| Tue 5 Mar 2002, 0:00 | | Liberty Group - Audited Preliminary Results For Th |
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2001
Liberty Group Limited
(Registration number 1957/002788/06)
JSE Share code: LGL ISIN: ZAE000024543
(Incorporated in the Republic of South Africa)
6000 minds one goal - build value!
Audited preliminary results for the year ended 31 December 2001
Highlights
- Embedded value per share of R54,21 up 23%
- Headline return on equity on continuing operations 25%
- Headline earnings per share on continuing operations up 14%
to 551,0 cents
- Final dividend of R1,50 per share on continuing operations up 15%
- Value of new business up 16%
- Indexed new business premiums up 11%
- Recurring new business premiums up 17%
- Total assets under management up 22% to R139 billion
Introduction
The Group has built on the groundwork of 1999 and 2000 by anticipating
market trends, adapting to the challenges at hand and by adhering to its
vision, cultural strengths and strategic plan. Liberty Group Limited's
(Liberty) overall results for 2001 are gratifying in the light of the year's
challenging environment. The willingness of Liberty's people to align their
thoughts and work with the clearly defined strategies of the Group is
encouraging. This is one of the compelling reasons why the Group has
redefined and enhanced its financial branding under the positioning
statement of 6 000 minds, one goal, build value!
As a result of the previous years' distributions to shareholders and
reduction of capital, together with the strong performance for 2001,
headline return on equity on continuing operations has increased to 25%,
return on embedded value improved to 26% and embedded value per share has
risen 23% to R54,21.
Headline return on equity
Dec 1997 13%
Dec 1998 13%
Dec 1999 Pre unbundling 11%
Dec 2000 Pre capital reduction 16%
Dec 2001 After capital reduction 25%
Results of operations
Earnings
The life fund operating surplus contributed 84,3% to headline earnings, with
contributions from financial services operations of 4,4%, income from listed
investments of 3,5% and income on other investments of 7,8% after allocating
shareholders' management expenses and taxation. These contributions reflect
the continued strong performance of the life fund, the sale of certain South
African Breweries (SAB) shares (with a resultant reduction in dividend
income) and the impact of losses incurred by Electric Liberty and Liberty
Healthcare on financial services operations.
Headline earnings from continuing operations increased by 14,0% from R1
314,3 million to R1 498,9 million. On a per-share basis, headline earnings
from continuing operations reflect an increase of 13,6% from 485,2 cents to
551,0 cents. Total earnings on continuing operations increased by R1 851,5
million from R578,0 million to R2 429,5 million.
Investment performance
The upturn in the JSE Securities Exchange during the last quarter, coupled
with Liberty Asset Management's (Libam) award-winning investment
performance, bolstered results. The total return on the JSE All-Share Index
was 29,1% in 2001, a strong turnaround from the -0,1% achieved in 2000. The
life fund equity portfolio returned 24,7% (2000: 5,2%), the bond portfolio
yielded 18,2% and the international assets portfolio returned 47,7%.
Eleven of the fourteen Liberty Unit Trust portfolios achieved first- or
second-quartile performance for the year and were awarded Raging Bull Awards
in January 2002. The sustained excellent investment performance earned Libam
the prestigious Raging Bull Plexus Award for Best Asset Management (on
behalf of Liberty Unit Trusts) over the last three years (1999, 2000 and
2001).
Most of the Liberty Ermitage funds reflect investment returns of more than
40% in rand terms and have significantly outperformed their benchmarks and
entrenched the intrinsic value of these hedge funds in volatile markets.
Financial services operations
The performance of the financial services operations is summarised in the
following table:
Group funds Group net Group
invested revenue investment
earned surpluses/
(deficits)
2001 2000 2001 2000 2001 2000
Rm Rm Rm Rm Rm Rm
Astute Financial Services Exchange - - (2) - (1) -
Liberty Asset Management 368 293 71 69 5 3
Liberty Collective Investments 90 69 26 16 5 (1)
Liberty Ermitage Jersey 428 257 12 1 147 (2)
Liberty Group Properties 24 5 18 12 - -
Liberty Healthcare (5) 25 (13) (3) - -
Liberty Specialised Investments 29 12 18 10 - -
Lodestone Investments 9 - (1) - - -
Electric Liberty 4 14 (51) (25) - -
Oracle Employee Benefits - (2) 1 1 - -
Simeka Financial Services 1 - - - - -
Total 948 673 79 81 156 -
The Liberty Ermitage Group contributed R11,5 million to headline earnings
for the year (2000: R1,4 million) due to solid operational offshore earnings
enhanced by the conversion from pound sterling to rand. Investment surpluses
on invested shareholders' funds not included in headline earnings amounted
to R146,5 million for the year, compared with a deficit of R2,4 million for
2000.
Electric Liberty's operating loss increased from R25,5 million to R50,8
million, including an amortisation and an asset impairment charge of R20,8
million. As previously announced, Electric Liberty has been restructured to
focus on the Group's web development and MyLife's leads generating engine is
now integrated into the liberty.co.za site. Operating costs are now
contained to R1 million per month.
Liberty Healthcare incurred a loss of R12,7 million, compared with a loss
of R2,6 million for 2000. The principal membership base increased by 73,3%
(18 870 at 31 December 2000 to 32 704 at 31 December 2001) and
has increased further since year end to 36 343, virtually doubling the
membership base since 31 December 2000.
Life fund operating surplus
The life fund operating surplus increased by 14,5% from R1 152,5 million
to
R1 319,7 million. The positive effect that the better-than-expected
investment returns had on the life fund operating surplus (due to
shareholders' sharing in 10% of policyholders' capital bonuses on certain
classes of business) was offset by marginally higher expenses than assumed
in the actuarial valuation, as well as lower mortality profits in 2001 from
Corporate Benefits compared to the exceptional level achieved in 2000.
New business production
Analysis of insurance new business for the Group:
Recurring Single Total
premiums premiums premiums
2001 2000 2001 2000 2001 2000 %
Rm Rm Rm Rm Rm Rm Change
Individual business 1 834 1 578 6 415 5 590 8 249 7 168 15
Corporate business 346 292 1 224 2 166 1 570 2 458 (36)
Total new business 2 180 1 870 7 639 7 756 9 819 9 626 2
Change 17% (2)%
New business index 2 944 2 646 11
Total new bancassurance premiums of R1 661,4 million included in total new
business premiums above reflects an increase of 6,8% on the R1 556,0 million
achieved in 2000.
New business by distribution channel - 2001
- Agency: 33%
- Franchise: 7%
- Broker: 43%
- Bancassurance: 17%
Sales of non-insurance products showed a significant increase with Liberty
Specialised Investments' new business up by 88,1% and Liberty Unit Trusts'
new business up by 60,6%.
Market share
The compound annual growth rate from 1998 to 2001 of Liberty's market share
of new individual recurring-premium business was 13,3% and for total
corporate new business it was 23,4%.
LOA* Market share statistics
Liberty's share of individual business all offices
Recurring Individual
Jun 1999 11%
Jun 2000 15%
Jun 2001 17%
Single Individual
Jun 1999 13%
Jun 2000 11%
Jun 2001 14%
Shareholders' funds
Shareholders' funds increased by R2 193,4 million from the proforma R6
152,4 million after capital reduction and leave pay restatements to R8 345,8
million. This 35,6% increase is largely due to investment surpluses
attributable to shareholders' funds of R1 102,3 million compared with
investment deficits of R782,1 million for 2000.
The holding of listed investments was reduced from R2 446,3 million to R1
526,3 million following the sale of 25,8 million SAB shares, the proceeds of
which were used partly to fund the capital reduction. The market value of
SAB
shares held at year-end of R934,8 million was R1 173,9 million less than at
31 December 2000. Of the number of shares held at the end of 2000, 68,5% was
sold during 2001. The remaining investment in SAB now represents 11,2% of
shareholder funds compared with the 34,4% proforma after capital reduction
at 31 December 2000.
The value of the Liblife International B.V. convertible bond liability
increased by 57,3% from R1 827,3 million to R2 874,2 million due to the
rand's depreciation. This, however, was matched in foreign currency offshore
deposits, which translate to R2 993,0 million.
The income statement includes a capital gains tax (CGT) charge of R143
million on gains on listed shareholders' investments.
Value of new business
The total value of new business for the year of R454,8 million, after
deducting the amount attributable to the Stanbic joint venture and including
an allowance for CGT for the first time, is 16,4% higher than the R390,6
million calculated for 2000.
The new business margin for 2001 of 18,5% improved against the margin at 31
December 2000 of 17,6%, notwithstanding the absorption of the effect of CGT
in the current year.
Embedded value
The total embedded value of R14 767,4 million at year-end has risen by
23,7% on the value of R11 941,1 million at the end of 2000. This gain
amounts to an increase in embedded value per share of 23,3%, from R43,95 to
R54,21 per share.
Shareholders' funds increased substantially and the fair value adjustment
made to financial services subsidiaries increased by 31,5% from R996,3
million to R1 309,7 million, reflecting increases in their respective
headline earnings.
The value of in-force business calculated at year-end increased by 6,0% from
R4 822,0 million to R5 111,9 million. The impact of CGT since implementation
on
1 October 2001 on embedded value is R152,7 million.
Positive net insurance cash flow
Net cash flow from insurance operations for the Group (net premium inflow
less claims and policyholder benefits) was positive at R2 930,6 million
compared with
R3 378,5 million for 2000.
Net cash flow from insurance operations
Rm
1997 102
1998 (633)
1999 1 622
2000 3 378
2001 2 930
Claims and policyholders' benefits increased by 10% from R10 188,8 million
to R11 191,6 million. Total net premium income increased by 4% from R13
567,3 million to R14 122,2 million.
Capital adequacy cover multiple
The capital adequacy requirement for the Group increased from R1 693,2
million to R2 391,3 million. The Group's capital adequacy multiple decreased
slightly from 3,6 times (after adjusting for the capital reduction) to 3,5
times.
Formation of STANLIB Limited
On 26 February 2002, after several months of analysis and consideration,
Standard Bank Investment Corporation Limited (Stanbic) and Liberty announced
the intended formation of STANLIB Limited (STANLIB).
Stanbic and Liberty, subject to the official approvals required under the
Competition Act, 1998, are to form a 50:50 wealth management holding
company, STANLIB. The new wealth management group will consist of the
combined and highly complementary domestic and African asset management,
unit trust, linked product and investment marketing businesses of Stanbic
and Liberty.
The new venture, to be rolled out in the first half of 2002, will offer
several benefits by:
* providing access to the combined comprehensive financial products
distribution network of Standard Bank and Liberty;
* drawing on the powerful brand names and proven financial services
expertise of two of South Africa's leading corporations;
* harnessing the actuarial, banking and asset management expertise of both
parties to innovate appropriate new products to meet changing market needs;
* further developing the marketing advantage of Liberty's strong relative
investment performance; and
* pooling and leveraging the business development and technical investment
skills of the two parties to unleash a far more powerful synergy to benefit
a growing customer base.
Key to the venture, Stanbic will pay Liberty R134 million to equalise the
relative contributions of net assets to the new business entity. Before
implementing the transaction, Liberty will receive a distribution from Libam
of R323 million. This amount represents the assets of Libam excluded from
the transaction.
STANLIB is destined to become a formidable trendsetter in the South African
financial services market. It will have one of the country's leading
distribution networks. Its combined funds under management will have a value
of about R135 billion and a further R13 billion in funds will be under
administration. Funds of this magnitude create favourable economies of
scale. The unit trust business will be the largest in South Africa in terms
of gross sales. In addition, client overlap between investment portfolios is
limited. Major new growth is expected from STANLIB which will benefit both
Stanbic and Liberty in the ensuing decade.
The existing bancassurance contract is also to be extended to 2012 and its
terms revised. In addition, Liberty will sign an agreement with Stanbic
through which Liberty will manage Standard Bank Financial Consultancy
(Stanfin), Standard Bank's established network of consultants and
intermediaries.
Prospects
Key goals for 2002 have been set for further business growth and
improvement. The life fund operating surplus, however, remains dependent on
the performance of local and international equity and bond markets.
Dividend
Notice is hereby given that final ordinary dividend No. 72 of 150,0 cents
per share has been declared in respect of the year ended 31 December 2001.
This represents an increase of 15% on the notional final dividend (on
continuing operations) declared in 2000. The 2000 notional final dividend of
150,0 cents per share comprised 130,8 cents relating to continuing
operations and 19,2 cents relating to earnings attributable to the capital
reduction. A dividend cover of 2 times on headline earnings per share on
continuing operations has been maintained.
The important dates pertaining to this dividend are:
Last day to trade cum dividend on the JSE
and LSE Wednesday, 20 March 2002
First trading day ex dividend on the LSE Thursday, 21 March 2002
First trading day ex dividend on the JSE Friday, 22 March 2002
Record date Thursday, 28 March 2002
Payment date Tuesday, 2 April 2002
Share certificates may not be dematerialised or rematerialised between
Thursday, 14 March 2002 and Thursday, 28 March 2002, both days inclusive.
Payment in respect of dividends issued by the United Kingdom transfer
secretaries will be converted from rand to the sterling equivalent on
Tuesday, 2 April 2002.
Where applicable, dividends in respect of certificated shareholders will be
transferred electronically to shareholders' bank accounts on or about
payment date. In the absence of specific mandates, dividend cheques will be
posted to shareholders. Shareholders who have dematerialised their share
certificates will have their bank accounts, which are linked to their CSDP
or broker's safe custody accounts, credited on Tuesday, 2 April 2002.
Derek Cooper Roy Andersen
Chairman Group Chief Executive
5 March 2002
Summarised group balance sheet 31 December
2001 2000
Rm Rm
Assets
Investments 85 617 71 564
Goodwill 113 123
Intangible assets 70 58
Office furniture, computer equipment and other
tangible assets 372 310
Deferred tax - 63
Current assets 3 229 3 848
Total assets 89 401 75 966
Capital, reserves and liabilities
Shareholders' funds 8 346 9 616(1)
Minority interests 1 1
Life funds 75 918 62 138
Convertible bonds 2 874 1 827
Retirement benefit obligation 135 114
Deferred tax 119 -
Current liabilities 2 008 2 270
Total capital, reserves and liabilities 89 401 75 966
Total assets under management 139 014 113 695
Capital adequacy requirement 2 391 1 693
Capital adequacy multiple (times covered) 3,5 5,7(2)
(1)Pre capital reduction of R3 493 million paid on 4 April 2001.
(2)Proforma multiple after adjusting for capital reduction was 3,6.
Summarised group Continuing Capital
income statement operations reduction(1)
2001 2000 % 2001 2000
Rm Rm Change Rm Rm
Life fund operating surplus 1 320 1 153 14
Revenue earnings attributable to
shareholders' funds 222 202 10 47 196
Preference dividend in
subsidiary company (43) (40) 7
Headline earnings 1 499 1 315 14 47 196
Goodwill amortisation (16) (7) 143
Investment surpluses/(deficits)
attributable to
shareholders' funds 1 089 (730) 249 13 (52)
Capital gains tax attributable
to shareholders' investment
surpluses/(deficits) (143)
Secondary tax on companies
relating to capital reduction (233)
Total earnings 2 429 578 320 (173) 144
Per share details
Headline earnings per share
Basic (cents) 551,0 485,2 14 17,3 72,6
Fully diluted (cents) 539,7 478,3 13 15,9 67,5
Total earnings per share
Basic (cents) 893,1 213,4 319 (63,5) 53,3
Fully diluted (cents) 853,6 225,4 279 (58,3) 49,6
Dividends per share
Interim (cents) 128,0 112,0 14 21,0
Final-2000: notional (cents) 150,0 130,8 15 19,2
Weighted average number of ordinary
shares in issue (millions) 272,0 270,9 - 272,0 270,9
Number of ordinary shares in
issue (millions) 272,4 271,7 - 272,4 271,7
Fully diluted weighted average
number of ordinary shares
in issue (millions) 296,4 291,2 2 296,4 291,2
Total operations
2001 2000
Rm Rm
Life fund operating surplus 1 320 1 153
Revenue earnings attributable to shareholders' funds 269 398
Preference dividend in subsidiary company (43) (40)
Headline earnings 1 546 1 511
Goodwill amortisation (16) (7)
Investment surpluses/(deficits) attributable
to shareholders' funds 1 102 (782)
Capital gains tax attributable to shareholders'
investment surpluses/(deficits) (143)
Secondary tax on companies relating to
capital reduction (233)
Total earnings 2 256 722
Per share details
Headline earnings per share
Basic (cents 568,3 557,8
Fully diluted (cents) 555,6 545,8
Total earnings per share
Basic (cents) 829,6 266,7
Fully diluted (cents) 795,3 275,0
Dividends per share
Interim (cents) 128,0 133,0
Final-2000: notional (cents) 150,0 150,0
Weighted average number of ordinary
shares in issue (millions) 272,0 270,9
Number of ordinary shares
in issue (millions) 272,4 271,7
Fully diluted weighted average
number of ordinary shares
in issue (millions) 296,4 291,2
The proforma earnings attributable to the capital reduction for the year
ended 31 December 2000 represent the earnings (for twelve months) on
shareholders' assets that were utilised to fund the capital reduction
on 4 April 2001. The proforma earnings shown for the year ended
31 Decemeber 2001 represent the earnings (for three months)
determined as defined above up to 4 April 2001.
31 December
Statement of changes 2001 2000
in shareholders' funds Rm Rm
Shareholders' funds at beginning of year as
previously published 6 152 9 172
Changes in accounting policies
Capital reduction of 1 200 cents - LDR 30 March 2001 3 260
Secondary tax on companies relating to the
capital reduction 233
1999 final dividend No. 68 of 140 cents
- LDR 31 March 2000 378
Secondary tax on companies relating to the
1999 final dividend 35
Provision for leave pay net of deferred tax (29) (32)
Shareholders' funds restated at beginning of year 9 616 9 553
Total earnings (2000 restated for changes in
accounting policies) 2 257 722
Total earnings as previously published 521
Changes in accounting policies
Secondary tax on companies relating to capital reduction 233
Secondary tax on companies relating to the
1999 final dividend (35)
Provision for leave pay net of deferred tax 3
Ordinary dividends (348) (738)
1999 final dividend No. 68 of 140 cents
- LDR 31 March 2000 (378)
2000 interim dividend No. 69 of 133 cents
- LDR 1 September 2000 (360)
2001 interim dividend No. 71 of 128 cents
- LDR 24 August 2001 (348)
Capital reduction of 1 200 cents - LDR 30 March 2001 (3 260)
Exchange difference relating to equity component of
the convertible bonds 54 19
Subscriptions for shares 27 60
Shareholders' funds at end of year 8 346 9 616(1)
(1) Pre capital reduction of R3 493 million paid on 4 April 2001.
31 December
Summarised group 2001 2000
cash flow statement Rm Rm
Cash flow from operating activities (873) 3 902
Net purchase of investments (25) (3 350)
Cash flow from financing activities 116 126
Net (decrease)/increase in cash and cash equivalents (782) 678
Cash and cash equivalents at beginning of year 1 424 734
Cash balances of subsidiary acquired - 10
Foreign exchange movements on cash balances 270 2
Cash and cash equivalents at end of year 912 1 424
31 December
Commitments 2001 2000
Rm Rm
Capital commitments 41 127
Under contracts 25 101
Authorised by the directors but not contracted 16 26
Operating lease commitments 32 9
Total 73 136
31 December
Group embedded value 2001 2000 %
and value of new business Rm Rm Change
Risk discount rate 13,75% 15,00%
Shareholders' net assets 8 346 9 616(1)
Capital reduction including secondary
tax on companies (3 493)
Shareholders' net assets after capital reduction 8 346 6 123 36
Net value of life business in force 5 112 4 822 6
Value of life business in force 5 235 4 832
Cost of solvency capital (123) (10)
Financial services subsidiaries at fair value 1 310 996 32
Embedded value 14 768 11 941 24
Embedded value per share R54,21 R43,95 23
(1) Pre capital reduction of R3 493 million paid on 4 April 2001.
Value of new business 31 December
and new business margins 2001 2000 %
Rm Rm Change
Value of new business written during the year 455 391 16
New single premiums 7 639 7 756 (2)
New recurring premiums net of natural increases 1 700 1 441 18
Indexed new business premiums net of
natural increases 2 465 2 217 11
Value of new business as a percentage
of indexed new business 18,5% 17,6%
31 December
Embedded value profits 2001 2000
Rm Rm
Embedded value at end of year 14 768 11 941
Less (capital raised)/plus capital reduction (28) 3 200
Plus dividends declared 348 739
Less embedded value at beginning of year (11 941) (14 274)
Embedded value profits 3 147 1 606
Return on shareholders' net assets 51,4% 16,8%
Return on embedded value 26,4% 11,3%
31 December
Analysis of embedded value profits 2001 2000
Rm Rm
Investment return on shareholders' net assets 1 224 (377)
Expected return on value of life business 752 771
Investment experience variations on life business 681 (76)
Other experience variations 27 46
Changes in assumptions (79) 144
Variation in tax (152) 127
Value of new business 455 391
Allowance for current and future
secondary tax on companies (134) (151)
Change in modelling methodology 60 (33)
Net financial services subsidiaries fair
value adjustment 313 764
Embedded value profits 3 147 1 606
31 December
Bases and assumptions 2001 2000
The principal bases and assumptions used are:
(i) Future investment returns on the major
classes were set with reference to the
market yield on medium-term
South African Government stock.
The investment returns per annum used are:
Government stock return 11,75% 13,00%
Equities 13,75% 15,00%
Property 12,75% 14,00%
(ii) The risk discount rate has been set equal
to the investment return on equity assets 13,75% 15,00%
(iii) Maintenance expense inflation rate 7,90% 9,05%
(iv) The expected return on value of life business is obtained by applying
the previous year's discount rate to the value of life business in force at
the beginning of the year and the current year's discount rate for half a
year to the value of new business.
(v) Tax has been allowed for on the Four Fund Tax basis with tax rates of
30%. Full tax relief on expenses to the extent permitted has been assumed.
CGT, introduced with effect from 1 October 2001, has been taken into account
in the embedded value at 31 December 2001.The effect of the introduction of
CGT was a reduction in value of R153 million which has been shown in
variation in tax in the analysis of embedded value profits.
(vi) Other bases, bonus rates and assumptions:
In general, parameters reflect best estimates of future experience,
consistent with the Financial Soundness Valuation basis used by the
Statutory Actuary, excluding any first- or second-tier margins. However, in
contrast to the valuation basis assumption, the embedded value does make
allowance for automatic premium and benefit increases.
(vii) Basis of calculation of financial services subsidiaries fair value
adjustment:
In general, to obtain the fair value in excess of the tangible net assets, a
price earnings ratio multiplier was applied to the net after tax recurring
earnings of the subsidiary derived from normal trading operations. In the
case of Liberty Asset Management, Liberty Specialised Investments and
Liberty Collective Investments, the fair value attributed to the companies
as part of the creation of STANLIB has been used at 31 December 2001.
Individual Corporate
Net cash flow business business
from insurance operations 2001 2000 2001 2000
Rm Rm Rm Rm
Total premium income 11 299 9 994 2 823 3 573
Single premiums 6 417 5 623 1 225 2 167
Recurring premiums 4 882 4 371 1 598 1 406
Total claims and
policyholders' benefits (8 634) (7 409) (2 558) (2 780)
Net premium/(benefit) cash flow 2 665 2 585 265 793
Total
2001 2000 %
Rm Rm Change
Total premium income 14 122 13 567 4
Single premiums 7 642 7 790 (2)
Recurring premiums 6 480 5 777 12
Total claims and policyholders' benefits (11 192) (10 189) 10
Net premium/(benefit) cash flow 2 930 3 378 (13)
Accounting policies and presentation
The accounting policies adopted by the Company and the Group comply, in
all material respects, with South African Statements of Generally Accepted
Accounting Practice as well as the South African Companies Act, 1973, and
the Long-term Insurance Act, 1998. The consolidated financial statements are
prepared on the historical-cost basis, modified by the revaluation of
investment properties, owner-occupied properties and financial instruments
to fair value.
These accounting policies are consistent with those applied at 31 December
2000 except for:
* the adoption of the new accounting statement on Events After The Balance
Sheet Date (AC 107). In terms of this statement, dividends proposed or
declared after the balance sheet date and related secondary tax on companies
are not recognised as a liability at the balance sheet date. This change in
the recognition of liabilities relating to dividends has been applied
retrospectively and comparative figures as well as opening retained earnings
in respect of 2000 have been restated. The capital reduction which was paid
on 4 April 2001 has also been accounted for as a first half 2001 transaction
in accordance with the new accounting statement;
* the adoption of the revised accounting statement on Employee Benefits (AC
116) in terms of which leave pay provisions have been recognised in respect
of past service of employees. This change has been applied retrospectively
and comparative figures as well as opening retained earnings in respect of
2000 have been restated.
The income statements reflect earnings from continuing operations separately
from proforma earnings attributable to the capital reduction in order to
make comparison of results more meaningful.
Achievements against strategic objectives
* Redeploy shareholder investments into financial services - partly achieved
- Capital reduction of R12,00 per share amounting to R3,5 billion completed
on
4 April 2001.
- 25,8 million South African Breweries shares sold during 2001 reducing
previously overweight position.
- STANLIB transaction announced - merger of asset management, unit trust,
linked product and investment marketing businesses.
* Individual business - leverage the strong position in the upper income
market
- achieved
- Indexed new business sales of Liberty Personal Benefits up 18%.
- Market share of individual recurring premiums increased from 11% in 1999
to 17% in 2001.
- Market share of individual single premiums increased from 13% in 1999 to
15%
in 2001.
- Successful product launches in 2001, including United Kingdom Property
Bond,
Global Capital Bond and freestanding dread disease products.
* Implement customer value management programme - achieved
- First-wave results of pilot phase delivered enhanced production.
* Expand Liberty Corporate Benefits' business - achieved
- New recurring business sales of Liberty Corporate Benefits up 18% to
R346 million.
- 966 new funds taken on in 2001.
* Drive continued growth in bancassurance - achieved
- Total new business premiums up 7% to R1,7 billion.
- Bancassurance agreement renegotiated and extended to 2012.
- Stanfin to be managed by Liberty as part of STANLIB transaction.
* Provide private banking services to clients
- Being developed by Standard Bank with support from Liberty.
* Achieve further synergies with Standard Bank - achieved
- STANLIB transaction announced - merger of asset management, unit trust,
linked product and investment marketing businesses.
- Lodestone new business flows have commenced.
* Establish an empowerment partnership - achieved
- Simeka Financial Services launched in 2001.
- Oracle Employee Benefits sold to Simeka with effect from 1 October 2001.
* Leverage Liberty Ermitage for international expansion - achieved
- Liberty Ermitage assets under management increased by 10% to US$2,2
billion.
- Liberty Ermitage funds launched in South Africa with sales of R793
million.
- Infrastructure and human capital in place for growth in 2002.
- Prestigious award received by Liberty Ermitage as Runner Up - Global
Investor Award for Excellence 2001.
Transfer secretaries - South Africa
Mercantile Registrars Limited, 10th Floor,
11 Diagonal Street, Johannesburg, 2001.
PO Box 1053, Johannesburg, 2000.
Telephone (011) 370-5000
Transfer secretaries - United Kingdom
Capita IRG plc, Bourne House,
34 Beckenham Road, Beckenham,
Kent BR34TU.
Telephone (0208) 639-2000
These results and an overview of the Liberty group are available at
www.liberty.co.za.
Liberty's presentation to the Investments Analysts' Society of Southern
Africa will similarly be available on 6 March 2002.
