Wrap Text
Financial Results for the six months ended 30 June 2013
Liberty Holdings Limited
Incorporated in the Republic of South Africa
(Registration number: 1968/002095/06)
JSE code: LBH
ISIN code: ZAE0000127148
Liberty Holdings Limited
Financial results
For the six months ended 30 June 2013
Highlights
BEE normalised operating earnings
up 31%
BEE normalised return on equity
22%
return on BEE normalised group equity value
13%
value of long-term insurance new business
up 32%
retail long-term insurance new business margin
2,1%
long-term insurance indexed new business
up 12%
customer net cash inflows
R11 billion
Interim dividend
up 10%
Liberty Group Limited CAR cover
2,75 times
Financial performance indicators
for the six months ended 30 June 2013
30 June 30 June % 31 Dec
2013 2012 change 2012
Liberty Holdings Limited
Earnings (1)
Basic earnings per share (cents) 648,8 611,9 6,0 1 433,6
BEE normalised headline earnings per share (cents) 602,7 568,8 6,0 1 300,1
BEE normalised operating earnings (Rm) 1 048 801 30,8 1 723
BEE normalised return on equity (%) 21,8 22,3 (2,2) 24,0
Group equity value
BEE normalised group equity value per share (R) 117,16 104,31 12,3 115,43
BEE normalised return on group equity value (%) 13,0 15,6 (16,7) 20,8
Distributions per share (cents)
Normal dividend 212 192 10,4 528
Interim dividend 212 192 10,4 192
Final dividend n/a n/a 336
Special dividend n/a n/a 130
Total assets under management (Rbn) 566 484 16,9 528
Long-term insurance operations
Indexed new business (excluding contractual increases) (Rm) 3 122 2 793 11,8 6 055
New business margin (%) 1,8 1,5 20,0 2,0
Net customer cash inflows (Rm) 1 922 1 062 81,0 4 572
Capital adequacy cover of Liberty Group Limited (times covered) 2,75 2,94 (6,5) 2,71
Asset management STANLIB
Assets under management (Rbn) 504 431 16,9 473
Net cash inflows including money market (Rm) (2) 9 012 5 419 66,3 14 327
Retail and institutional net cash inflows excluding money market (Rm) (2) 7 630 5 711 33,6 11 744
Money market net cash inflows/(outflows) (Rm) (2) 1 382 (292) >100 2 583
(1) 2012 earnings have been restated for the change in accounting policy relating to the adoption of the amendments to IAS 19 Employee Benefits.
(2) Excludes intergroup life funds; multi-manager insurance funds have been reclassified to Liberty intergroup effective 1 January 2013.
Preparation and supervision:
This announcement on Liberty Holdings Limited's interim results for the six months ended 30 June 2013 has been
prepared and supervised by JC Hubbard (Group Chief Financial Officer) BCom CA(SA) and CG Troskie (Group Financial
Director) BCom (Hons) CA(SA).
Commentary on results
for the six months ended 30 June 2013
Overview
In the first half of 2013, Liberty continued to produce a high return on equity and further growth in sales and assets under management.
We continued to produce positive experience variances in our long-term insurance business and our balance sheet management
capability successfully managed the volatility in the markets seen in May and June. Equity value advanced in line with our medium-term
expectations.
This performance has been supported by innovative new products, solid insurance new business growth, reasonable investment fund
performance and our demonstrated ability to manage within model. BEE normalised headline earnings of R1 704 million were 5,1% up,
representing a 30,8% growth in operating earnings and a gross investment return on the group's shareholder investment portfolio (SIP)
of 5,5% (30 June 2012: 6,4%). The growth in operating earnings has been achieved without any significant assumption or modelling
changes and despite a volatile interest rate environment. This converts to a 6,0% increase in BEE normalised headline earnings per
ordinary share to R6,03 (30 June 2012: restated R5,69). Return on equity of 21,8% compares to 22,3% (restated) achieved in the
first half of 2012.
The SIP performance while ahead of benchmark does reflect a reduction in the exposure to foreign assets through profit taking as the
rand weakened.
Equity value per share of R117,16 is 1,5% up on 31 December 2012, despite the funding of the 2012 special and final dividends of R4,66 per
share and reflects R2 068 million of equity value profits, or a 13,0% annualised return on group equity value. The annualised return is
higher than the estimated cost of capital target of 11,7%.
Long-term indexed insurance sales of R3 122 million are up 11,8% on the prior half year. This combined with improved pricing, produced
a 32,3% improvement in the group embedded value of long-term insurance new business to R307 million at an overall margin of 1,8%
(30 June 2012: 1,5%). Margins were down from the 2012 second half mainly due to the higher risk discount rate following the increased
South African bond market interest rates at 30 June 2013. The new Evolve investment product range launched at the end of 2012 has
been very successful.
Group asset management net cash inflows of R9,0 billion are significantly higher compared to the R5,4 billion cash inflows for the half
year 2012. This was achieved despite a drawdown of R7 billion of assets under a government mandate in East Africa. STANLIB's South
African business had a particularly good half year attracting R14,1 billion of net cash inflows of which R13,5 billion went into higher margin
non money market retail and institutional mandates. Assets under management across the group grew by 7,2% from 31 December 2012
to R566 billion.
LibFin's management of the group's market risk within risk appetite has supported the maintenance of the group's strong capital position
with the capital adequacy ratio in the group's main long-term insurance license being 2,75 times (31 December 2012: 2,71 times) the
regulatory minimum despite the funding of dividends of R800 million.
There has broadly been no change to the group's strategic objectives which remain focussed on:
- managing the core South African insurance operations within acceptable sustainable long-term assumption sets, whilst profitably
capturing greater shares of both the existing and developing markets;
- developing innovative products to service targeted customer segments;
- optimising the balance sheet within board approved risk appetite limits;
- improving asset management capability, while leveraging off the strong property, fixed income, balanced and money market
franchises and new alternative capability to capture a larger share of the retail and institutional fund flows;
- achieving the business cases of business development initiatives across the group;
- expanding the geographical footprint into expected high growth regions of sub-Saharan Africa; and
- maximising opportunities under the Standard Bank bancassurance agreement.
We continue to prepare for the implementation of the proposed new long-term insurance solvency regime (SAM) and believe the group
is appropriately positioned from a capital perspective.
Business unit financial review
for the six months ended 30 June 2013
12 months
Restated(1) Restated(1)
30 June 30 June 31 Dec
2013 2012 % 2012
Earnings by business unit Rm Rm change Rm
Insurance
Retail segment (1) 771 575 34,1 1 179
Retail SA (1) 798 611 30,6 1 217
Direct Financial Services (27) (36) 25,0 (38)
Institutional segment 44 (12) >100 45
Liberty Corporate (1) 52 38 36,8 66
Liberty Africa Insurance (2) 18 (5) >100 21
Liberty Health (26) (45) 42,2 (42)
Balance sheet management
LibFin Markets 54 99 (45,5) 151
Asset management
STANLIB 270 221 22,2 537
South Africa 243 200 21,5 489
Other Africa 27 21 28,6 48
Liberty Properties 17 25 (32,0) 48
Development and management 17 15 13,3 39
Fountainhead (sold 1 August 2012) 10 9
Central overheads and sundry income (1) (108) (107) (0,9) (237)
BEE normalised operating earnings 1 048 801 30,8 1 723
LibFin Investments 656 821 (20,1) 1 965
BEE normalised headline earnings 1 704 1 622 5,1 3 688
BEE preference share adjustment (37) (33) (12,1) (62)
Headline earnings 1 667 1 589 4,9 3 626
(1) 2012 earnings have been restated for the change in accounting policy relating to the adoption of the amendments to IAS 19 Employee Benefits.
(2) Liberty Africa Insurance includes long-term and short-term insurance products sold to both the retail and institutional markets. The business unit has been classified under the
institutional segment as the majority of premiums are derived from institutional clients.
Financial results
Insurance
Retail segment (includes Retail SA and Direct Financial Services)
Headline earnings for the half year of R771 million are 34,1% up compared to the restated R575 million in 2012, comprising Retail SA of
R798 million (30 June 2012: R611 million) and Direct Financial Services of R27 million loss (30 June 2012: R36 million loss). This increase
is supported by good annual contract increases, ongoing positive persistency and risk variances, higher management fees due to the
2012 growth in underlying investment portfolios and good expense control. Earnings have also absorbed the ongoing build costs of the
transactional joint venture with Standard Bank, affinity relationship with Vodacom and investments in our emerging consumer market
(ECM) business during the period.
We continue to innovate and new investment products have been recently launched, particularly supporting our strategy of developing
investment propositions that are low cost but provide relevant options to consumers. In addition, a Linked Investment Service Provider
(LISP) capability has been developed and has been functional from mid July 2013. This offering makes direct investments into managed
funds available to retail customers through a cost-efficient platform and complements the life wrapper investment product range. This
development also improves the ability for the financial advisors to assess a customer's comprehensive investment needs and provide
complete portfolio information from one data source.
Indexed new business sales (excluding contractual increases) of R2,8 billion have increased by 12,7% over June 2012. Single premium
investment business of the new Evolve range is very encouraging and totalled R1,4 billion for the half year. Credit life sales under the
bancassurance agreement with Standard Bank (up 25,5%) remain good. Recurring premium investment business was up 8% and risk
business remains steady. The ability to convert leads and reduce lapse rates in our ECM business remains a challenge and alternative
channel development is being investigated. The Retail SA new business margin of 2,0% is a significant improvement on the 1,7% achieved
for six months to 30 June 2012, and is within the medium-term targeted range of between 2,0% and 2,5%. Significant increases in the
South African market bond yields particularly towards the end of the reporting period have had the effect of reducing the value of new
business margin by 0,2% from December 2012.
Net cash inflows were also very strong at R2,2 billion and were supported by strong contributions from our sales of single premium
investment products and good persistency experience leading to lower than anticipated withdrawals.
In October 2012 a comprehensive loyalty programme, "Own your life REWARDS", was successfully launched to initially support both the
Retail SA and Liberty Health businesses. The costs of the programme are included in central overheads, development costs and sundry
income. The programme has been well received as evidenced by membership growth to 13 200 principal members, being an increase
of 6 400 members for the six months to 30 June 2013.
The direct IT platform capability continues to be enhanced to improve the support of the joint ventures with Vodacom and Standard
Bank.
Institutional segment
Liberty Corporate
Following last year's launch of the new flagship investment product, the Liberty Stable Growth Fund, as well as a unique index tracking
investment range, Liberty Corporate was recognised by the Financial Intermediary Association as the best employee benefits product
supplier. This is indicative of the recent focus on enhancing service levels and establishing a distribution and product capability for larger
corporate and retirement funds.
Improved headline earnings of R52 million (up 36,8%) are mainly a function of improved risk claims experience and cost efficiency.
Indexed new business of R292 million is 6,2% higher than the half year to 30 June 2012, largely due to improved enhancement and risk
sales. Value of new business for the period is R12 million (30 June 2012: R9 million). Net cash outflows reduced to R0,4 billion for the half
year, this is considerably improved from the R1,9 billion outflow in the equivalent period in 2012.
Liberty Africa Insurance
East and Southern Africa (outside of South Africa) contributed R18 million to Liberty's headline earnings for the reporting period.
This is significantly up compared to the R5 million loss reported for the same period in 2012. The result has been supported by stable
investment markets and consistent claims loss ratios in the short-term insurance business. Long-term insurance new business margins
at 11,3% (30 June 2012: 7,7%) are pleasing.
We continue to actively pursue expansion opportunities particularly in West Africa where Liberty is underrepresented. The positive
Africa growth outlook is gaining in credibility and consequently the group has reserved capital resources to take advantage of investment
opportunities as they arise.
Liberty Health
Liberty's share of Liberty Health's headline loss for the half year 2013 is R26 million. Whilst recent operational efficiencies are producing
better cost ratios, the business does not, as yet, have sufficient scale to leverage the investment in systems and processes. The
acquisition of client mandates as well as assisting the medical scheme administration clients to grow their membership remains
management's top priority.
Our health risk products targeted at employees in African countries, excluding South Africa, continue to be supported, despite requiring
significant premium increases. Our in-force book covers 78 425 lives (30 June 2012: 78 836). The medical claims loss ratio at 96,9% for
the first half has suffered from high outlier claims and seasonality.
Balance sheet management
Market risk exposures and credit portfolio (LibFin Markets)
LibFin Markets continued to manage market risk exposures within a narrow range despite considerable volatility in interest rate markets
towards the end of the six month period. Headline earnings of R54 million flowed mainly from increased profits on the credit portfolio
assets backing annuities and guaranteed capital bonds. The result of asset liability matching activities virtually broke even for the period.
LibFin directly managed R39 billion of asset portfolios at 30 June 2013 (31 December 2012: R32 billion).
Shareholder Investment Portfolio (SIP) (LibFin Investments)
LibFin Investments manages the SIP which comprises the group's investment market exposure to the 90:10 book of business and the
assets backing capital in the insurance operations. The portfolio which is managed under a low risk balanced mandate produced a gross
return of 5,5% (30 June 2012: 6,4%) which was ahead of benchmark. This return benefited from a weaker rand, positive offshore equity
markets and portfolio construction offset by lower domestic bond and equity returns. Exposure to foreign assets was reduced during
the period on profit taking actions as the rand weakened.
Asset management
With effect from 1 January 2013, STANLIB manages all the group's African asset management businesses that are located in South Africa
as well as other African territories. Prior year comparatives have been restated to reflect this change.
STANLIB South Africa
STANLIB experienced substantial net inflows of R14,1 billion during the first six months of 2013. Inflows into institutional money
market collective investments of R1,6 billion, retail collective investments of R9,0 billion and linked investments and structured
products of R3,6 billion were particularly good. Total assets under management increased to R468 billion at 30 June 2013
(31 December 2012: R437 billion).
The majority of funds under management continue to produce satisfactory performance and STANLIB's unit trusts recently received
five Raging Bull awards.
STANLIB's headline earnings at R243 million are 21,5% higher compared to the equivalent period in 2012 despite ongoing costs associated
with additional investment capabilities. Earnings have benefited from gross fee income growth of 21,2% driven by a higher opening asset
base and a better fund mix reflecting the higher proportion of retail flows in recent periods.
STANLIB Other Africa
Assets under management at 30 June 2013 remained high at R36 billion (31 December 2012: R36 billion) despite the further drawdown
of R7,0 billion of assets under a government mandate in East Africa. Headline earnings for the half year were 28,6% higher at R27 million
(30 June 2012: R21 million).
Liberty Properties
Liberty Properties, which comprises property management and development, has benefited from growth in property management
fees supported by increases in rentals at the flagship shopping centres. Development fee income, however, remains low reflecting little
development activity for the period. Headline earnings are R17 million for the period (30 June 2012: R15 million).
Bancassurance
The commercial bancassurance joint venture relationship with Standard Bank, which is applicable across the group's asset management
and insurance operations, is continuing to make a considerable contribution to new business volumes and earnings. Indexed sales of
insurance products for the period from bancassurance channels are 20,0% higher than 2012 and STANLIB received a 12,0% growth in
net asset management fees related to assets acquired through the Standard Bank distribution channel.
The total SA covered business embedded value of in-force contracts sold under the agreement attributable to Liberty at 30 June 2013
has increased from R1,2 billion at 31 December 2012 to R1,3 billion at 30 June 2013 despite the higher required discount rates which have
reduced the present value of in-force insurance policies.
Tax legislation
The draft Taxation Laws Amendment Bill, 2013 was issued for comment on 4 July 2013. The draft bill proposes additional changes to
the new expense relief formulae to those which became applicable to long-term insurers in the 2012 Amendment Bill. These changes
are contrary to the long-term insurance industry expectations and if promulgated in their current form will negatively impact Liberty's
reported IFRS net asset value as well as the group's equity value. The potential impact cannot reliably be determined at this stage,
however, it is likely to be less than R300 million reduction in the group's IFRS net asset value and less than R450 million reduction in the
group's equity value. Liberty will actively engage with the South African Revenue Services and National Treasury to lobby for a definition
that is more equitable.
The group has applied the current taxation legislation in preparing the 30 June 2013 results.
Capital adequacy cover and life license rationalisation
The capital adequacy cover of Liberty Group Limited remains strong at 2,75 times the statutory requirement (31 December 2012:
2,71 times). All the other group subsidiary life licences are well capitalised.
The proposed rationalisation of transferring three of the South African long-term insurance licensed entities (Capital Alliance Life
Limited, Liberty Growth Limited and Liberty Active Limited) into the main license entity, Liberty Group Limited, is progressing well and
the required court date to sanction the arrangement has been scheduled for late August 2013. Assuming the sanction is granted, the
implementation date will be 1 September 2013. The rationalisation will result in improved capital efficiency under the SAM framework
and simplification of operational requirements.
The Liberty Group Limited's capital position will not be significantly impacted by the rationalisation. However, post-rationalisation, the
capital adequacy cover ratio (CAR) will reflect the combined statutory capital and the combined capital requirements of the four entities.
This will lead to a lower cover ratio than previously reported for Liberty Group Limited but a higher capital surplus.
The pro forma CAR ratio of Liberty Group Limited at 30 June 2013 assuming rationalisation had been implemented is 2,07 times the
statutory requirement.
Dividends
2013 interim dividend
In line with the group's dividend policy, the board has approved and declared a gross interim dividend of 212 cents per ordinary share.
The interim dividend will be payable out of income reserves and payable to all ordinary shareholders recorded in the books of Liberty
Holdings Limited at the close of business on Friday, 30 August 2013.
There are no STC credits to be utilised for this interim dividend. The dividend of 212 cents per ordinary share will be subject to a local
dividend tax rate of 15% which will result in a net interim dividend, to those shareholders who are not exempt from paying dividend tax,
of 180,2 cents per ordinary share. Liberty Holdings Limited's income tax number is 9050/191/71/8. The number of ordinary shares in
issue in the company's share capital at the date of declaration is 286 202 373.
The important dates pertaining to the dividend is as follows:
Last date to trade cum dividend on the JSE Friday, 23 August 2013
First trading day ex dividend on the JSE Monday, 26 August 2013
Record date Friday, 30 August 2013
Payment date Monday, 2 September 2013
Share certificates may not be dematerialised or rematerialised between Monday, 26 August 2013 and Friday, 30 August 2013, both
days inclusive. Where applicable, in terms of instructions received by the company from certificated shareholders, the payment of the
dividend will be made electronically to shareholders' bank accounts on payment date.
In the absence of specific mandates, cheques will be posted to shareholders. Shareholders who have dematerialised their shares will
have their accounts with their CSDP or broker credited on Monday, 2 September 2013.
Prospects
We believe that the group is well positioned to continue to produce sustainable growth. Our core insurance and asset management
businesses are performing better than assumptions. We anticipate that they will continue to do so and attract higher levels of new
business at improved margin despite the current pressure on consumer disposable income in South Africa. We believe our balance
sheet management capability has proven our ability to continue managing our investment market risk exposures within risk appetite and
competently deal with any protracted period of volatility in investment markets.
Bruce Hemphill Saki Macozoma
Chief Executive Chairman
31 July 2013
Liberty Holdings Limited
Incorporated in the Republic of South Africa
(Registration number: 1968/002095/06)
JSE code: LBH
ISIN code: ZAE0000127148
Telephone +27 11 408 3911
Transfer Secretaries
Computershare Investor Services (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
These results are available at www.liberty.co.za
Accounting policies
The unaudited condensed interim financial information for the six months ended 30 June 2013 have been prepared in terms of
International Financial Reporting Standards (IFRS) and comply with IAS 34, Interim Financial Reporting, the SAICA Financial Reporting
Guides issued by the Accounting Practices Committee and Financial Pronouncements issued by the Financial Reporting Standards
Council, the JSE Limited Listings Requirements as well as the requirements of the South African Companies Act, No. 71 of 2008.
The accounting policies adopted in the preparation of the consolidated financial statements are in terms of IFRS and are consistent
with those adopted in the previous year except for changes required by the mandatory adoption of new and revised IFRS, as well
as the adoption of a new accounting policy to describe the accounting treatment of certain financial instrument sale and repurchase
agreements. These changes and impacts are summarised below:
Mandatory changes in accounting policies resulting from the adoption of new and revised IFRS with retrospective application:
Refer to the appendix for details of the required restatements to the previously reported statements of financial position at 30 June
2012 and 31 December 2012 and statements of comprehensive income for the periods ended 30 June 2012 and 31 December 2012.
The restatements have not had any impact on the condensed statement of changes in shareholders' funds, as previously reported.
The group's condensed statements of cash flows have been restated for the increase in cash and cash equivalents resulting from the
consolidation of additional mutual funds and the corresponding flows from investing activities. The condensed segment information has
been restated in line with the changes to the statements of comprehensive income.
IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, and IAS 28 (Revised) Investments in Associates and
Joint Ventures
The group has adopted the above suite of IFRS and revisions which deal with the accounting treatment for the group's involvement in
investments in entities for which the group is assessed to have more than an insignificant influence. These have resulted in changes in
accounting policies effective for the year commencing 1 January 2013 and have been applied retrospectively in line with the transitional
requirements. The group consequently re-examined the combined impact of these standards on all of its investments and certain
reclassifications of investments in mutual funds were required. There have been no reclassifications of investments in other types of
entities.
Previously, investments in mutual funds that amounted to between 20% and 50% of the total fund value or voting rights were considered
to be interests in associates mutual funds, and those greater than 50% were considered to be subsidiaries. As a result of the adoption
of IFRS 10, which has redefined the definition of control, the group has removed the reference to specific percentage holdings in the
group's accounting policy as the defining parameter. This has led to an increased number of mutual funds being classified as subsidiaries
or associates, as well as reclassifications between these categories and financial instruments. No investments in mutual funds have met
the new definition of joint arrangements.
The group continues to account for its interests in associates mutual funds, as at fair value through profit or loss by applying the
measurement exemption for investment-linked insurance funds in IAS 28.
These reclassifications of mutual funds have resulted in a number of changes to items presented in both the statement of comprehensive
income and financial position for the periods reported on in 2012. These restatements are detailed in the appendix, however in summary
there have been no resultant changes to the group total earnings, comprehensive income, shareholders' funds or net asset value for
these prior reported periods or the six month period to 30 June 2013.
Amendments to IAS 19 Employee Benefits
The group has adopted the amendments to IAS 19 Employee Benefits, which has resulted in a change in accounting policy effective
for the year commencing 1 January 2013. The amendments have changed the basis for recognition of movements in post-retirement
employee benefits liabilities or assets, with certain remeasurements of the relevant liability or asset now being mandatory recognised
in other comprehensive income. In prior periods the group recognised all remeasurements in post-retirement employee benefit plan
liabilities or assets in profit or loss as previously allowed or mandated in IAS 19.
The change in accounting policy has been applied retrospectively with the impact being that total earnings for the six months ended
30 June 2013 have decreased by R24 million (30 June 2012: decrease of total earnings of R54 million, full year to 31 December 2012:
R80 million) with other comprehensive income increasing by the same amounts, respectively. This has consequently resulted in
a restatement of related earnings per share disclosures. There has been no consequential impact or change to total comprehensive
income, the financial position or shareholders' funds of the group in respect of the periods reported on in these 2013 interim results.
Mandatory changes in accounting policies resulting from the adoption of the new standard IFRS 13 Fair Value Measurement
with prospective application:
The group has adopted IFRS 13 Fair Value Measurement which is effective for years commencing 1 January 2013. IFRS 13 defines fair value
and describes in a single standard a framework for measuring fair value. IFRS 13 defines fair value on the basis of an exit price notion,
which results in a market-based, rather than entity-specific measurement.
IFRS 13 is effective prospectively and therefore there are no required restatements arising from the adoption of IFRS 13. The impact of
changes in measurement of the group's assets and liabilities held at fair value at 30 June 2013 and impacts to group total earnings for the
six months period to 30 June 2013 has not been material.
Voluntary adoption of a new accounting policy
During the six month period to 30 June 2013, the group has entered into certain agreements of sale and repurchase of financial
instruments as part of the group's asset/liability matching processes. This has necessitated the adoption of a new accounting policy
as follows:
Sale and repurchase agreements
Securities sold subject to linked repurchase agreements are reclassified in the statement of financial position as pledged assets when
the transferee has the right by contract or custom to sell or repledge the collateral. Such securities are measured in accordance with
the measurement policy as described under the accounting policy for financial assets in the integrated annual report. The liability to the
counterparty is included under investment creditors within insurance and other payables on the statement of financial position.
The difference between the repurchase and sales price is treated as interest and amortised over the life of the reverse repurchase
agreement using the effective interest method and disclosed as finance costs in the statement of comprehensive income.
The transactions entered into during the six month period to 30 June 2013 have been accounted for in compliance with this new
accounting policy.
Additional disclosures
IAS 34 Interim Financial Reporting has been revised for the introduction of IFRS 13 Fair Value Measurement and changes to IFRS 7
Financial Instruments: Disclosures. The group has complied with the requirements of these additional disclosures in these interim results.
Enhanced disclosures as required by IFRS 12 Disclosures of Interests in Other Entities will be provided for the integrated annual report for
the year ending 31 December 2013, in addition to other disclosure requirements required by the applicable new or revised IFRS.
Other revised IFRS applicable to the 2013 interim reporting period
The group has also adopted the various other revisions to IFRS which are effective for years commencing 1 January 2013. These revisions
have not resulted in material impacts to the 2013 group's reported results, comparative periods or interim disclosures.
Review/audit
These interim results have not been reviewed or audited by the company's auditors, PricewaterhouseCoopers Inc.
Definitions
BEE normalised: headline earnings per share, return on equity, group equity value per share and return on
group equity value
These measures reflect the economic reality of the Black Economic Empowerment (BEE) transaction as opposed to the required
technical accounting treatment that reflects the BEE transaction as a share buy-back. Dividends received on the group's BEE preference
shares (which are recognised as an asset for this purpose) are included in income. Shares in issue relating to the transaction are reinstated.
Capital adequacy requirement (CAR)
The capital adequacy requirement is the minimum amount by which the Financial Services Board requires an insurer's assets to exceed
its liabilities. The assets, liabilities and CAR must be calculated using a method which meets the Financial Services Board's requirements.
Capital adequacy cover refers to the amount of capital the insurer has as a multiple of the minimum requirement.
Long-term insurance operations Indexed new business
This is a measure of new business which is calculated as the sum of twelve months' premiums on new recurring premium policies and
one tenth of single premium sales.
Long-term insurance operations Value of new business and margin
The present value, at point of sale, of the projected stream of after tax profits for new business issued, net of the cost of required capital.
The present value is calculated using a risk adjusted discount rate. Margin is calculated using the value of new business divided by the
present value of future modelled premiums.
Short-term insurance operations Claims loss ratio
This is a measure of underwriting risk and is measured as a ratio of claims incurred divided by the net premiums earned.
Short-term insurance operations Medical loss ratio
Net claims incurred divided by net premiums earned (adjusted by direct expenses).
FCTR
Foreign Currency Translation Reserve.
Development costs
Represents project costs incurred on developing or enhancing future revenue opportunities.
Negative rand reserves
A portion of expected future management and administration fees are present valued and recognised at point of sale. Prospective
measurement takes place at each valuation date until received.
Statement of financial position
as at 30 June 2013
Restated Restated
30 June 30 June 31 Dec
2013 2012 2012
Unaudited Rm Rm Rm
Assets
Equipment and owner-occupied properties under development 1 080 881 952
Owner-occupied properties 1 404 1 445 1 378
Investment properties 24 259 23 032 24 133
Intangible assets 667 909 759
Defined benefit pension fund employer surplus 213 219 186
Deferred acquisition costs 485 432 449
Interests in joint ventures 391 395 378
Reinsurance assets 1 396 1 148 1 170
Long-term insurance 1 037 938 978
Short-term insurance 359 210 192
Operating leases accrued income 1 408 1 271 1 277
Pledged assets 1 759
Derivative assets 4 681 5 557 6 910
Held for sale assets 200
Interests in associates equity accounted 72 72
Interest in associates held at fair value 14 975 13 879 14 359
Financial investments 246 676 218 370 242 015
Deferred taxation 289 188 253
Prepayments, insurance and other receivables 4 214 3 720 3 628
Cash and cash equivalents 15 376 9 562 10 418
Total assets 319 345 281 208 308 337
Liabilities
Long-term policyholder liabilities 241 414 217 252 236 684
Insurance contracts 166 391 151 905 164 666
Investment contracts with discretionary participation features 7 951 3 516 3 855
Financial liabilities under investment contracts 67 072 61 831 68 163
Short-term insurance liabilities 806 536 525
Financial liabilities at amortised cost 2 131 2 190 2 177
Third party financial liabilities arising on consolidation of mutual funds 36 316 27 625 30 015
Employee benefits 971 866 1 198
Deferred revenue 186 169 174
Deferred taxation 2 771 1 848 2 715
Deemed disposal taxation liability 628 918
Provisions 257 389 338
Operating leases accrued expense 63 30
Derivative liabilities 4 252 4 890 6 098
Insurance and other payables 9 618 6 453 8 230
Current taxation 831 2 253 724
Total liabilities 300 181 264 534 289 826
Equity
Ordinary shareholders' interests 15 978 13 777 15 410
Share capital 26 26 26
Share premium 6 034 6 113 6 078
Retained surplus 10 775 8 609 10 332
Other reserves (857) (971) (1 026)
Non-controlling interests 3 186 2 897 3 101
Total equity 19 164 16 674 18 511
Total equity and liabilities 319 345 281 208 308 337
Statement of comprehensive income
for the six months ended 30 June 2013
12 months
Restated Restated
30 June 30 June 31 Dec
2013 2012 2012
Unaudited Rm Rm Rm
Revenue
Insurance premiums 16 090 14 400 30 720
Reinsurance premiums (657) (556) (1 089)
Net insurance premiums 15 433 13 844 29 631
Service fee income from investment contracts 417 484 881
Investment income 6 936 6 653 13 606
Hotel operation sales 377 347 720
Investment gains 6 649 9 993 31 108
Fee revenue and reinsurance commission 941 781 1 800
Total revenue 30 753 32 102 77 746
Claims and policyholder benefits under insurance contracts (10 446) (11 992) (25 004)
Insurance claims recovered from reinsurers 524 360 672
Change in long-term policyholder liabilities (5 477) (6 340) (19 532)
Insurance contracts (1 623) (6 329) (19 228)
Investment contracts with discretionary participation features (3 911) (47) (380)
Applicable to reinsurers 57 36 76
Fair value adjustment to policyholder liabilities under investment contracts (2 754) (3 773) (10 035)
Fair value adjustment on third party mutual fund interests (3 396) (1 633) (4 748)
Acquisition costs (2 013) (1 778) (3 818)
General marketing and administration expenses (3 820) (3 624) (7 573)
Finance costs (114) (125) (243)
Profit share allocations under bancassurance and other agreements (441) (395) (800)
Profit on sale of joint venture 135
Equity accounted earnings from joint ventures 14 16 3
Profit before taxation 2 830 2 818 6 803
Taxation (1 041) (1 109) (2 685)
Total earnings (carried forward) 1 789 1 709 4 118
12 months
Restated Restated
30 June 30 June 31 Dec
2013 2012 2012
Unaudited Rm Rm Rm
Total earnings (brought forward) 1 789 1 709 4 118
Other comprehensive income 76 69 90
Items that may be reclassified subsequently to profit or loss 60 22 (121)
Net change in fair value on cash flow hedges (109) 3 (29)
Income and capital gains tax relating to net change in fair value on cash flow hedges 33 (1) 8
Foreign currency translation 129 13 26
Owner-occupied properties fair value adjustment 13 15 (192)
Income tax and capital gains tax relating to owner-occupied properties fair
value adjustment (6) (8) 66
Items that may not be reclassified to profit or loss 16 47 211
Change in long-term policyholder insurance liabilities (application of
shadow accounting) (8) (7) 131
Actuarial gains on post-retirement medical aid liability 7 56 127
Income tax relating to post-retirement medical aid liability (2) (15) (36)
Net adjustments to defined benefit pension fund (1)
27 18 (15)
Income tax relating to defined benefit pension fund (8) (5) 4
Total comprehensive income 1 865 1 778 4 208
Attribution of total earnings and comprehensive income
Total earnings attributable to:
Ordinary shareholders' interests 1 668 1 588 3 699
Non-controlling interests 121 121 419
1 789 1 709 4 118
Total comprehensive income attributable to:
Ordinary shareholders' interests 1 700 1 654 3 780
Non-controlling interests 165 124 428
1 865 1 778 4 208
Basic and fully diluted earnings per share Cents Cents Cents
Basic earnings per share 648,8 611,9 1 433,6
Fully diluted basic earnings per share 596,4 577,5 1 341,7
(1) Net adjustments to defined benefit pension fund include actuarial gains or losses, return on plan assets, reduced by the interest on the net defined benefit asset, and the effect
of the application of the asset ceiling.
Headline earnings and earnings per share
for the six months ended 30 June 2013
12 months
Restated Restated
30 June 30 June 31 Dec
2013 2012 2012
Unaudited Rm Rm Rm
Reconciliation of total earnings to headline earnings attributable to equity holders
Total earnings attributable to equity holders 1 668 1 588 3 699
Preference share dividend (1) (1) (2)
Basic earnings attributable to ordinary shareholders 1 667 1 587 3 697
Profit on sale of joint venture (117)
Derecognition and impairment of intangible asset 44
FCTR recycled through profit or loss 2 2
Headline earnings attributable to ordinary shareholders 1 667 1 589 3 626
Net income earned on BEE preference shares 37 33 62
BEE normalised headline earnings attributable to ordinary shareholders 1 704 1 622 3 688
Weighted average number of shares in issue ('000) 256 954 259 371 257 885
BEE normalised weighted average number of shares in issue ('000) 282 750 285 167 283 681
Fully diluted weighted average number of shares in issue ('000) 279 490 274 808 275 534
Cents Cents Cents
Earnings per share attributable to ordinary shareholders
-Basic 648,8 611,9 1 433,6
-Headline 648,8 612,7 1 406,0
-BEE normalised headline 602,7 568,8 1 300,1
Fully diluted earnings per share attributable to ordinary shareholders
-Basic 596,4 577,5 1 341,7
-Headline 596,4 578,3 1 316,0
Condensed statement of changes in shareholders' funds
for the six months ended 30 June 2013
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2013 2012 2012
Rm Rm Rm
Balance of ordinary shareholders' interests at 1 January 15 410 13 211 13 211
Dividends (1 330) (851) (1 396)
Total comprehensive income 1 700 1 654 3 780
Share buy-back (1) (370) (415)
Subscription for shares 36 30 26
Black Economic Empowerment transaction 116 75 126
Share-based payments 48 27 78
Preference dividend (1) (1) (2)
FCTR recycled through profit or loss 2 2
Ordinary shareholders' interests 15 978 13 777 15 410
Balance of non-controlling interests at 1 January 3 101 3 072 3 072
Total comprehensive income 165 124 428
Unincorporated property partnerships (77) (91) (182)
Non-controlling share of subsidiary dividend (3) (7) (16)
Acquisition of interest in Total Health Trust Limited 33 33
Disposal of Alberton City unincorporated property partnership (234) (234)
Non-controlling interests 3 186 2 897 3 101
Total equity 19 164 16 674 18 511
Condensed statement of cash flows
for the six months ended 30 June 2013
12 months
Restated Restated
30 June 30 June 31 Dec
2013 2012 2012
Unaudited Rm Rm Rm
Operating activities 2 267 612 6 218
Investing activities 2 589 (2 943) (7 864)
Financing activities (6) (575) (407)
Net increase/(decrease) in cash and cash equivalents 4 850 (2 906) (2 053)
Cash and cash equivalents at the beginning of the year 10 418 12 432 12 432
Foreign currency translation 108 7 10
Cash and cash equivalents acquired through business acquisition 29 29
Cash and cash equivalents at the end of the period 15 376 9 562 10 418
Condensed segment information
for the six months ended 30 June 2013
The unaudited segment results for the six months ended 30 June 2013 are as follows:
Short- Asset Reporting
Long-term insurance term manage- Health adjust- IFRS
Rm Retail Corporate insurance ment services Other Total ments(1) reported
Total revenue 23 914 6 548 499 1 272 134 698 33 065 (2 312) 30 753
Profit/(loss) before taxation 1 956 143 40 398 (82) 273 2 728 102 2 830
Taxation (886) (38) (10) (111) 30 (31) (1 046) 5 (1 041)
Total earnings/(loss) 1 070 105 30 287 (52) 242 1 682 107 1 789
Other comprehensive
income (14) 1 37 17 35 76 76
Total comprehensive
income/(loss) 1 056 106 67 304 (52) 277 1 758 107 1 865
Attributable to:
Non-controlling interests (23) (4) (28) (5) 13 (11) (58) (107) (165)
Equity holders 1 033 102 39 299 (39) 266 1 700 1 700
Reconciliation of total
earnings/(loss) to headline
earnings/(loss) attributable
to equity holders
Total earnings/(loss) 1 070 105 30 287 (52) 242 1 682 107 1 789
Attributable (to)/from
non-controlling interests 3 (4) (11) (4) 13 (11) (14) (107) (121)
Preference dividend (1) (1) (1)
Headline earnings/(loss) 1 073 101 19 283 (39) 230 1 667 1 667
Net income earned
on BEE preference shares 37 37 37
BEE normalised headline
earnings/(loss) 1 073 101 19 283 (39) 267 1 704 1 704
(1) Reporting adjustments include the consolidation of unincorporated property partnerships, the consolidation of third party mutual fund liabilities, the classification of long-term
insurance into defined IFRS 'investment' and 'insurance' products, the application of shadow accounting for the change in long-term policyholder insurance liabilities and the
elimination of intergroup transactions.
The unaudited segment results for the six months ended 30 June 2012 are as follows:
Short- Asset Reporting
Restated Long-term insurance term manage- Health adjust- IFRS
Rm Retail Corporate insurance ment services Other Total ments(1) reported
Total revenue 26 301 6 618 411 1 027 137 740 35 234 (3 132) 32 102
Profit/(loss) before taxation 1 971 87 52 343 (68) 311 2 696 122 2 818
Taxation (987) (19) (8) (92) 2 (5) (1 109) (1 109)
Total earnings/(loss) 984 68 44 251 (66) 306 1 587 122 1 709
Other comprehensive
income 44 4 3 1 17 69 69
Total comprehensive
income/(loss) 1 028 72 47 252 (66) 323 1 656 122 1 778
Attributable to:
Non-controlling interests 12 (6) (21) (3) 16 (2) (122) (124)
Equity holders 1 040 66 26 249 (50) 323 1 654 1 654
Reconciliation of total
earnings/(loss) to headline
earnings/(loss) attributable
to equity holders
Total earnings/(loss) 984 68 44 251 (66) 306 1 587 122 1 709
Attributable (to)/from
non-controlling interests 16 (8) (20) (3) 16 1 (122) (121)
Preference dividend (1) (1) (1)
FCTR recycled through profit
or loss 2 2 2
Headline earnings/(loss) 1 000 60 24 248 (48) 305 1 589 1 589
Net income earned
on BEE preference shares 33 33 33
BEE normalised headline
earnings/(loss) 1 000 60 24 248 (48) 338 1 622 1 622
(1) Reporting adjustments include the consolidation of unincorporated property partnerships, the consolidation of third party mutual fund liabilities, the classification of long-term
insurance into defined IFRS 'investment' and 'insurance' products, the application of shadow accounting for the change in long-term policyholder insurance liabilities and the
elimination of intergroup transactions.
The unaudited segment results for the year ended 31 December 2012 are as follows:
Short- Asset Reporting
Restated Long-term insurance term manage- Health adjust- IFRS
Rm Retail Corporate insurance ment services Other Total ments(1) reported
Total revenue 62 096 16 395 904 2 419 289 1 634 83 737 (5 991) 77 746
Profit/(loss) before taxation 4 553 113 128 785 (132) 910 6 357 446 6 803
Taxation (2 392) (20) (15) (216) 38 (14) (2 619) (66) (2 685)
Total earnings/(loss) 2 161 93 113 569 (94) 896 3 738 380 4 118
Other comprehensive
income 71 10 7 2 90 90
Total comprehensive
income/(loss) 2 232 103 120 571 (94) 896 3 828 380 4 208
Attributable to:
Non-controlling interests (22) 1 (59) (7) 23 16 (48) (380) (428)
Equity holders 2 210 104 61 564 (71) 912 3 780 3 780
Reconciliation of total
earnings/(loss) to headline
earnings/(loss) attributable
to equity holders
Total earnings/(loss) 2 161 93 113 569 (94) 896 3 738 380 4 118
Attributable (to)/from
non-controlling interests (17) 1 (55) (7) 23 16 (39) (380) (419)
Preference dividend (2) (2) (2)
Intangible assets derecognition
and impairment 44 44 44
Profit on sale of joint venture (117) (117) (117)
FCTR recycled through profit
or loss 2 2 2
Headline earnings/(loss) 2 188 94 58 562 (69) 793 3 626 3 626
Net income earned
on BEE preference shares 62 62 62
BEE normalised headline
earnings/(loss) 2 188 94 58 562 (69) 855 3 688 3 688
(1) Reporting adjustments include the consolidation of unincorporated property partnerships, the consolidation of third party mutual fund liabilities, the classification of long-term
insurance into defined IFRS 'investment' and 'insurance' products, the application of shadow accounting for the change in long-term policyholder insurance liabilities and the
elimination of intergroup transactions.
Group equity value report
1. Introduction
Liberty presents a "group equity value" report to reflect the combined value of the various components of Liberty's businesses.
Section 2 below describes the valuation bases used for each reported component. It should be noted the group equity value
is presented to provide additional information to shareholders to assess performance of the group. The total equity value is
not intended to be a fair value calculation of the group but should provide indicative information of the inherent value of the
component parts.
2. Component parts of the group equity value and valuation techniques used
Group equity value has been calculated as the sum of the various component parts:
2.1 South African covered business:
The wholly owned subsidiary, Liberty Group Limited, comprises the cluster of South African long-term insurance entities and
related asset holding entities. The embedded value methodology in terms of Actuarial Practice Note 107 issued by the Actuarial
Society of South Africa continues to be used to derive the value of this business cluster described as "South African covered
business". The embedded value report of the South African covered business has been reviewed by the group's statutory
actuary. The full embedded value report is included in the supplementary information section.
2.2 Other businesses:
STANLIB Valued using a 10 times (2012: 10 times) multiple of estimated sustainable earnings.
Liberty Properties Valued using a 10 times (2012: 10 times) multiple of estimated sustainable earnings.
Liberty Health As Liberty Health has yet to establish a history to support a sustainable earnings calculation,
IFRS net asset value is applied.
Liberty Africa Liberty Africa Insurance is an emerging cluster of both long and short-term insurance businesses
Insurance located in various African countries outside of South Africa. A combination of valuation techniques
including embedded value, discounted cash flow and earnings multiples have been applied to value
these businesses. The combined value of this cluster is not material relative to the other components
of group equity value and therefore a detailed analysis of this valuation has not been presented.
LibFin Credit LibFin originates appropriate illiquid assets that provide acceptable illiquidity premiums.
The value of this origination is reflected at a 10 times multiple of estimated sustainable earnings
adjusting for related expenses and prudential margin.
Liberty Holdings The net market value of assets and liabilities held by the Liberty Holdings Limited company excluding
investments in subsidiaries valued separately.
2.3 Other adjustments:
These comprise the fair value of share options/rights allocated to staff not employed by the South African covered businesses
and allowance for certain shareholder recurring costs incurred in Liberty Holdings Limited capitalised at a multiple of 9 times
(December 2012: 9 times).
3. BEE normalised group equity value
3.1 Analysis of BEE normalised group equity value
Value of
in-force:
Unaudited SA Other Group SA
30 June 2013 covered busi- funds Adjust- Net covered
Rm business nesses invested ments worth(1) business Total
SA insurance operations 9 637 9 637 (4 935) 4 702 20 435 25 137
Retail SA 18 609
Corporate 1 758
Frank Life 68
Value of in-force acquired 188 188 (188)
Working capital and other assets 4 007 4 007 (441) 3 566 3 566
South African insurance operations 13 832 13 832 (5 564) 8 268 20 435 28 703
Other group businesses:
STANLIB 430 430 4 804 5 234 5 234
South Africa 296 296 4 604 4 900 4 900
Other Africa 134 134 200 334 334
Properties 36 36 364 400 400
Liberty Health (including Total Health Trust) 47 152 199 199 199
Liberty Africa Insurance 52 410 462 462 25 487
LibFin Credit 520 520 520
Liberty Holdings 1 019 1 019 39 1 058 1 058
Cost of required capital (1 564) (1 564)
Net equity reported under IFRS 13 931 2 047 15 978 163 16 141 18 896 35 037
BEE preference funding 940 940 940 940
Allowance for future shareholder costs (241) (241) (241) (1 796) (2 037)
Allowance for employee share
options/rights (246) (182) (428) (428) (428)
BEE normalised equity value 14 625 1 624 16 249 163 16 412 17 100 33 512
Summary of adjustments:
Negative rand reserves (4 935) (4 935)
Deferred acquisition costs (473) (473)
Deferred revenue liability 175 175
Internally generated software (39) 39
Carrying value of in-force business acquired (188) (188)
Fair value adjustment of non SA covered
business (100) 5 688 5 588
Impact of discounting on deferred tax asset (4) (4)
(5 564) 5 727 163
(1) Reconciliation to SA covered business net worth
as per analysis in supplementary information
Net equity of SA covered business as reported under IFRS 13 931
Adjustments as above (5 564)
Allowance for employee share options/rights (246)
BEE preference share funding 940
Net worth as reported in supplementary information 9 061
3. BEE normalised group equity value
3.1 Analysis of BEE normalised group equity value
Value of
Audited in-force:
SA Other Group SA
31 December 2012 covered busi- funds Adjust- Net covered
Rm business nesses invested ments worth(1) business Total
SA insurance operations 9 424 9 424 (4 796) 4 628 20 268 24 896
Retail SA 18 525
Corporate 1 679
Frank Life 64
Value of in-force acquired 230 230 (230)
Working capital 3 535 3 535 (416) 3 119 3 119
South African insurance operations 13 189 13 189 (5 442) 7 747 20 268 28 015
Other group businesses:
STANLIB 359 359 4 588 4 947 4 947
South Africa 262 262 4 438 4 700 4 700
Other Africa 97 97 150 247 247
Properties 45 45 355 400 400
Liberty Health (including Total Health Trust) 41 186 227 227 227
Liberty Africa Insurance 40 336 376 376 33 409
LibFin Credit 500 500 500
Liberty Holdings 1 214 1 214 37 1 251 1 251
Cost of required capital (1 477) (1 477)
Net equity as reported under IFRS 13 270 2 140 15 410 38 15 448 18 824 34 272
BEE preference funding 1 012 1 012 1 012 1 012
Allowance for future shareholders costs (236) (236) (236) (1 785) (2 021)
Allowance for employee share
options/rights (305) (218) (523) (523) (523)
BEE normalised equity value 13 977 1 686 15 663 38 15 701 17 039 32 740
Summary of adjustments:
Negative rand reserves (4 796) (4 796)
Deferred acquisition costs (439) (439)
Deferred revenue liability 165 165
Internally generated software (37) 37
Carrying value of in-force business acquired (230) (230)
Fair value adjustment of non SA
covered business (100) 5 443 5 343
Impact of discounting on deferred tax asset (5) (5)
(5 442) 5 480 38
(1) Reconciliation to SA covered business net worth.
Net equity of SA covered business as reported under IFRS 13 270
Adjustments as above (5 442)
Allowance for employee share options/rights (305)
BEE preference share funding 1 012
Net worth as reported in supplementary information 8 535
3.2 BEE normalised group equity value earnings and value per share
Unaudited Audited
6 months 12 months
30 June 2013 31 December 2012
SA Other SA Other
covered busi- covered busi-
Rm business nesses Total business nesses Total
BEE normalised equity value at the end of the
period 26 161 7 351 33 512 25 574 7 166 32 740
Equity value at the end of the period 25 221 7 351 32 572 24 562 7 166 31 728
BEE preference shares 940 940 1 012 1 012
Capital transactions (35) (35) 389 389
Funding of restricited share plan 87 (87) 87 (87)
Intergroup dividends 800 (800) 1 701 (1 701)
Dividends paid 1 331 1 331 1 396 1 396
BEE normalised equity value at the beginning of
the period (25 574) (7 166) (32 740) (23 185) (5 454) (28 639)
Equity value at the beginning of the period (24 562) (7 166) (31 728) (22 110) (5 454) (27 564)
BEE preference shares (1 012) (1 012) (1 075) (1 075)
BEE normalised equity value earnings 1 474 594 2 068 4 177 1 709 5 886
BEE normalised return on group equity value 11,9% 17,0% 13,0% 18,1% 33,7% 20,8%
BEE normalised number of shares (000's) 286 043 283 635
Number of shares in issue (000's) 257 755 256 440
Shares held for the employee restricted share
scheme (000's) 2 492 1 399
Adjustment for BEE shares (000's) 25 796 25 796
BEE normalised group equity value per
share (Rand) 117,16 115,43
3.3 Sources of BEE normalised group equity value earnings
Unaudited Audited
6 months 12 months
30 June 2013 31 December 2012
SA Other SA Other
covered busi- covered busi-
Rm business nesses Total business nesses Total
Value of new business written in the period 295 12 307 660 31 691
Expected return on value of in-force business 877 877 1 763 1 763
Variances/changes in operating assumptions 42 (20) 22 37 (149) (112)
Operating experience variances (including
incentive outperformance) 82 (2) 80 131 (42) 89
Operating assumption changes (26) (18) (44) 272 (107) 165
Changes in modelling methodology (14) (14) (366) (366)
Headline earnings of other businesses (30) 274 244 (45) 547 502
Operational equity value profits 1 184 266 1 450 2 415 429 2 844
Non headline earnings adjustments (2) 73 71
Development costs (non-recurring project cost
of future developments) (27) (7) (34) (78) (78)
Investment return on net worth 392 66 458 760 120 880
Investment variances 250 250 700 700
Change in economic assumptions (384) (384) 507 507
Increase in fair value adjustments on value of
other businesses 233 233 1 163 1 163
Change in allowance for share options/rights 59 36 95 (125) (76) (201)
Group equity value earnings 1 474 594 2 068 4 177 1 709 5 886
3. BEE normalised group equity value (continued)
3.4 Analysis of value of long-term insurance, new business and margin
Unaudited Unaudited Audited
6 months 6 months 12 months
30 June 30 June 31 Dec
Rm 2013 2012 2012
South African covered business:
Retail SA
Traditional Life 507 455 1 052
Emerging Consumer Markets 86 82 185
Credit Life 52 41 128
Liberty Corporate 55 47 110
Direct Financial Services 21 22 55
Gross value of new business 721 647 1 530
Overhead acquisition costs impact on value of new business (377) (385) (782)
Cost of required capital (49) (46) (88)
Net value of South African covered new business 295 216 660
South African life licences 291 214 655
Liberty Africa Insurance subsidiaries 4 2 5
Present value of future expected premiums 16 715 15 211 33 510
Margin 1,8% 1,4% 2,0%
Liberty Africa Insurance:
Net value of new business 12 16 31
Present value of future expected premiums 103 205 311
Margin 11,7% 7,8% 10,0%
Total group net value of new business 307 232 691
Total group margin 1,8% 1,5% 2,0%
Long-term insurance new business
for the six months ended 30 June 2013
12 months
30 June 30 June 31 Dec
2013 2012 2012
Unaudited Rm Rm Rm
Sources of insurance operations total new business by customer segment
Retail segment 9 826 8 766 18 990
Single 7 827 6 967 15 105
Recurring 1 999 1 799 3 885
Institutional segment 723 726 1 500
Single 425 475 934
Recurring 298 251 566
Total new business 10 549 9 492 20 490
Single 8 252 7 442 16 039
Recurring 2 297 2 050 4 451
Sources of insurance indexed new business 3 122 2 793 6 055
Retail (1) 2 759 2 448 5 305
Corporate 292 275 612
Liberty Africa Insurance (2) 71 70 138
(1) Includes Retail SA of R2 747 million (30 June 2012: R2 437 million; 31 December 2012: R5 286 million) and Direct Financial Services of R12 million (30 June 2012: R11 million;
31 December 2012: R19 million).
(2) Liberty owns less than 100% of the various entities that make up Liberty Africa. The information is recorded at 100% and is not adjusted for proportional legal ownership.
Long-term insurance net cash flows
for the six months ended 30 June 2013
Audited
Unaudited Unaudited 12 months
30 June 30 June 31 Dec
2013 2012 2012
Rm Rm Rm
Premiums
Recurring 11 785 11 193 23 627
Retail 8 158 7 903 16 498
Institutional 3 627 3 290 7 129
Single 9 163 7 560 16 972
Retail 4 901 4 211 9 519
Institutional 1 286 529 2 035
Immediate annuities 2 976 2 820 5 418
Net premium income from insurance contracts and inflows from investment contracts 20 948 18 753 40 599
Claims and policyholders benefits
Retail (13 811) (11 995) (25 149)
Death and disability claims (2 357) (2 256) (4 557)
Policy surrender and maturity claims (9 507) (8 178) (16 783)
Annuity payments (1 947) (1 561) (3 809)
Institutional (5 215) (5 696) (10 878)
Death and disability claims (941) (832) (1 714)
Scheme terminations and member withdrawals (4 101) (4 707) (8 882)
Annuity payments (173) (157) (282)
Net claims and policyholders benefits (19 026) (17 691) (36 027)
Long-term insurance net cash flows 1 922 1 062 4 572
Sources of insurance operations cash flows:
Retail 2 215 2 753 6 058
Corporate (401) (1 850) (2 048)
STANLIB Multi-manager (51) (30) 253
Liberty Africa Insurance (1) 159 189 309
(1) Liberty owns less than 100% of the various entities that make up Liberty Africa. The information is recorded at 100% and is not adjusted for proportional legal ownership.
Short-term insurance
for the six months ended 30 June 2013
Audited
Unaudited Unaudited 12 months
30 June 30 June 31 Dec
2013 2012 2012
Rm Rm Rm
Net cash flows
Premiums 428 346 756
Liberty Health medical risk 315 203 496
Liberty Africa Insurance motor, property, medical risk and other 113 143 260
Claims (257) (206) (427)
Liberty Health medical risk (206) (142) (318)
Liberty Africa Insurance motor, property, medical risk and other (51) (64) (109)
Net cash inflows from short-term insurance 171 140 329
Claims loss ratio (%)
Liberty Health 65 70 64
Liberty Kenya Holdings Limited 45 45 42
Liberty Health medical loss ratio (%) 97 93 89
Assets under management (1)
as at 30 June 2013
30 June 30 June 31 Dec
2013 2012 2012
Unaudited Rbn Rbn Rbn
Managed by group business units 543 461 505
STANLIB South Africa 468 392 437
STANLIB Other Africa (2) 36 39 36
LibFin 39 30 32
Externally managed 23 23 23
Total assets under management 566 484 528
(1) Includes funds under administration.
(2) Liberty owns less than 100% of the various entities that make up STANLIB other Africa. The information is recorded at 100% and is not adjusted for proportional legal ownership.
Asset management net cash flows Stanlib
for the six months ended 30 June 2013
12 months
30 June 30 June 31 Dec
2013 2012 2012
Unaudited Rm Rm Rm
South Africa
Non-money market 13 548 6 856 16 520
Retail 12 545 6 177 17 511
Institutional 1 003 679 (991)
Money market 515 571 3 792
Retail (1 095) (1 021) (1 778)
Institutional 1 610 1 592 5 570
Net South Africa cash inflows (1) 14 063 7 427 20 312
Other Africa
Non-money market (5 918) (1 145) (4 776)
Retail 1 419 695 990
Institutional (7 337) (1 840) (5 766)
Money market 867 (863) (1 209)
Net Other Africa cash outflows (1)(2) (5 051) (2 008) (5 985)
Total net cash inflows 9 012 5 419 14 327
(1) Cash flows exclude intergroup life funds; South Africa multi-manager insurance funds have been reclassified to Liberty intergroup effective 1 January 2013.
(2) Liberty owns less than 100% of the various entities that make up other Africa. The information is recorded at 100% and is not adjusted for proportional legal ownership.
Retirement benefit obligations
as at 30 June 2013
Post-retirement medical benefit
The group operates an unfunded post-retirement medical aid benefit for permanent employees who joined the group prior to 1 February
1999 and agency staff who joined prior to 1 March 2005.
As at 30 June 2013, the Liberty post-retirement medical aid benefit liability was R379 million (31 December 2012: R371 million).
Defined benefit retirement funds
The group operates a number of defined benefit pension schemes on behalf of employees. All these funds are closed to new membership
and are well funded with no deficits reported.
Capital commitments
as at 30 June 2013
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2013 2012 2012
Rm Rm Rm
Equipment 382 247 551
Investment and owner-occupied property 1 856 965 1 937
Total capital commitments 2 238 1 212 2 488
Under contracts 588 574 838
Authorised by the directors but not contracted 1 650 638 1 650
The group's share of commitments of joint ventures amounts to R4 million (31 December 2012: R4 million) and is to be financed by the
existing facilities in the joint venture operations.
The above 2013 capital commitments will be financed by available bank facilities, existing cash resources, internally generated funds and
R467 million (31 December 2012: R198 million) from non-controlling interests in unincorporated property partnerships.
Related parties
for the six months ended 30 June 2013
Unaudited
Standard Bank Group Limited and any subsidiary (excluding Liberty) is referred to as Standard Bank in the context of this section.
The following selected significant related party transactions have occurred in the 30 June 2013 financial period:
1) Summary of movement in investment in ordinary shares held by the group in the group's holding company is as follows:
Fair
Number value Ownership
'000 Rm %
Standard Bank Group Limited
Balance at 1 January 2013 7 749 922 0,49
Purchases 1 720 194
Sales (2 397) (277)
Fair value adjustments (51)
Balance at 30 June 2013 7 072 788 0,44
2) Bancassurance
During 2010 Liberty and Standard Bank conducted a detailed review of the existing bancassurance agreement and agreed with
effect from 1 January 2011, to expand the scope thereof to include asset management, investment and health products in addition
to the insurance products across the African continent. The agreements are evergreen agreements with a 24-month notice period
for termination, but neither party may give notice of termination until February 2014.
New business insurance premium income in respect of this business in 2013 amounted to R3 342 million (2012 full year:
R5 984 million). In terms of the agreements, Liberty's subsidiaries pay joint venture profit shares to various Standard Bank
operations. The amounts to be paid are in most cases dependent on source and type of business and are paid along geographical
lines. The total net profit share calculated as payable to the Standard Bank group for 2013 is R421 million (2012 full year: R775 million).
A binder agreement has been entered into with Standard Bank effective from 1 January 2013. The binder agreement shall remain in
force for an indefinite period with a 90 day notice period for termination. Fees accrued for the year to 30 June 2013 is R44 million
(this fee is adjusted for in arriving at the net profit share).
As the joint venture bancassurance relationship provides commercial benefits to both Liberty and Standard Bank, a governance
framework is in place to protect the interests of minority shareholders.
3) Sale and repurchase agreements
As described in the accounting policies section of this announcement, the group has entered into certain agreements of sale and
repurchase of financial instruments as part of the group's asset/liability matching processes.
A total of R1,7 billion in assets have been traded with Standard Bank under a repurchase agreement with various repurchase dates
to 9 September 2013. Finance costs recognised in respect of these agreements as at 30 June 2013 was R4 million, with total
finance costs over the term of the various agreements totalling R19 million.
4) Purchases and sales of other financial instruments
In the normal course of conducting Liberty's insurance business, Liberty deposits cash with Standard Bank, purchases and sells
financial instruments issued by Standard Bank and enters into derivative transactions with Standard Bank. These transactions are
at arm's length and are primarily used to support investment portfolios for policyholders and shareholders' capital.
Financial instruments measurement
Unaudited
Financial instruments measurement analysis and fair value hierarchy
as at 30 June 2013
Measurement basis Fair value hierarchy
Financial
Designation per Financial Position Amortised soundness Provided Not
Statement cost value Fair value Total below provided
Note reference 1 2 3
Rm Rm Rm Rm Rm Rm
Assets
Pledged assets 1 759 1 759 1 759
Derivative assets 4 681 4 681 3 565 1 116
Interest in associates - held at fair value 14 975 14 975 14 975
Financial instruments 1 110 245 566 246 676 245 566
Prepayments, insurance and other receivables 4 214 4 214 4 214
Cash and cash equivalents 15 376 15 376 15 376
Total financial instrument assets 1 110 286 571 287 681 265 865 20 706
Fair value of amortised cost assets 984
Liabilities
Investment contracts with discretionary
participation features 7 951 7 951
Financial liabilities under investment contracts 67 072 67 072 67 072
Financial liabilities at amortised cost 2 131 2 131
Third party financial liabilities arising on
consolidation of mutual funds 36 316 36 316 36 316
Derivative liabilities 4 252 4 252 4 252
Insurance and other payables 9 618 9 618 9 618
Total financial instrument liabilities 2 131 7 951 117 258 127 340 107 640 9 618
Fair value of amortised cost liabilities 2 073
Notes
(1) Amortised cost
The R1 110 million financial instrument asset relates to policyholder loans. The fair value has been determined by utilising a discounted cash flow model utilising discount rates
ranging between 10,5% and 19,5%. The financial liabilities comprise subordinated bonds of R2 038 million and non-controlling interests loan of R93 million.
The fair value of these liabilities is R1 982 million and R91 million, respectively, using discount rates ranging between 8% and 10%.
(2) Financial soundness value
The financial soundness valuation methodology is described in SAP 104 issued by the Actuarial Society of South Africa. With regards to investment contracts with discretionary
participation features, the group cannot reliably measure the fair value of the investment contracts with discretionary participation features (DPF). The DPF is a contractual
right that gives investors in these contracts the rights to receive supplementary discretionary returns through participation in the surplus arising from the assets held in the
investment DPF fund. These supplementary returns are subject to the discretion of the group. Given the discretionary nature of these investments returns and the absence
of an exchange market in these contracts, there is no generally recognised methodology available to determine fair value. These instruments are issued by the group and the
intention is to hold the instruments to full contract term.
(3) Fair value hierarchy not provided
The fair value of prepayments, insurance and other receivables, cash and cash equivalents and insurance and other payables approximate their carrying value and are not
included in the hierarchy table as their settlement terms are short-term and therefore from a materiality perspective fair values are not required to be modelled.
Fair value hierarchy of financial instruments
as at 30 June 2013
The information below analyses financial assets and financial liabilities which are carried at fair value at each reporting period, by level of
hierarchy as required by IFRS 7 and IFRS 13. The different levels in the hierarchy are defined below:
Level 1 Values are determined using readily and regularly available quoted prices in an active market for identical assets or liabilities.
These prices would primarily originate from the Johannesburg Stock Exchange, the Bond Exchange of South Africa or an international
stock or bond exchange.
Level 2 Values are determined using valuation techniques or models, based on assumptions supported by observable market prices
or rates either directly (that is, as prices) or indirectly (that is, derived from prices) prevailing at the financial position date. The valuation
techniques or models are periodically reviewed and the outputs validated.
Level 3 Values are estimated indirectly using valuation techniques or models for which one or more of the significant inputs are
reasonable assumptions (that is unobservable inputs), based on market conditions.
The table below analyses the fair value measurement of applicable financial instrument assets by level:
Rm Level 1 Level 2 Level 3 Total
Assets
Equity instruments 72 952 1 411 74 363
Listed ordinary shares on the JSE 60 654 60 654
Foreign equities listed on an exchange other than the JSE 12 298 12 298
Unlisted equities 1 411 1 411
Debt instruments 41 653 17 507 513 59 673
Preference shares listed on the JSE or foreign exchanges 1 379 1 379
Unlisted preference shares 536 172 708
Listed term deposits (1) on BESA, JSE or foreign exchanges 40 274 40 274
Unlisted term deposits (1) 16 971 341 17 312
Mutual funds (2) 3 098 103 617 104 106 819
Active market 3 098 103 125 106 223
Property 422 6 151 6 573
Equity instruments 2 666 39 095 41 761
Interest-bearing instruments 5 32 057 32 062
Mixed 5 25 822 25 827
Non-active market
Equity 492 104 596
Investment policies 21 694 21 694
Derivatives 3 316 3 316
Equity 9 9
Foreign exchange 3 3
Interest rate 3 304 3 304
Total financial instrument assets carried at fair value 117 703 146 134 2 028 265 865
Comprising:
Held-for-trading 3 316 3 316
Designated as at fair value through profit or loss 117 703 142 818 2 028 262 549
Total financial instrument assets carried at fair value 117 703 146 134 2 028 265 865
There have been no transfers between Level 1, 2 or 3 during the period.
(1) Term deposits include instruments which have a defined maturity date and capital repayment. These instruments are by nature interest bearing at a predetermined rate, which
is either fixed or referenced to quoted floating indices.
(2) Mutual funds are categorised into property, equity or interest-bearing instruments based on a minimum of 80% of the underlying asset composition of the fund by value being
of a like category. In the event of "no one category meeting this threshold" it is classified as mixed assets class.
The table below analyses the fair value measurement of applicable financial instrument liabilities which are all categorised as level 2:
Rm Level 2
Liabilities
Long-term investment contract liabilities 67 072
Third party financial liabilities arising on consolidation of mutual funds 36 316
Derivatives 4 252
Total financial instrument liabilities carried at fair value 107 640
Comprising:
Held-for-trading 4 252
Fair value through profit or loss 103 388
Total financial instrument liabilities carried at fair value 107 640
There were no transfers between levels 1, 2 and 3 during the period.
Reconciliation of level 3 financial instrument assets
The table below analyses the movement of level 3 financial investments for the period under review:
2013
Rm
Balance at 1 January 2013 2 645
Fair value adjustment recognised in profit or loss as part of investment gains/(losses) (1) (151)
Additions 763
Disposals (1 229)
Balance at 30 June 2013 2 028
(1) Included in the fair value adjustment is a R222 million unrealised loss for the six months to 30 June 2013.
Level 3 significant fair value model assumptions and sensitivities
Equities R1 515 million discount rates applied between 13% and 20%.
Debt instruments R513 million R117 million recent arm's length transaction, R396 million discount rates between 6% and 9%.
Approximately 60% of these assets are allocated to policyholder unit linked portfolios and therefore changes in estimates would be
offset by equal changes in liability values.
The net shareholder exposure is approximately R820 million. Changes to discount rates applied of 10% would result in between
R58 million to R72 million after taxation net impact to profit or loss and shareholder funds.
Group's valuation process
The group's appointed asset managers have qualified valuators that perform the valuations of financial assets required for financial
reporting purposes, including level 3 fair values. These valuations are reviewed and approved every reporting period by the group
balance sheet committee. The committee is chaired by the group's financial director.
The fair value of level 3 financial instruments are determined using valuation techniques that incorporate certain assumptions that are
not supported by prices from observable current market transactions in the same instruments and are not based on available observable
market data. Such assumptions include the assumed risk adjusted discount rate applied to estimate future cash flows and the liquidity
and credit spreads applied to debt instruments. Changes in these assumptions could affect the reported fair value of these financial
instruments.
The valuation techniques used in determining the fair value of financial assets and liabilities classified within level 2
Instrument Valuation basis/techniques Main assumptions
Unlisted preference shares Discounted cash flow model (DCF) Bond and Forward Rate
Agreement interest curves
Issuer credit ratings
Liquidity spreads
Unlisted term deposits DCF Bond and interbank swap
interest rate curves
Issuer credit ratings
Liquidity spreads
Mutual funds Quoted put (exit) price provided by the Price n/a
fund manager Notice period bond interest
rate curves
Investment policies Quoted put/surrender price provided by the issuer, Price n/a
adjusting for any applicable notice periods (DCF) Bond interest rate curves
Derivative assets and liabilities Option pricing models Volatility and correlation
DCF factors
Bond and interbank swap
interest rate curves
Forward equity and currency
rates
Policyholder investment contracts liabilities
unit-linked policies Current unit price of underlying unitised financial n/a
asset that is linked to the liability, multiplied by the
number of units held
annuity certains DCF Bond and interbank swap
interest rate curves
Own credit/liquidity
Third party financial liabilities arising on the Quoted put (exit) price provided by the n/a
consolidation of mutual funds fund manager
The valuation techniques used in determining the fair value of financial assets and liabilities classified within level 3
Instrument Valuation basis/techniques Main assumptions
Unlisted equities DCF/earnings multiple Cost of capital
Bond and interbank swap
interest rate curves
Consumer price index
Gross domestic product
Recent arm's length transactions n/a
Unlisted preference shares DCF Bond and Forward Rate
Agreement interest curves
Issuer credit ratings
Liquidity spreads
Recent arm's length transactions n/a
Unlisted term deposits DCF Bond and interbank swap
interest rate curves
Issuer credit ratings
Liquidity spreads
Offsetting
Unaudited
The group does not have any financial assets or financial liabilities that are currently subject to offsetting in accordance with IAS 32.
However of the gross derivatives assets recognised of R4 681 million (31 December 2012: R6 910 million) and gross derivative liabilities
R4 252 million (31 December 2012: R6 098 million), derivative assets of R4 672 million (31 December 2012: R6 910 million) and derivative
liabilities of R4 118 million (31 December 2012: R6 098 million) are subject to master netting arrangements, with a net exposure of
R554 million (31 December 2012: R812 million).
Appendix Restatement of prior period financial statements
Statement of financial position
as at 31 December 2012
Audited Reclassifi- Unaudited
As cation Restated
previously of mutual 31 Dec
reported funds(1) 2012
Rm Rm Rm
Assets
Equipment and owner-occupied properties under development 952 952
Owner-occupied properties 1 378 1 378
Investment properties 24 133 24 133
Intangible assets 759 759
Defined benefit pension fund employer surplus 186 186
Deferred acquisition costs 449 449
Interests in joint ventures 378 378
Reinsurance assets 1 170 1 170
Long-term insurance 978 978
Short-term insurance 192 192
Operating leases accrued income 1 277 1 277
Derivative assets 6 910 6 910
Interest in associates equity accounted 72 72
Interest in associates held at fair value 13 837 522 14 359
Financial investments 231 187 10 828 242 015
Deferred taxation 253 253
Prepayments, insurance and other receivables 3 489 139 3 628
Cash and cash equivalents 6 327 4 091 10 418
Total assets 292 757 15 580 308 337
Liabilities
Long-term policyholder liabilities 236 684 236 684
Insurance contracts 164 666 164 666
Investment contracts with discretionary participation features 3 855 3 855
Financial liabilities under investment contracts 68 163 68 163
Short-term insurance liabilities 525 525
Financial liabilities at amortised cost 2 177 2 177
Third party financial liabilities arising on consolidation of mutual funds 14 465 15 550 30 015
Employee benefits 1 198 1 198
Deferred revenue 174 174
Deferred taxation 2 715 2 715
Deemed disposal taxation liability 918 918
Provisions 338 338
Operating leases accrued expense 30 30
Derivative liabilities 6 098 6 098
Insurance and other payables 8 200 30 8 230
Current taxation 724 724
Total liabilities 274 246 15 580 289 826
Equity
Ordinary shareholders' interests 15 410 15 410
Share capital 26 26
Share premium 6 078 6 078
Retained surplus 10 332 10 332
Other reserves (1 026) (1 026)
Non-controlling interests 3 101 3 101
Total equity 18 511 18 511
Total equity and liabilities 292 757 15 580 308 337
(1) Applying IFRS 10 and the revised IAS 28 has led to certain investments in mutual funds being reclassified between subsidiaries, associates and financial instruments. For further
detailed explanation, refer to the accounting policies section.
Statement of comprehensive income
for the year ended 31 December 2012
Audited Reclassifi- Unaudited
As cation IAS 19 Restated
previously of mutual Amend- 31 Dec
reported funds(1) ments 2012
Rm Rm Rm Rm
Revenue
Insurance premiums 30 720 30 720
Reinsurance premiums (1 089) (1 089)
Net insurance premiums 29 631 29 631
Service fee income from investment contracts 881 881
Investment income 12 688 948 (30) 13 606
Hotel operation sales 720 720
Investment gains 30 209 899 31 108
Fee revenue and reinsurance commission 1 877 (77) 1 800
Adjustment to defined benefit pension fund employer surplus (45) 45
Total revenue 75 961 1 770 15 77 746
Claims and policyholder benefits under insurance contracts (25 004) (25 004)
Insurance claims recovered from reinsurers 672 672
Change in long-term policyholder liabilities (19 532) (19 532)
Insurance contracts (19 228) (19 228)
Investment contracts with discretionary participation features (380) (380)
Applicable to reinsurers 76 76
Fair value adjustment to policyholder liabilities under investment
contracts (10 035) (10 035)
Fair value adjustment on third party mutual fund interests (2 979) (1 769) (4 748)
Acquisition costs (3 818) (3 818)
General marketing and administration expenses (7 445) (1) (127) (7 573)
Finance costs (243) (243)
Profit share allocations under bancassurance and other agreements (800) (800)
Profit on sale of joint venture 135 135
Equity accounted earnings from joint ventures 3 3
Profit before taxation 6 915 (112) 6 803
Taxation (2 717) 32 (2 685)
Total earnings (carried forward) 4 198 (80) 4 118
Audited Reclassifi- Unaudited
As cation IAS 19 Restated
previously of mutual Amend- 31 Dec
reported funds(1) ments 2012
Rm Rm Rm Rm
Total earnings (brought forward) 4 198 (80) 4 118
Other comprehensive income 10 80 90
Items that may be reclassified subsequently to profit or loss (121) (121)
Net change in fair value on cash flow hedges (29) (29)
Income and capital gains tax relating to net change in fair value
on cash flow hedges 8 8
Foreign currency translation 26 26
Owner-occupied properties fair value adjustment (192) (192)
Income and capital gains tax relating to owner-occupied properties
fair value adjustment 66 66
Items that may not be reclassified subsequently to profit or loss 131 80 211
Change in long-term policyholder insurance liabilities (application of
shadow accounting) 131 131
Actuarial gains on post-retirement medical aid liability 127 127
Income tax relating to post-retirement medical aid liability (36) (36)
Net adjustments to defined benefit pension fund (2) (15) (15)
Income tax relating to defined benefit pension fund 4 4
Total comprehensive income 4 208 4 208
Attribution of total earnings and comprehensive income
Total earnings attributable to:
Ordinary shareholders' interests 3 779 3 699
Non-controlling interests 419 419
4 198 4 118
Total comprehensive income attributable to:
Ordinary shareholders' interests 3 780 3 780
Non-controlling interests 428 428
4 208 4 208
Basic and fully diluted earnings per share Cents Cents Cents
Basic earnings per share 1 464,6 (31,0) 1 433,6
Fully diluted basic earnings per share 1 370,8 (29,1) 1 341,7
(1) Applying IFRS 10 and the revised IAS 28 has led to certain investments in mutual funds being reclassified between subsidiaries, associates and financial instruments. For further
detailed explanation, refer to the accounting policies section.
(2) Net adjustments to defined benefit pension fund include actuarial gains or losses, return on plan assets, reduced by the interest on the net defined benefit asset, and the effect
of the application of the asset ceiling.
Statement of financial position
as at 30 June 2012
Reclassifi-
As cation Restated
previously of mutual 30 June
reported funds(1) 2012
Unaudited Rm Rm Rm
Assets
Equipment and owner-occupied properties under development 881 881
Owner-occupied properties 1 445 1 445
Investment properties 23 032 23 032
Intangible assets 909 909
Defined benefit pension fund employer surplus 219 219
Deferred acquisition costs 432 432
Interests in joint ventures 395 395
Reinsurance assets 1 148 1 148
Long-term insurance 938 938
Short-term insurance 210 210
Operating leases accrued income 1 271 1 271
Derivative assets 5 557 5 557
Held for sale assets 200 200
Interests in associates held at fair value 12 630 1 249 13 879
Financial investments 207 055 11 315 218 370
Deferred taxation 188 188
Prepayments, insurance and other receivables 3 623 97 3 720
Cash and cash equivalents 6 665 2 897 9 562
Total assets 265 650 15 558 281 208
Liabilities
Long-term policyholder liabilities 217 252 217 252
Insurance contracts 151 905 151 905
Investment contracts with discretionary participation features 3 516 3 516
Financial liabilities under investment contracts 61 831 61 831
Short-term insurance liabilities 536 536
Financial liabilities at amortised cost 2 190 2 190
Third party financial liabilities arising on consolidation of mutual funds 12 007 15 618 27 625
Employee benefits 866 866
Deferred revenue 169 169
Deferred taxation 1 848 1 848
Provisions 389 389
Operating leases accrued expense 63 63
Derivative liabilities 4 890 4 890
Insurance and other payables 6 513 (60) 6 453
Current taxation 2 253 2 253
Total liabilities 248 976 15 558 264 534
Equity
Ordinary shareholders' interests 13 777 13 777
Share capital 26 26
Share premium 6 113 6 113
Retained surplus 8 609 8 609
Other reserves (971) (971)
Non-controlling interests 2 897 2 897
Total equity 16 674 16 674
Total equity and liabilities 265 650 15 558 281 208
(1) Applying IFRS 10 and the revised IAS 28 has led to certain investments in mutual funds being reclassified between subsidiaries, associates and financial instruments. For further
detailed explanation, refer to the accounting policies section.
Statement of comprehensive income
for the six months ended 30 June 2012
Reclassifi- Amend-
As cation ments Restated
previously of mutual to 30 June
reported funds(1) IAS 19 2012
Unaudited Rm Rm Rm Rm
Revenue
Insurance premiums 14 400 14 400
Reinsurance premiums (556) (556)
Net insurance premiums 13 844 13 844
Service fee income from investment contracts 484 484
Investment income 6 184 478 (9) 6 653
Hotel operation sales 347 347
Investment gains 9 701 292 9 993
Fee revenue and reinsurance commission 819 (38) 781
Adjustment to defined benefit pension fund employer surplus 9 (9)
Total revenue 31 388 732 (18) 32 102
Claims and policyholder benefits under insurance contracts (11 992) (11 992)
Insurance claims recovered from reinsurers 360 360
Change in long-term policyholder liabilities (6 340) (6 340)
Insurance contracts (6 329) (6 329)
Investment contracts with discretionary participation features (47) (47)
Applicable to reinsurers 36 36
Fair value adjustment to policyholder liabilities under
investment contracts (3 773) (3 773)
Fair value adjustment on third party mutual fund interests (901) (732) (1 633)
Acquisition costs (1 778) (1 778)
General marketing and administration expenses (3 568) (56) (3 624)
Finance costs (125) (125)
Profit share allocations under bancassurance and other agreements (395) (395)
Equity accounted earnings from joint ventures 16 16
Profit before taxation 2 892 (74) 2 818
Taxation (1 129) 20 (1 109)
Total earnings (carried forward) 1 763 (54) 1 709
Reclassifi- Amend-
As cation ments Restated
previously of mutual to 30 June
reported funds(1) IAS 19 2012
Unaudited Rm Rm Rm Rm
Total earnings (brought forward) 1 763 (54) 1 709
Other comprehensive income 15 54 69
Items that may be reclassified subsequently to profit or loss 22 22
Net change in fair value on cash flow hedges 3 3
Income and capital gains tax relating to net change in fair value
on cash flow hedges (1) (1)
Foreign currency translation 13 13
Owner-occupied properties fair value adjustment 15 15
Income and capital gains tax relating to owner-occupied properties
fair value adjustment (8) (8)
Items that may not be reclassified subsequently to profit or loss (7) 54 47
Change in long-term policyholder insurance liabilities
(application of shadow accounting) (7) (7)
Actuarial gains on post-retirement medical aid liability 56 56
Income tax relating to post-retirement medical aid liability (15) (15)
Net adjustments to defined benefit pension fund (2) 18 18
Income tax relating to defined benefit pension fund (5) (5)
Total comprehensive income 1 778 1 778
Attribution of total earnings and comprehensive income
Total earnings attributable to:
Ordinary shareholders' interests 1 642 1 588
Non-controlling interests 121 121
1 763 1 709
Total comprehensive income attributable to:
Ordinary shareholders' interests 1 654 1 654
Non-controlling interests 124 124
1 778 1 778
Basic and fully diluted earnings per share Cents Cents Cents
Basic earnings per share 632,7 (20,8) 611,9
Fully diluted basic earnings per share 597,1 (19,6) 577,5
(1) Applying IFRS 10 and the revised IAS 28 has led to certain investments in mutual funds being reclassified between subsidiaries, associates and financial instruments. For further
detailed explanation, refer the accounting policies section.
(2) Net adjustments to defined benefit pension fund include actuarial gains or losses, return on plan assets, reduced by the interest on the net defined benefit asset, and the effect
of the application of the asset ceiling.
Date: 01/08/2013 07:05:00 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
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