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LBH - Liberty Holdings Limited - Operational update for the three months ended

Release Date: 18/05/2012 07:10
Code(s): LBH
Wrap Text

LBH - Liberty Holdings Limited - Operational update for the three months ended 31 March 2012 Liberty Holdings Limited Registration number 1968/002095/06 Incorporated in the Republic of South Africa Share code: LBH ISIN code: ZAE0000127148 ("Liberty Holdings" or "the Company") LIBERTY HOLDINGS LIMITED OPERATIONAL UPDATE FOR THE THREE MONTHS ENDED 31 MARCH 2012 Group operating performance The results of the first quarter of 2012 reflect continued strong growth in Retail SA new business, positive client net cash inflows in both asset management and insurance operations, and a good operational performance across the group. Returns on our shareholder investment portfolio were supported by the positive investment markets. In summary: Long-term insurance indexed new business (excluding premium escalations) was up 22% to R1 283m for the period. Insurance net cash inflows of R819m are substantially higher compared to the corresponding 2011 period of R296m. Total group assets under management increased to R469bn from R455bn at 31 December 2011. The shareholder investment portfolio reflected the performance of favourable financial markets during the quarter. The capital adequacy level of Liberty Group Limited, the entity which conducts the bulk of the company`s insurance activities, remains strong at 2.81 times the required cover (31 December 2011: 2.89) after the payment of R750m to support Liberty Holdings 2011 final dividend distributions paid in March and April 2012. All the other life license subsidiaries remain well capitalised. Retail SA Retail SA continues to deliver on its strategy in both the traditional and emerging consumer (ECM) markets. Retail SA indexed new business was up 24%, with recurring new business up 20% to R810m and single premium new business up 36% to R3 277m. The overall increase in indexed new business was driven mainly by strong guaranteed investment, annuity and risk business sales in the traditional and ECM markets as well as good growth in credit life sales under the Standard Bank bancassurance agreement. ECM indexed new business was up 54% off a low base. Retail SA net cash inflows of R1 163m were up over 100% on the corresponding 2011 period of R457m driven by continued strong single premium business. LibFin LibFin continues to manage the shareholder investment portfolio within mandate and returns for the first quarter were in line with benchmark. LibFin Markets benefited from lower investment market volatility during the quarter. Institutional and Asset Management Corporate Significant action to accelerate efforts to address historical systems and administrative concerns has affected operating results. However, good progress has been made and management is comfortable that the actions taken will have the desired outcome. Corporate indexed new business was down 15% to R 106m mainly as a result of lower single premium business. Corporate cash outflows increased to R488m in this quarter from R186m in 2011 due to the loss of certain scheme investment mandates, the acceleration of the backlog administration project as well as lower single premium sales. STANLIB Assets under management for the period increased to R353bn compared to R341bn at 31 December 2011, reflecting a further R3.5bn in net inflows (excluding intercompany life assets), as well as the increase in underlying asset values resulting from market growth. Client net Inflows included R1.7bn in respect of retail and institutional funds (excluding money market) and R1.8bn into the money market products. Investment performance continued to improve during the period. Liberty Properties Liberty Properties, which now constitutes property management and development, has benefited from growth in property management fees supported by the recent increases to rental areas at the flagship shopping centres. However, delays in development mandates have resulted in reduced development fee income. Fountainhead Liberty Holdings has entered into agreements to sell its 50% joint venture interests in Fountainhead Property Trust Management Limited and Evening Star Trading 768 (Pty) Limited to Redefine Properties Limited for R330 million. The current IFRS book value at 31 March 2012 of these interests is R203 million. The sale is subject to regulatory approvals. Diversification Initiatives Liberty Africa Net customer cash inflows in the asset management business amounted to R350m for the period with assets under management remaining static at R39bn during the period. The East African operations have benefited from the partial recovery of investment markets in the region. Liberty Health Operational efficiencies continue to be enhanced under the new management team and the medical risk loss ratio improved during the period. Direct Financial Services (incorporating FRANK.NET) The recently launched transactional initiative with Retail SA and Standard Bank utilising the FRANK.NET technology platform is performing to expectation. In addition, Vodacom South Africa has appointed FRANK.NET as its partner in its new long-term insurance initiative. Conclusion Management`s focus remains on ensuring that the core South African insurance operations are managed within acceptable sustainable long-term assumption sets, whilst gaining profitable market share in all business lines and markets in which we operate. The leveraging of our group capabilities and the execution of our previously communicated strategy remains the key priority for management. The operational update for the three months ended 31 March 2012 has not been audited or reviewed by the Company`s auditors. 18 May 2012 Sponsor Merrill Lynch South Africa (Pty) Limited Date: 18/05/2012 07:10:04 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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