LIBERTY HOLDINGS LIMITED - Operational update for the ten months ended 31 October 2014

Operational update for the ten months ended 31 October 2014

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 2014

Operating performance supported by good insurance business results

The performance of the group for the ten months to 31 October 2014 continues to reflect the benefits,
demonstrated at the half year, of product innovation and related positive momentum in insurance new
business sales with relatively stable customer behavior. Returns on the shareholder investment
portfolio for the period remain slightly below benchmark for 2014, but significantly ahead of the three
years’ cumulative benchmark. Assets under management across the group amount to R631 billion at
31 October 2014 (31 December 2013: R611 billion), with STANLIB experiencing net inflows into non-
money market retail and institutional mandates offset by money market withdrawals.

Capital position:

Consistent management of the group’s risks within the board approved risk appetite has supported
the maintenance of the group’s capital position. The group and its insurance subsidiaries remain well
capitalised as reflected by Liberty Group Limited’s capital adequacy level at 31 October 2014 of
2.61 times the regulatory minimum, compared to 2.58 times at 30 June 2014 and 2.56 times at
31 December 2013.

Insurance operations

South African retail insurance segment indexed sales up 9%

Including sales to the Retail SA LISP, the retail insurance segment indexed new business grew by 9%
to R5.3 billion for the period. Single premium new business is up 29% to R18.9 billion gross inflow
(Retail SA LISP contributing R2.1 billion). The investment new business increase continues to be
driven by strong ongoing support of our Evolve product range. Recurring premium investment and risk
business is marginally up compared to the equivalent 2013 period.

Net cash inflows for the Retail insurance segment (excluding the Retail SA LISP) are R3.6 billion for
the period following the continued good growth in single premium investment business and ongoing
good retention of customer business. Stability of the group’s experienced advisors has been a
significant contributor to this result.

Corporate business new initiatives provide significant growth in premium income and cash
flow

Corporate indexed new business improved by 20% to R779 million (single premium R237 million,
recurring premium R542 million) largely reflecting the success of the liability driven solutions unit that
have secured a number of large mandates.

Corporate net cash inflows for the period of R1 billion compare to the R187 million outflows for the
comparable period in 2013. Whilst acknowledging the impact that the volatility of investment
mandates has on cash flows, management is encouraged by the substantial net positive inflows,
reflecting market acceptance of the Liberty Corporate product offering.
Liberty Africa long-term insurance contribution to the group improves steadily

The introduction of an enhanced product portfolio has contributed to a 42% increase in indexed long-
term insurance new business with long-term insurance net customer cash inflows up 22%. Focus
continues on finding opportunities to expand the group’s footprint whilst growing and improving
efficiencies in existing operations.

LibFin consistently provides effective balance sheet management with increased returns from
the credit portfolio

LibFin Markets continues to manage the market risk exposures within a narrow range whilst steadily
improving margins from the diversified asset portfolio backing the South African insurance guaranteed
product set.

Asset management operations

STANLIB

STANLIB’s assets under management (excluding the on-balance sheet property portfolio) at
31 October 2014 amounted to R523 billion (including R159 billion segregated Liberty intragroup
mandates) compared to R514 billion at 31 December 2013. Net cash outflows (excluding intragroup)
for the period amounted to R1.7 billion, reflecting the net result of positive retail and institutional non-
money market inflows of R7.2 billion, offset by institutional money market outflows. The intragroup
segregated mandates cash flows are negative, mainly arising from changes in product mix,
policyholder taxation obligations and Liberty shareholder distributions.

Conclusion

Liberty continues to be a leading product innovator focused on meeting customer needs. Our
association with Standard Bank is a significant competitive advantage.

The core insurance and asset management businesses of Liberty continue to deliver sustainable
value, supported by the group’s proven capability in balance sheet management.

Growth initiatives are to broaden the group’s geographic representation in African markets, whilst
leveraging capabilities and expanding customer segments.

The operational update for the ten months ended 31 October 2014 has not been audited or reviewed
by the Company's auditors.


Queries:
Investor Relations
Sharon Steyn 011 408 3063
www.libertyholdings.co.za

20 November 2014
Sponsor
Merrill Lynch South Africa (Pty) Limited

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