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Liberty Group Limited - Restructuring and integration presentation to analysts
LIBERTY GROUP LIMITED
("Liberty Life")
Registration number 1957/002788/06
Alpha Code LGL
Issuer Code LIBU
ISIN Code ZAE000057360
Incorporated in the Republic of South Africa
Restructuring and integration presentation to analysts
Liberty Life will make a presentation to analysts today at 14h30, on the
progress of the Liberty Group"s restructuring and integration activities. The
presentation and full webcast, will be available on the Liberty Life website
www.liberty.co.za.
Liberty Life decided on a restructuring of its business into Marketing and
Distribution, Operations, Asset Management and Group Support Services divisions
earlier this year. The acquisition of Capital Alliance (CAHL) has enabled the
group to progress the restructuring process faster than on a standalone basis.
Progress on the restructuring of Liberty Life and the integration of CAHL are in
line with management"s expectations. Liberty Life is therefore in a position to
update investors on the estimated financial implications of the restructuring
and integration.
Improved operational efficiency, lower unit costs, better customer service and
lower operational risk are some of the key anticipated benefits from the new
structure. Liberty Life believes the consolidated entity will be better
positioned for growth in the South African market.
The salient financial features of the presentation are as follows:
The reduction in the cost base after the successful completion of the
restructuring and integration activities (planned to be complete by 2008) is
estimated to be around R300 million (before tax) per annum. The capitalised
effect of these savings is estimated at around R1 billion (after tax);
Restructuring and integration costs of the group are estimated to be around R500
million (before tax) over the next three to four years;
Approximately 70% of these costs would be incurred regardless of the CAHL
acquisition as they relate to the planned restructuring of the group and the
consolidation onto a single IT platform;
The goodwill impairment (cost of control) on acquisition of CAHL amounted to
R312 million as disclosed in the Liberty Group Limited interim financial
statements published in August this year;
The potential net embedded value enhancement as a result of the successful
completion of the restructuring and integration activities is set out below:
Estimated embedded value enhancement Rm
Capitalised effect of reducing cost base by R300m 1 000
Integration costs net of tax -324
Net embedded value enhancement 676
Potential net embedded value enhancement per share (BEE normalised) R2,00 to
R2,50
Note:
The value of CAHL new business is not taken into account in the calculation.
No attempt has been made to place values on operational efficiency, improved
customer servicing, the ability to bring product to market faster and a lower
operational risk environment.
General trading environment
The environment has been characterised by both positive and negative factors. On
the positive side, South African equity markets have performed strongly for the
year to date, while on the negative side the uncertainty regarding continued
Pension Fund Adjudicator rulings against the industry continues. Liberty Life,
along with the rest of the industry, is working towards a solution for the way
forward.
The results for the nine months ended 30 September 2005 reflect similar trends
as for the half-year ended 30 June 2005 on a like for like basis:
New business growth remained firm (up 15% on an indexed basis).
The new business embedded value margin was maintained within the medium-term
target range of 18% to 22%.
Net cash inflows from insurance operations remained strong at R4 434 million
compared with R2 184 million in 2004.
Stanlib"s net cash flows amounted to R10.4bn compared to the 9.7bn in the
previous 9 month period.
Total group management expenses increased in line with actuarial assumptions.
The information contained in this announcement has been estimated and is based
on actuarial projections and assumptions. It has also not been audited or
reviewed by the company"s auditors.
Shareholders will be kept informed on progress regarding these initiatives as
part of future results announcements and presentations.
Date: 23 November 2005
SPONSOR
Merrill Lynch South Africa (Proprietary) Limited
For information purposes:
Conference Call & Webcast details
Date: Wednesday 23 November 2005
Time: 14:30 PM (GMT +2:00)
Access Numbers: Original Call
South Africa Toll-free 0800 200 648
Toll 011 535 3600
USA Toll-free 1 866 752 6302
UK Toll-free 0800 917 7042
Date: 23/11/2005 02:11:08 PM Produced by the JSE SENS Department
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