transactions as described in note 42 to the 31 December 2006 annual financial
statements.
Investments in ordinary shares held by the group and its subsidiaries in the
group`s holding company is as follows:
Market
Number value Ownership
`000 Rm %
Standard Bank Group Limited 39 141 3 848 2,85
Addendum - Restatement of comparatives
Condensed group balance sheet for the six months ended 30 June 2006
Unaudited Reclassi- Common
fications
as and effect control
previously of IFRS business
reported Interpreta- combinations Restated
tions
Rm Rm Rm Rm
Assets
Investments 159 320 2 325 161 645
Intangible assets 1 741 (309) 1 432
Reinsurance assets 977 977
Deferred taxation 116 116
Prepayments, insurance 4 639 94 4 733
and other receivables
Cash and cash equivalents 9 908 291 10 199
Other assets 629 39 668
Total assets 177 330 2 749 (309) 179 770
Liabilities
Policyholders` 150 282 - 150 282
liabilities
Insurance contracts 111 275 (1 588) 109 687
Investment contracts 1 588 1 588
with discretionary
participation features
(DPF)
Investment contracts 39 007 39 007
through profit or loss
Financial liabilities 2 368 2 368
Third party liabilities 5 090 2 720 7 810
arising on consolidation
of mutual funds
Deferred taxation 2 781 2 781
Insurance and other 4 788 29 4 817
payables
Other liabilities 978 978
Total liabilities 166 287 2 749 169 036
Equity
Ordinary shareholders` 5 000 (309) 4 691
funds
Minority interests 6 043 6 043
Total equity 11 043 (309) 10 734
Total equity and 177 330 2 749 (309) 179 770
liabilities
Condensed group income statement for the six months ended 30 June 2006
Unaudited Reclassi- Common
fications
as and effect control
previously of IFRS business
reported Interpretations combinations Restated
Rm Rm Rm Rm
Total revenue 23 730 665 24 395
Net insurance benefits (15 804) (15 804)
and claims
Fair value adjustment to (2 730) (2 730)
policyholders`
liabilities under
investment contracts
Fair value adjustment on (213) (518) (731)
third party mutual fund
liabilities
Acquisition costs (1 196) (1 196)
associated with insurance
and investment contracts
Expenses (1 758) (147) (1 905)
Preference dividend in (71) (71)
subsidiary
Profit on dilution 3 (3) -
Profit on sale of 378 378
subsidiaries
Equity accounted earnings 53 - 53
from joint ventures
Profit before taxation 2 392 - (3) 2 389
Taxation (962) (962)
Total earnings 1 430 (3) 1 427
Reclassifications and effect of IFRS interpretations:
* Properties under development included in owner-occupied properties (R23
million) and investment properties (R16 million) have been reclassified as
equipment and properties under development.
* Short-term employee benefit liabilities comprising incentive scheme and
leave pay of R79 million have been reclassified from provisions to employee
benefits.
* Certain rental income relating to hotel operations was stated net of
operating expenses. Investment income and general marketing and
administration expenses have both increased by R164 million for the six
months ended 30 June 2006.
* Inter-company management fees on assets under management of R59 million
were previously not eliminated. Management fees on assets under management
have decreased by R59 million with a corresponding decrease in general
marketing and administration expenses for the six months ended 30 June
2006.
* Reclassification of R1 588 million from policyholders` liabilities under
insurance contracts to policyholders` liabilities under investment
contracts with DPFs.
* On further analysis of the group`s investment portfolio, it was considered
more appropriate to adopt a look through approach to underlying interests
in certain investments. This resulted in a reclassification of a number of
mutual funds the group invests in, into associates and subsidiaries. 30
June 2006 reported amounts were consequently restated. This impact can be
summarised as follows:
Mutual fund subsidiaries
* Increase in financial instruments of R2 364 million;
* Increase in prepayments, insurance and other receivables of R94 million;
* Increase in cash and cash equivalents of R291 million;
* Increase in third party liabilities arising on consolidation of mutual
funds of R2 720 million;
* Increase in insurance and other payables of R29 million;
* Increase in investment income of R138 million;
* Increase in investment gains of R422 million;
* Increase in fair value adjustment on third party mutual fund interests of
R518 million; and
* Increase in general marketing and administration expenses of R42 million.
Mutual fund associates
* Reclassification of R1 841 million from financial instruments to interest
in associates.
There is no impact on shareholder earnings, net asset value or statement of
changes in shareholders` funds from the above adjustments.
Business combinations involving business under common control
As a result of changing the group`s accounting policy relating to transactions
with minorities, goodwill of R309 million has been reclassified directly to
equity. In addition, the R3 million profit on dilution recognised in the income
statement to 30 June 2007 has been accounted for directly in equity.
The change in accounting policy is considered appropriate as the group regards
transactions that do not result in the change of control as transactions with
minorities that should not result in the creation of goodwill assets or profit
in the income statement.
Restatement of 31 December 2006 reported results
As a result of the change in accounting policy, as detailed above, the December
2006 reported results have been restated. Goodwill of R309 million has been
reclassified directly to equity. Profit on dilution of R4 million previously
recognised in the income statement to 31 December 2006 has been accounted for
directly in equity.
Date: 14/08/2007 17:09:02 Produced by the JSE SENS Department.
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