LIBERTY HOLDINGS LIMITED - Operational Update for the Ten Months Ended 31 October 2012

Operational Update for the Ten Months Ended 31 October 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 TEN MONTHS ENDED 31 OCTOBER 2012

Group operating performance

The operating performance for the ten months to 31 October 2012 reflects continued positive momentum
in the Retail SA business, sustained long-term improvement in asset management investment returns
and a better operational performance from the rest of the group. Returns on the shareholder’s investment
portfolio are in line with the positive investment markets experienced during the period.

Key features:

    •    Long-term insurance indexed new business (excluding premium escalations) increased by 16%
         to R4.8 billion for the period.

    •    Net customer cash inflows of R21 billion reflect a significant improvement on the R1 billion for the
         corresponding 2011 period.

    •    Total group assets under management increased to R514 billion from R455 billion at 31
         December 2011.

    •    The shareholder investment portfolio continues to benefit from the favourable financial markets
         experienced during 2012.

The capital adequacy level of Liberty Group Limited, the entity which conducts the bulk of the company's
insurance activities, was 2.9 times at 31 October 2012. This includes the redemption of the R2 billion
subordinated debt in September and new debt issuances totalling R2 billion. All the other life license
subsidiaries remain well capitalised.

Retail SA

Retail SA remains focussed on growth in both the traditional and emerging consumer markets.

Retail SA indexed new business was up 19% for the period, with recurring new business up 23% to
R3 billion and single premium new business up 12% to just under R12 billion. Higher risk business sales,
and strong guaranteed investment plan and annuity business have supported this growth.

ECM indexed new business is 54% higher on the back of improved productivity and distribution capacity.

Retail SA net cash inflows of R4.4 billion demonstrate both good single premium business growth from
sales of the guaranteed investment plan and flexible annuity products, as well as lower than expected
claims and withdrawals due to the ongoing successful retention programme. The improvements achieved
in policyholder persistency are being sustained and expense management remains good.

LibFin

LibFin Investments continue to manage the shareholder investment portfolio within mandate with returns
for the ten months ahead of benchmark.
Libfin Markets continue to manage market risk exposures in a narrow range and within expectation but
results were impacted slightly negatively by interest rate volatility following interest rate cuts in July.

Institutional and Asset Management

Corporate
Management’s action plan to address historical systems and administrative concerns is proving
successful and the number of uneconomic stand-alone funds under administration has been reduced
significantly. Operational performance has benefitted from the risk claims experience which has improved
compared to the prior period.

Corporate indexed new business declined by 10% to R471 million, mainly as a result of lower single
premium business, with recurring premium business down by 4% to R409 million.

Corporate cash outflows were R2.3 billion and included the loss of a single investment mandate of R1.4
million in the first half of the year.

STANLIB
Assets under management at 31 October 2012 increased to R423 billion compared to R368 billion
(restated to include the on-balance sheet property portfolio) at 31 December 2011, reflecting continued
strong retail non money market inflows and institutional money market inflows. Underlying asset values
have also benefitted from the positive growth in investment markets.

STANLIB’S new operating model is delivering sustained improvements in investment performance over
the longer periods in most of the investment franchises.

Liberty Properties
Liberty Properties, which constitutes property management and development, has continued to benefit
from growth in property management fees and higher rentals from additions to rental areas at the flagship
shopping centres. However, delays are being experienced in finalising development mandates, which
have negatively impacted development fee income for the period.

Fountainhead
Liberty Holdings and Standard Bank finalised the sale of their respective interests in Fountainhead
Property Trust Management Limited and Evening Star Trading 768 (Pty) Limited to Redefine Properties
Limited during August 2012. Liberty Holdings after tax profit share (treated as non-headline earnings)
from the transaction was R117 million.

Diversification Initiatives

Liberty Africa
Long-term insurance indexed new business increased by 51%, with long-term insurance net cash inflows
reflecting growth of 70% for the period. Assets under management increased marginally to R40 billion
from R39 billion at 31 December 2011, representing investment market growth offset by the anticipated
partial withdrawal of funds from one sovereign client. The East African operations have benefited from
improved market conditions in the region resulting in better investment performance.

Liberty Health
Growth in the Liberty Medical Scheme membership and improved lapse rates in South Africa, together
with growth in health risk lives and a continued improvement in the medical risk loss ratio in Africa during
the period, are translating into a better operational performance.

Direct Financial Services
Management continues to focus its efforts on bedding down the Vodacom South Africa and Standard
Bank Direct affinities. Both affinities are performing to plan and have the expected associated start up
costs. To support the ongoing growth in this business several new management appointments have
recently been made.

Conclusion

Considerable value has been added through an improved operational performance over the last two
years. Growth in Retail insurance sales, significantly better lapse rates, effectiveness of balance sheet
management, the improvement in investment performance, delivery of the corporate remediation plan, as
well as good progress in the diversification initiatives are beginning to bear fruit. Management will
continue to aggressively focus on executing strategy and delivering key objectives to create additional
value for shareholders.

All of the countries in which we operate will continue to be challenged by the uncertain global economic
environment, in addition, each country faces its own unique internal challenges. However, we will
continue developing products and providing risk and investment solutions that address and respond to
consumer needs.

The operational update for the ten months ended 31 October 2012 has not been audited or reviewed by
the Company's auditors.

29 November 2012
Sponsor
Merrill Lynch South Africa (Pty) Limited

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