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LIBERTY HOLDINGS LIMITED - Financial Results for the year ended 31 December 2016

Release Date: 24/02/2017 07:14
Code(s): LBH LBHP     PDF:  
Wrap Text
Financial Results for the year ended 31 December 2016

Liberty Holdings Limited 
Incorporated in the Republic of South Africa 
(Registration number: 1968/002095/06)
JSE code: LBH
ISIN code: ZAE0000127148
Preference share code: LBHP
ISIN Code: ZAE000004040
("Liberty Holdings" or "Group" or "Company")

Financial Results for the year ended 31 December 2016

Financial performance indicators for the year ended 31 December 2016

                                                                                               %
Rm (unless otherwise stated)                                            2016       2015   change
Liberty Holdings Limited
Earnings
Normalised operating earnings(1)                                       1 740      2 772     (37)
Basic earnings per share (cents)                                       811,7    1 493,5     (46)
Fully diluted basic earnings per share (cents)                         788,9    1 428,0     (55)
Normalised headline earnings per share (cents)(1)                      904,5    1 464,5     (38)
Normalised return on IFRS equity (%)(1)                                 11,4       19,5     (42)
Group equity value
Normalised group equity value per share (R)(1)                        145,86     145,96
Normalised return on group equity value (%)(1)                           5,1       10,5     (51)
Distributions per share (cents) 
Normal dividend                                                          691        691
Interim dividend                                                         276        254        9
Final dividend                                                           415        437      (5)
Total assets under management (Rbn)                                      676        668        1
Long-term insurance operations
Indexed new business (excluding contractual increases)                 7 892      7 515        5
Embedded value of new business                                           483        729     (34)
New business margin (%)                                                  1,1        1,8     (39)
Net customer cash inflows                                              1 119      5 402     (79)
Capital adequacy cover of Liberty Group Limited (times covered)         2,95       3,03      (3)
Asset Management - STANLIB 
Assets under management (Rbn)                                            586        579        1
Net cash inflows including money market(2)                             5 764      8 454     (32)
Retail and institutional net cash inflows excluding money market(2)    4 488      7 343     (39)
Money market net cash inflows(2)                                       1 276      1 111       15

(1) Normalised: operating earnings, 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 consolidation of the listed REIT Liberty Two Degrees (L2D) and the Black Economic Empowerment (BEE) transaction, as opposed to the required technical accounting treatment.
(2) Excludes intergroup life funds.

Preparation and supervision:
This announcement on Liberty Holdings Limited annual financial results for the year ended 31 December 2016 has been prepared and
supervised by Y Maharaj (Executive: Group Finance) CA(SA) and CG Troskie (Financial Director) CA(SA).

Financial review
for the year ended 31 December 2016

Lower returns from investment markets and a challenging consumer environment
contributed to weaker earnings in 2016. Group equity value has however been preserved
and the capital position remains strong. Second half sales and cash flows improved whilst
margins remained under pressure.

Overview
Group equity value per share was maintained at the prior year level
at R145,86 (31 December 2015: R145,96) Operating variances, and
modelling and assumptions changes were net positive although
lower than the prior year, supporting the assumptions underlying
the group's equity value. However, the growth in group equity
value was offset by significantly lower investment returns and
the impact of capitalisation of reduced earnings from the asset
management business.

Headline earnings for the year ended 31 December 2016 amounted
to R2 207 million, down 46,2% compared to R4 102 million in 2015.
Liberty's 2016 headline earnings were impacted by the first time
consolidation of the Liberty Two Degrees listed REIT (L2D). This
resulted in a negative earnings impact of R304 million due to an
accounting mismatch, which has been adjusted for in calculating
normalised headline earnings, as advised to shareholders in the
trading statement released on 27 January 2017.

Normalised headline earnings for the 2016 year of R2 527 million
were 38,8% lower, representing a 37,2% decline in normalised
operating earnings and a 42,0% decline in earnings from the
shareholder investment portfolio (SIP). Normalised return on equity
was 11,4% (31 December 2015: 19,5%) due to the lower earnings
in 2016.

The group was managed within the board approved risk appetite
throughout 2016 and the capital position of the group's main long-
term insurance licence, Liberty Group Limited, remained strong with
the capital adequacy ratio at 2,95 (31 December 2015: 3,03) times
the regulatory minimum.

Group sales improved in the second half of 2016 with indexed new
business growth improving to 5,0%. Various new and enhanced
product offerings, including the Guaranteed Investment Product,
a more competitive offshore investment product offering and the
launch of the Bold Living annuity, supported this result.

Management is continuing to execute on growth and geographic
expansion strategies. We are in the advanced stages of acquiring a
life licence in Nigeria.

The group successfully listed L2D in December 2016, providing an
additional investment proposition to our customers.


Normalised headline earnings
The main items contributing to the decrease in normalised headline
earnings between 2015 and 2016 were as follows:

-  Strengthening of assumption sets in the SA insurance business
   reduced earnings by R572 million from the prior year. In line
   with recent customer trends and regulatory developments, the
   retail business significantly strengthened its assumptions by
   R414 million (2015: weakened assumptions by R122 million) in the
   year. The impact of assumption changes in Liberty Corporate was
   a further strain of R36 million. These changes have strengthened
   the balance sheet, significantly improved management of interest
   rate risk and reduced future hedging costs.

-  The impact of lower investment returns on the earnings of the
   SIP amounted to R569 million. Weak local equity markets coupled
   with the rand strengthening significantly against the US dollar and
   other major currencies during 2016, resulted in a 5.7% return on
   the SIP assets. The negative mark-to-market adjustment of certain
   infrastructure investments held in the alternatives portfolio in the
   second half of 2016 negated the positive performance of these
   assets reported in the first half. The extent of the SIP exposure
   to investment markets remains appropriate in the context of the
   group's risk appetite.

-  STANLIB earnings were R267 million lower than 2015, resulting
   from decreases in the earnings from the South African operations
   of R108 million and earnings from the other African operations,
   which were R159 million down on 2015. STANLIB South Africa
   results were impacted by continued low market returns and
   positive but lower external net cash inflows, higher once off
   costs relating to the implementation of the outsourcing of its
   retail and institutional administration business and costs relating
   to provisioning for tax and client exposures. The other Africa
   business was mainly impacted by impaired bank exposures, the
   curtailment of guaranteed cash mandate business and provisions
   raised for client and operational exposures in Kenya.

-  New business strain increased by R219 million in 2016, driven
   primarily by the geared effects of lower volumes, the introduction
   of the new risk tax fund and worse business mix.

Sales
In the group's long-term insurance operations, indexed new business
was 5,0% higher at R7 892 million. Recurring premium business
increased by 4,1% over the prior year. Single premium investment
business was up 7,1%. Management continues to actively address
the priorities highlighted in the half year financial review, leading to
second half Individual Arrangements indexed new business sales up
15,0% on the first half. Various new and enhanced product offerings
were taken to market. These included continued strong support for
the Guaranteed Investment Product, a more competitive offshore
investment product offering, launch of the Bold living annuity and
further policyholder investment choice following the listing of L2D.

Net customer cash inflows amounted to R7,7 billion
(31  December  2015: R15,2 billion) within which long-term
insurance net customer cash inflows amounted to R1,1 billion
(31 December 2015: R5,4 billion). Long-term insurance cash inflows
reflected an improvement compared to the outflows of R353 million
reported at the half year despite higher claims and surrenders, but
remained subdued. Strong fourth quarter new business inflows in
Individual Arrangements, lower scheme terminations and lower
member withdrawals in Liberty Corporate contributed to the
encouraging improvement in the second half of 2016. STANLIB net
cash inflows of R5,8 billion (31 December 2015: R8,5 billion) were
lower than prior year due mainly to lower South African non-money
market flows, partly offset by improved non-money market inflows
from the African businesses. The asset management cash inflows
improved considerably from the net cash inflows of R453 million
reported at 30 June 2016.

New business margins at 1,1% (31 December 2015: 1,8%) remained
under pressure in the second half of 2016 due to writing of new
risk business in the new risk tax fund and delayed re-pricing of
these products as well as a continued change in the mix of business
sold. The value of new business reduced to R483 million from
R729 million at 31 December 2015. The improvement of the value
of new business and related margin has been set as a key priority for
2017 and a number of actions are being implemented.

Total assets under management increased marginally to R676 billion
(31 December 2015: R668 billion), due to low market returns
combined with lower net customer cash inflows during the year.

Management action
Management has taken active steps to address some of the shorter
term challenges and made a number of executive management
changes to improve the execution of the group's strategy and to
ensure that key initiatives are prioritised. These are:

-  Various management actions are underway to improve margins
   and grow the value of new business within the Individual
   Arrangements business. This is management's key priority for 2017.

-  The focus on achieving cost savings across the group is ongoing.

-  In line with the simplification of operations, projects continue
   to be delivered to enable product and customer efficiencies,
   providing more flexibility and reduced policy administration
   complexity.

-  Liberty Corporate continues to drive a multiyear project which
   will deliver a simplified suite of cost effective and flexible risk and
   investment umbrella products.

-  Ongoing focus on ensuring that the group remains within risk
   appetite.

Earnings by business unit
                                                                                            %
Rm (Unaudited)                                                        2016     2015    change
Insurance
Individual Arrangements                                              1 119    1 869      (40)
Group Arrangements                                                     149      204      (27)
Liberty Corporate                                                      191      219      (13)
Liberty Africa Insurance                                                41       25        64
Liberty Health                                                        (45)     (19)      >100
Growth initiatives                                                    (38)     (21)        81
Balance sheet management                                               318      260        22
LibFin Markets - credit portfolio                                      300      260        15
LibFin Markets - asset/liability management portfolio                   18
Asset Management                                                       362      629      (42)
STANLIB South Africa                                                   459      567      (19)
STANLIB Other Africa                                                  (97)       62    >(100)
Central overheads and sundry income                                  (208)    (190)         9
Normalised operating earnings                                        1 740    2 772      (37)
LibFin Investments - SIP                                               787    1 356      (42)
Normalised headline earnings                                         2 527    4 128      (39)
BEE preference share adjustment                                       (16)     (26)      (38)
Reversal of accounting mismatch arising on consolidation of L2D(1)   (304)
Headline earnings                                                    2 207    4 102      (46)

(1) Refer Corporate actions.

Commentary on the earnings by business unit follows on the pages below. Additional information is contained in the summary consolidated
segment information.

Individual Arrangements
Headline earnings from the group's South African retail operations
of R1 119 million were 40,1% down compared to 2015. The primary
contributors to this result were the significant strengthening of
forward looking assumptions to take account of recent customer
trends and regulatory developments, increased new business strain,
lower positive operating variances due to worsening persistency on
investment business as well as on risk business at early durations.

Net customer cash inflows of R1,9 billion (31 December 2015:
R6,3 billion) were below the prior year primarily due to the higher
value of policy surrenders and maturities experienced during 2016,
attributable to the challenging consumer environment.

Indexed new business grew by 3,4% over 2015, reflecting an
improvement on the 1,2% year on year increase reported at
30  June  2016. Strong support for the Guaranteed Investment
Product, a more competitive offshore investment product offering,
launch of the Bold Living annuity and offering policyholders further
investment choice following the successful listing of L2D contributed
to the improved performance.

Value of new business of R426 million was below the prior year
amount of R654 million due to the positive impact of the reduction
in the risk discount rate being muted by the effect of the year end
basis changes, the introduction of the new risk tax fund together
with the delayed repricing of the risk products and the impact of
acquisition expense growth exceeding new business growth. In
addition, the value of new business was negatively affected by the
business mix. The new business margin declined to 1,2% from 2,0%
at 31 December 2015.

Despite the tough environment, the business continued to deliver
positive, but lower, operating variances and was managed to better
than model. The strengthening of the forward looking assumption
sets has strengthened the balance sheet, significantly improved
management of interest rate risk and reduced future hedging costs.

Group Arrangements

Liberty Corporate
Earnings of R191 million were achieved after a once-off R36 million
charge related to strengthening of longevity improvement
assumptions. Despite the higher volume of risk claims reported
in the year, the underwriting result was slightly better than the
prior year and reflected good risk selection. Good expense control
continued during 2016. Indexed new business was 7% higher at
R842 million, with recurring premium new business up 14% due to
strong umbrella sales. Net cash outflows amounted to R751 million
(31 December 2015: R891 million), reflecting low single premium
new business and high risk claims linked to the challenging economic
environment and associated job losses.

Liberty Africa Insurance
Earnings of R41 million were above prior year earnings of R25 million.
Poor investment markets, mainly in Kenya, Namibia and Botswana,
negatively impacted shareholder investment income and fees.
However the short-term insurance businesses produced good
underwriting results demonstrating good pricing and claims
management. Indexed new business in the long-term insurance
businesses grew by 35,2% to R411 million with the value of new
business lower at R29 million (31 December 2015: R45 million) at a
margin of 5,6%. Customer cash flows of R483 million were 22,3%
up on the prior year. During 2016, three short-term insurance
acquisitions were successfully concluded in Uganda, Malawi and
Botswana and a long-term business commenced in Lesotho.

Management is continuing to execute on growth and geographic
expansion strategies. We are in the advanced stages of acquiring a
life licence in Nigeria.

Liberty Health
The business has been strategically repositioned to focus primarily
on providing health risk value solutions to employers and their
employees across the African continent. Growth of 16% per
annum in the number of Liberty Health Cover product lives has
been achieved over the last three years. Total lives serviced now
amount to 121 000. Claims loss ratios have deteriorated in line with
declining economic conditions across Africa, in particular Nigeria.
The loss of R45 million includes the impact of the curtailment of the
Liberty Medical Scheme (LMS) contracts in South Africa following
LMS's scheme amalgamation with Bonitas Medical Aid and the
consequential restructure of the administration business.

Balance sheet management

LibFin Markets - Asset liability management and
credit portfolio
Earnings from the credit portfolio, a diversified portfolio of
government, state owned enterprise and corporate securities
backing the guaranteed investment product sets, increased
to R300  million (31 December 2015: R260 million) in line with
the continued growth of the portfolio and improved portfolio
diversification.

The asset liability management portfolio, which consists of the
market and liquidity risk exposures arising from the guaranteed
investment product set, produced a profit of R18 million for the year
compared to a break even result in 2015 despite a volatile trading
environment.

LibFin assets under management were higher at R58 billion
(31 December 2015: R50 billion).

LibFin Investments - Shareholder Investment
Portfolio
The SIP includes the assets backing capital in the insurance
operations as well as the group's investment market exposure to the
90:10 book of business. This portfolio has a conservative balanced
mandate and is managed with a long-term through the cycle
investment horizon.

Market returns experienced in 2016 were muted and the portfolio
accordingly delivered a gross return of 5,7% (31 December 2015:
9,6%) which was below the strategic benchmark for the year.
The extent of the SIP exposure to investment markets remains
appropriate in the context of the group's risk appetite. The SIP
contributed R787 million (31 December 2015: R1 356 million) to the
group's normalised headline earnings.

Asset Management

STANLIB
STANLIB's headline earnings of R362 million were 42% lower than
the prior year. Continued low market returns and positive but
lower external net cash inflows, higher once off costs relating to
the implementation of the outsourcing of its retail and institutional
administration business and costs relating to provisioning for tax
and client exposures contributed to this result. The other Africa
business was mainly impacted by impaired bank exposures and
the curtailment of guaranteed cash mandate business in Kenya.
Costs incurred in identifying, resolving and providing for potential
exposures and write offs further impacted the results of the
business in Kenya. Operations in the other African territories tracked
expectation.

Total assets under management by STANLIB increased by 1% to
R586 billion (31 December 2015: R579 billion), as a result of low
growth from investment market returns and low net cash inflows.

Net customer cash inflows (excluding intergroup) amounted to
R5,8 billion compared to R8,5 billion in the prior year. This result was
mainly driven by lower South African non-money market flows and
was partly offset by improved non-money market inflows from the
African businesses. The asset management cash inflows improved
considerably from the net cash inflows of R453 million reported at
30 June 2016. Intergroup cash outflows for the year amounted to
R10,0 billion.

Bancassurance
The bancassurance partnership arrangement with Standard Bank,
which is applicable across the group's asset management and
insurance operations, continues to make a positive contribution
to new business volumes and earnings. The total indexed new
business premiums sold under the agreement increased by 6,3% to
R3,1 billion (31 December 2015: R2,9 billion).

Capital adequacy cover
The capital adequacy cover of Liberty Group Limited remained
strong at 2,95 times the statutory requirement (31 December 2015:
3,03 times). The group remains well capitalised at the upper end of
its target range in respect of the current capital regime and in respect
of capital requirements under the impending Solvency Assessment
and Management (SAM) regime. All other group subsidiary life
licences were adequately capitalised.

Capital adequacy requirements in South Africa are set at the higher
of the "termination" (TCAR) basis or "ordinary" (OCAR) basis. Both
31 December 2016 and 2015 reflected OCAR as the higher amount.

The board remains confident of the group's ability to support its
dividend policy.

Dividends

2016 final dividend
In line with the group's dividend policy, the board has approved and
declared a gross final dividend of 415 cents per ordinary share. The
final dividend will be paid out of income reserves and is payable on
Monday, 10 April 2017 to all ordinary shareholders recorded in the
books of Liberty Holdings Limited on the record date.

The dividend of 415 cents per ordinary share will be subject to a local
dividend tax rate of 20% which will result in a net interim dividend,
to those shareholders who are not exempt from paying dividend tax,
of 332 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 are as follows:

Last date to trade cum dividend on the JSE       Tuesday, 4 April 2017
First trading day ex dividend on the JSE                    Wednesday,
                                                          5 April 2017
Record date                                       Friday, 7 April 2017
Payment date                                     Monday, 10 April 2017

Share certificates may not be dematerialised or rematerialised
between Wednesday, 5 April 2017 and Friday, 7 April 2017, 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, 10 April 2017.

Prospects
Management's immediate priorities are to address shorter term
challenges relating to sales, the ongoing competitiveness of
Liberty's product suite and ongoing cost management.

Operating conditions are expected to remain tough and the
pressure on consumer disposable income is likely to continue in
the short term. However, our strategy remains intact and we are
resolute in developing competitive value propositions for our
customers, driving efficiency through simplifying our operations,
managing risk appropriately, deploying capital effectively and
pursuing profitable growth opportunities over the long term.

Thabo Dloti                                       Jacko Maree
Chief Executive                                      Chairman

23 February 2017

Transfer Secretaries
Computershare Investor Services Proprietary Limited
(Registration number 2004/003647/07)
Rosebank Towers, 15 Biermann Avenue, Rosebank
Johannesburg 2196
Tel: +27 (11) 370 5000

Sponsor:
Merrill Lynch South Africa (Pty) Limited


These results are available at http://www.libertyholdings.co.za
Telephone +27 11 408 3911


Accounting policies

The 2016 consolidated annual financial statements of Liberty
Holdings Limited have been prepared in accordance with and
contains information required by:

-  International Financial Reporting Standards (IFRS) including IAS 34
   Interim Financial Reporting (with the exception of disclosures
   required under IAS 34 16A (j) relating to fair value measurement,
   which are not required by the JSE Listing Requirements);

-  the SAICA Financial Reporting Guides as issued by the Accounting
   Practices Committee;

-  Financial Reporting Pronouncements as issued by the Financial
   Reporting Standards Council;

-  the Listings Requirements of the JSE Limited; and

-  the South African Companies Act No. 71 of 2008.

The consolidated annual financial statements have been prepared
in compliance with IFRS and interpretations for year ends
commencing on or after 1 January 2016. The accounting policies
are consistent with those adopted in the previous year except for
the mandatory adoption of minor amendments, early adoption
of amendments to IFRS and voluntary changes in presentation
policies, as set out below. The minor amendments have not
resulted in any material impacts to the group's 2016 reported
results or comparative periods.

Reinsurance liabilities were included within the aggregate
policyholder liabilities for insurance contracts. To provide more
relevant and useful information to the user, these reinsurance
liabilities have been separately disclosed on the face of the statement
of financial position, as this class of liabilities represents the effect of
management's risk mitigation action on policyholder contracts.

In addition, certain individual pure risk contracts, where the present
value of expected future inflows exceeded the present value
of expected future outflows at a portfolio level, were included
as negative liability amounts (policyholder assets) within the
aggregate policyholder liabilities for insurance contracts. A change
in presentation was adopted for the year ended 31 December 2016
to disclose portfolio level negative policyholder liabilities as
policyholder assets.

As a result of these two voluntary presentation changes, R7 314 million
(2015: R7 579 million) is disclosed separately in the statement of
financial position as long-term policyholder assets and R555  million
(2015: R617 million) is disclosed as reinsurance liabilities with a net
adjustment to long-term policyholder liabilities of R6 579 million (2015:
R6 962 million). The impact is a presentation change only and there
is no resultant change to the group's total earnings, comprehensive
income, shareholders' equity or net asset value.

The change in presentation provides more relevant and meaningful
information and closer aligns the treatment of insurance contracts
with the prescribed reporting requirements expected under IFRS 17,
the new standard on insurance contracts.

In addition, amendments to IAS 1 Presentation of Financial
Statements, effective 1 January 2016, clarify that materiality applies
to the complete set of financial statements and that the inclusion
of immaterial information can inhibit the usefulness of financial
disclosures. As a consequence, the group undertook a project
to assess the effectiveness of disclosures in the annual financial
statements and removed or amended immaterial disclosures,
resulting in a more streamlined and concise set of annual
financial statements.

Amendments to IAS 7 Statement of Cash Flows: Disclosure Initiative
and IAS 12 Income Taxes: Recognition of Deferred Tax Assets for
Unrealised Losses, effective 1 January 2017, have been early adopted
as at 1 January 2016. These amendments have not impacted on the
group results, however increased disclosure relating to financing
activities is required under the Disclosure Initiative amendments for
annual financial statements. Upon review of the financing activities
presented in the statement of cash flows, collateral deposits payable
(not related to repurchase agreements) included in 'Net proceeds
on repurchase agreements liabilities and collateral deposits payable'
would be more accurately presented as part of investing activities.
The statement of cash flows has been restated to reflect this for 2015.

Auditor statement

PricewaterhouseCoopers Inc. (PwC) have audited the consolidated
annual financial statements of Liberty Holdings Limited from which
the summary consolidated financial results have been extracted.
These summary consolidated financial results comprise the
consolidated statement of financial position at 31 December 2016,
the consolidated statement of comprehensive income, summary
consolidated changes in equity and summary consolidated cash
flows for the year then ended and selected explanatory notes.
These statements and related notes are marked as 'audited'. This
announcement itself is not audited.

The financial results contained in this announcement have been
prepared in accordance with the requirements of the JSE Limited
Listings Requirements for preliminary reports, and the requirements
of the Companies Act applicable to summary financial statements.
The Listings Requirements require preliminary reports to be prepared
in accordance with the framework concepts and the measurement
and recognition requirements of International Financial Reporting
Standards (IFRS), SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Pronouncements
as issued by the Financial Reporting Standards Council and also, as
a minimum, to contain the information required by IAS 34 Interim
Financial Reporting.

The accounting policies applied in the preparation of the
consolidated annual financial statements, from which the summary
consolidated financial results were extracted, are in terms of
IFRS and are consistent with the accounting policies applied in
the preparation of the prior year's consolidated annual financial
statements except for the changes outlined in the Accounting
policies above. This announcement does not include the information
required pursuant to paragraph 16A (j) of IAS 34. The full IAS 34
compliant summary consolidated financial results announcement
and a copy of the auditors' report is available on request or on the
company's website and at the company's registered office.

The auditors have expressed an unmodified audit opinion on the
consolidated annual financial statements. PwC have also issued an
unmodified assurance opinion on Liberty Holdings Limited's group
equity value report, which has also been marked as 'audited' in this
financial results announcement.

Shareholders are advised that in order to obtain a full understanding
of the nature of the auditors' engagement, they should obtain a
copy of the auditors' reports together with the accompanying
financial information which is available upon request from Liberty
Holdings Limited's registered office.

Directors' responsibility

The summary consolidated annual financial statements included
in this announcement are the full responsibility of the directors.
The directors confirm that the financial information has been
correctly extracted from the underlying 2016 audited consolidated

Liberty Holdings Limited annual financial statements which are
available for inspection at the company's registered office on
request.

Explanation of terms

Normalised: operating earnings, 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 consolidation of
the listed REIT Liberty Two Degrees (L2D) and the Black Economic
Empowerment (BEE) transaction, as opposed to the required
technical accounting treatment.

Reversal of accounting mismatch arising on consolidation of L2D
An accounting mismatch arises on consolidation of L2D in the
group annual financial statements, resulting from the different
measurement bases applied to L2D's assets and Liberty Group
Limited's (100% subsidiary of Liberty Holdings Limited) policyholder
liabilities. Specifically:

-  the investment property assets of L2D are included in the group
   annual financial statements at fair value; whereas

-  the corresponding obligations to Liberty Group Limited's
   policyholder assets are required under IFRS to continue to be
   measured in the group annual financial statements at the listed
   price of the L2D units.

The result of this accounting mismatch is that any increase in the
premium at which L2D's listed units trade relative to the underlying
net asset value will result in a reported loss in the group annual
financial statements. Conversely, any decrease in the premium (or
change from a premium to a discount) will result in a reported profit
in the group annual financial statements.

BEE transaction
IFRS reflects the BEE transaction as a share buy-back. Dividends
received on the group's 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.

Development costs
Represents project costs incurred on developing or enhancing
future revenue opportunities.

FCTR
Foreign Currency Translation Reserve.

"Liberty" or "group"
Represents the collective of Liberty Holdings Limited and its
subsidiaries.

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.

Consolidated statement of financial position
as at 31 December 2016
   
                                                                                          Restated    Restated
                                                                                       31 December   1 January
Rm (Audited)                                                                     2016         2015        2015
Assets   
Intangible assets                                                                 390          317         368
Defined benefit pension fund employer surplus                                     215          301         277
Properties                                                                     33 828       33 321      29 747
Equipment                                                                       1 105        1 178         975
Interests in joint ventures                                                     1 229          979
Interests in associates                                                        12 995       16 967      16 497
Deferred taxation                                                                 358          326         455
Deferred acquisition costs                                                        713          673         590
Long-term policyholder assets - insurance contracts                             7 314        7 579       6 507
Reinsurance assets                                                              1 674        1 658       1 558
Long-term insurance                                                             1 352        1 317       1 302
Short-term insurance                                                              322          341         256
Financial investments                                                         316 441      307 608     291 517
Loans and receivables                                                           1 242        1 210       1 327
Assets held for trading and for hedging                                         8 609       11 890       7 777
Repurchase agreements, scrip and collateral assets                             15 483       19 225       6 991
Prepayments, insurance and other receivables                                    5 300        4 360       3 668
Cash and cash equivalents                                                      14 994       19 305      13 985
Total assets                                                                  421 890      426 897     382 239
Liabilities   
Long-term policyholder liabilities                                            307 230      305 194     293 617
Insurance contracts                                                           204 155      205 485     201 457
Investment contracts with discretionary participation features                 11 462       11 250      10 177
Financial liabilities under investment contracts                               91 613       88 459      81 983
Reinsurance liabilities                                                           555          617         406
Third-party financial liabilities arising on consolidation of mutual funds     44 046       46 329      34 501
Provisions                                                                        191          168         173
Deferred taxation                                                               2 586        4 436       4 131
Deferred revenue                                                                  268          247         216
Deemed disposal taxation liability                                                873                      268
Short-term insurance liabilities                                                  925          937         683
Financial liabilities                                                           4 601        3 914       3 575
Liabilities held for trading and for hedging                                    6 798       11 125       5 148
Repurchase agreements liabilities and collateral deposits payable              11 748       16 159       5 191
Employee benefits                                                               1 369        1 400       1 371
Insurance and other payables                                                   11 213       10 041       9 060
Current taxation                                                                  481          337         265
Total liabilities                                                             392 884      400 904     358 605
Equity   
Ordinary shareholders' equity                                                  21 676       21 739      19 487
Share capital                                                                      26           26          26
Share premium                                                                   5 296        5 524       5 755
Retained surplus                                                               16 990       16 615      14 599
Other reserves                                                                  (636)        (426)       (893)
Non-controlling interests                                                       7 330        4 254       4 147
Total equity                                                                   29 006       25 993      23 634
Total equity and liabilities                                                  421 890      426 897     382 239

Consolidated statement of comprehensive income
for the year ended 31 December 2016

                                                                                                      Restated
Rm (Audited)                                                                                  2016        2015
Insurance premiums                                                                          41 288      39 245
Reinsurance premiums                                                                       (1 922)     (1 673)
Net insurance premiums                                                                      39 366      37 572
Fee income and reinsurance commission                                                        3 731       3 840
Investment income                                                                           20 885      19 634
Hotel operations sales                                                                         585         524
Investment (losses)/gains                                                                  (1 823)      12 425
Total revenue                                                                               62 744      73 995
Claims and policyholder benefits under insurance contracts                                (39 664)    (34 362)
Insurance claims recovered from reinsurers                                                   1 450       1 203
Change in long-term policyholder assets and liabilities                                        598     (3 725)
Liabilities under insurance contracts                                                        1 164     (3 794)
Policyholder assets related to insurance contracts                                           (265)       1 072
Investment contracts with discretionary participation features                               (404)       (802)
Applicable to reinsurers                                                                       103       (201)
Fair value adjustment to long-term policyholder liabilities under investment contracts     (3 891)     (6 181)
Fair value adjustment to financial liabilities                                                (27)        (14)
Fair value adjustment on third party mutual fund interests                                     619     (7 301)
Acquisition costs                                                                          (4 723)     (4 760)
General marketing and administration expenses                                             (10 733)    (10 149)
Finance costs                                                                              (1 415)     (1 196)
Profit share allocations under bancassurance and other agreements                          (1 029)       (933)
Equity accounted earnings from joint venture                                                    22          13
Profit before taxation                                                                       3 951       6 590
Taxation(1)                                                                                (1 325)     (2 303)
Total earnings                                                                               2 626       4 287
Other comprehensive income                                                                   (148)          62
Items that may be reclassified subsequently to profit or loss                                (101)          71
Net change in fair value on cash flow hedges                                                   218       (150)
Income and capital gains tax relating to net change in fair value on cash flow hedges         (56)          37
Foreign currency translation                                                                 (263)         184
Items that may not be reclassified subsequently to profit or loss                             (47)         (9)
Owner-occupied properties - fair value adjustment                                              (1)          54
Income and capital gains tax relating to owner-occupied properties fair value adjustment                  (17)
Change in long-term policyholder insurance liabilities (application of shadow accounting)        1        (37)
Actuarial gains/(losses) on post-retirement medical aid liability                               30        (34)
Income tax relating to post-retirement medical aid liability                                   (8)          10
Net adjustments to defined benefit pension fund(2)                                            (96)          20
Income tax relating to defined benefit pension fund                                             27         (5)
Total comprehensive income                                                                   2 478       4 349
Total earnings attributable to: 
Shareholders' equity                                                                         2 209       4 011
Non-controlling interests                                                                      417         276
                                                                                             2 626       4 287
Total comprehensive income attributable to: 
Shareholders' equity                                                                         2 128       4 010
Non-controlling interests                                                                      350         339
                                                                                             2 478       4 349
Basic and fully diluted earnings per share                                                   Cents       Cents
Basic earnings per share                                                                     811,7     1 493,5
Fully diluted basic earnings per share                                                       788,9     1 428,0

(1) IFRS requires both policyholder and shareholder taxation to be reported in the taxation line. This therefore distorts the 
    effective tax charge relative to profit before taxation.
(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.

Summary consolidated statement of changes
in shareholders' funds
for the year ended 31 December 2016

Rm (Audited)                                                                                  2016        2015     
Balance of ordinary shareholders' interests at 1 January                                    21 739      19 487
Ordinary dividends                                                                         (2 022)     (1 874)
Total comprehensive income                                                                   2 128       4 010
Share buy-back(1)                                                                            (477)       (444)
Black economic empowerment transaction                                                         195         520
Share-based payments                                                                           132         140
Transaction costs of issuing units in Liberty Two Degrees                                     (78)  
Preference dividends                                                                           (2)         (2)
Transactions between owners                                                                   (40)        (98)
Transactions between owners - Liberty Two Degrees                                              101      
Ordinary shareholders' interests                                                            21 676      21 739      
Balance of non-controlling interests at 1 January                                            4 254       4 147
Total comprehensive income                                                                     350         339
Acquisition of Liberty Two Degrees                                                           3 000  
Transactions between owners - Liberty Two Degrees                                            (101)  
Acquisition of unincorporated property partnership                                              98  
Acquisition of subsidiaries                                                                     33  
Unincorporated property partnerships net distributions                                       (219)       (144)
Non-controlling interests' share of subsidiary dividend                                       (21)        (43)
Non-controlling interests' share of shares issued/(capital reduction) in subsidiary              3         (1)
Transaction costs of issuing units in Liberty Two Degrees                                     (38)  
Transactions between owners                                                                   (29)        (44) 
Non-controlling interests                                                                    7 330       4 254        
Total equity                                                                                29 006      25 993

(1) Share buy-backs are purchases from the market to meet employee share-based payment obligations.

Summary consolidated statement of cash flows
for the year ended 31 December 2016
                  
                                                                                                      Restated
Rm (Audited)                                                                                  2016        2015
Cash flows from operating activities                                                         2 443      13 489
Cash (utlised)/generated by operations                                                     (9 157)       2 033
Interest and dividends received                                                             18 242      17 181
Dividends paid                                                                             (2 717)     (2 255)
Taxation paid                                                                              (2 260)     (2 055)
Other operating cash flows                                                                 (1 665)     (1 415)
Cash flows from investing activities                                                       (6 607)    (16 052)
Net purchase of investments                                                                (4 937)    (16 759)
Net purchase of other assets                                                                 (288)       (650)
Proceeds on collateral deposits payable                                                    (1 236)       3 246
Acquisition of subsidiaries                                                                  (146)     (1 889)
Cash flows from financing activities                                                          (18)       7 691
Net advance of financial liabilities                                                           687         339
Net proceeds on repurchase agreements liabilities                                          (3 175)       7 722
Net cash flows from equity transactions with non-controlling interests                       3 063          74
Transaction costs of issuing units in Liberty Two Degrees                                    (116)
Share buy-back                                                                               (477)       (444)
Net increase in cash and cash equivalents                                                  (4 182)       5 128
Cash and cash equivalents at the beginning of the year                                      19 305      13 985
Cash and cash equivalents acquired through business acquisitions                                61  
Foreign currency translation                                                                 (190)         192
Cash and cash equivalents at the end of the year                                            14 994      19 305

Headline earnings and earnings per share
for the year ended 31 December 2016
 
Rm (Audited)                                                                                  2016        2015
Reconciliation of total earnings to headline earnings attributable to shareholders       
Total earnings attributable to shareholders                                                  2 209       4 011
Preference share dividend                                                                      (2)         (2)
Basic earnings attributable to ordinary shareholders                                         2 207       4 009
Impairment of intangible assets                                                                            110
Tax on headline earnings adjustable item                                                                  (17)
Headline earnings attributable to ordinary shareholders                                      2 207       4 102
Net income earned on BEE preference shares                                                      16          26
Reversal of the accounting mismatch arising on consolidation of L2D(1)                         304 
Normalised headline earnings attributable to ordinary shareholders                           2 527       4 128
Weighted average number of shares in issue ('000)                                          271 883     268 423
Normalised weighted average number of shares in issue ('000)                               279 373     281 864
Fully diluted weighted average number of shares in issue ('000)                            279 760     280 736
Earnings per share                                                                           Cents       Cents
Total earnings attributable to ordinary shareholders       
Basic                                                                                        811,7     1 493,5
Headline                                                                                     811,7     1 528,2
Normalised headline                                                                          904,5     1 464,5
Fully diluted earnings attributable to ordinary shareholders       
Basic                                                                                        788,9     1 428,0
Headline                                                                                     788,9     1 461,2

(1) Refer Corporate actions.

Summary consolidated segment information
for the year ended 31 December 2016

                                             Individual      Group      Asset                   Reporting
2016                                           Arrange-   Arrange-    Manage-                     adjust-       IFRS
Rm (Audited)                                      ments      ments       ment   Other     Total  ments(1)   reported
Total revenue                                    56 583     18 050      3 384   1 097    79 114  (16 370)     62 744
Profit before taxation                            2 018        446        517     653     3 634       317      3 951
Taxation                                          (950)      (162)      (148)    (65)   (1 325)              (1 325)
Total earnings                                    1 068        284        369     588     2 309       317      2 626
Other comprehensive income/(loss)                   181      (131)       (31)   (167)     (148)                (148)
Total comprehensive income                        1 249        153        338     421     2 161       317      2 478
Attributable to non-controlling interests                        5        (7)    (31)      (33)     (317)      (350)
Shareholders                                      1 249        158        331     390     2 128                2 128
Reconciliation of total earnings to headline
earnings attributable to shareholders
Total earnings                                    1 068        284        369     588     2 309       317      2 626
Attributable to non-controlling interests                     (62)        (7)    (31)     (100)     (317)      (417)
Preference share dividend                                                         (2)       (2)                  (2)
Headline earnings                                 1 068        222        362     555     2 207                2 207
Net income earned on BEE preference shares                                         16        16                   16
Reversal of the accounting mismatch arising
on consolidation of L2D                                                           304       304                  304
Normalised headline earnings                      1 068        222        362     875     2 527                2 527

(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 customer facing units are supported by shared service functions (Group Enablement) and LibFin (incorporating LibFin Markets and
LibFin Investments), which are strategic competency units. The impact of LibFin Markets is disclosed in the relevant customer grouping.
Refer to supplementary information included in the full results announcement available on the Liberty website for the reconciliation of
business unit earnings to segment result.

                                            Individual       Group      Asset                    Reporting
2015                                          Arrange-    Arrange-    Manage-                      adjust-       IFRS
Rm (Audited)                                     ments       ments       ment    Other     Total  ments(1)   reported
Total revenue                                   57 694      18 527      3 436    2 169    81 826   (7 831)     73 995
Profit before taxation                           3 427         499        842    1 599     6 367       223      6 590
Taxation                                       (1 737)       (193)      (205)    (168)   (2 303)              (2 303)
Total earnings                                   1 690         306        637    1 431     4 064       223      4 287
Other comprehensive (loss)/income                (136)        138          44       16        62                   62
Total comprehensive income                       1 554         444        681    1 447     4 126       223      4 349
Attributable to non-controlling interests                    (106)       (10)              (116)     (223)      (339)
Shareholders                                     1 554         338        671    1 447     4 010                4 010
Reconciliation of total earnings to headline
earnings attributable to shareholders
Total earnings                                   1 690         306        637    1 431     4 064       223      4 287
Attributable to non-controlling interests                     (45)        (8)               (53)     (223)      (276)
Preference share dividend                                                          (2)       (2)                  (2)
Impairment of intangible assets                     51          21                  21        93                   93
Headline earnings                                1 741         282        629    1 450     4 102                4 102
Net income earned on BEE preference shares                                          26        26                   26
Normalised headline earnings                     1 741         282        629    1 476     4 128                4 128

(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
for the year ended 31 December 2016

1  Introduction
Liberty presents a "group equity value" report to reflect the combined value of the various components of Liberty's businesses.

Section 3 below describes the valuation bases used for each reported component. It should be noted that 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  Change in measurement basis of LibFin Markets - credit portfolio
   (LibFin Credit) and certain shareholder recurring costs
In order to improve the relevance of sources of equity value earnings and to better align to future statutory guidance on expense modelling,
with effect from 1 January 2015 the method to value the contribution of LibFin Credit and the treatment of certain recurring shareholder
costs was changed as described in the 31 December 2015 annual financial statements.

These changes have been applied retrospectively with the cumulative effect recognised at 1 January 2015. The effect of these changes at
1 January 2015 was a decrease in the normalised group equity value of R189 million.

3  Component parts of the group equity value and valuation techniques used
Group equity value has been calculated as the sum of the following component parts:

3.1 South African (SA) covered business:
The wholly owned subsidiary, Liberty Group Limited, comprises the South African long-term insurance entities and related asset holding
entities. The embedded value methodology in terms of Advisory 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.

3.2 Other businesses:

STANLIB            Valued using a 10 times (2015: 10 times) multiple of estimated sustainable earnings.

Liberty Health     As Liberty Health has yet to establish a history to support a sustainable earnings calculation, an adjusted IFRS net asset
                   value is applied.

Liberty Africa     Liberty Africa Insurance is an emerging cluster of both long and short-term insurance businesses located in various
Insurance          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. At 31 December 2016 and 31 December 2015 the combined valuations approximated the group's
                   IFRS net asset value. Therefore the IFRS net asset value was used.

Liberty Holdings   The net market value of assets and liabilities held by the Liberty Holdings Limited company excluding investments in
                   any subsidiaries which are valued separately.

3.3 Other adjustments:
These comprise the fair value of share rights allocated to staff not employed by the South African covered businesses, adjusting certain
deferred tax assets to current values and allowance for certain shareholder recurring costs incurred in Liberty Holdings Limited capitalised
at a multiple of 9 times (2015: 9 times).

4   Normalised group equity value
4.1 Analysis of normalised group equity value

31 December 2016                                                       SA covered        Other 
Rm (Audited)                                                             business   businesses      Total
Liberty Group Limited                                                      18 505                  18 505
STANLIB South Africa(2)                                                                    777        777
STANLIB Other Africa(2)                                                                    104        104
Liberty Health (including Total Health Trust)                                              404        404
Liberty Africa Insurance                                                                   808        808
Liberty Holdings                                                                         1 408      1 408
Liberty Two Degrees normalisation adjustment(1)                                          (330)      (330)
Shareholders' equity reported under IFRS                                   18 505        3 171     21 676
Difference between statutory and published valuation methods              (6 786)         (58)    (6 844)
Negative rand reserves                                                    (6 344)                 (6 344)
Deferred acquisition costs                                                  (698)                   (698)
Deferred revenue liability                                                    256                     256
Other                                                                                     (58)       (58)
Subordinated notes (including accrued interest)                             4 601                   4 601
CAR of subsidiaries                                                          (10)                    (10)
Reverse value of in-force acquired                                           (17)                    (17)
Inadmissible assets                                                         (807)         (85)      (892)
Statutory excess assets over liabilities                                   15 486        3 028     18 514
Reverse difference between statutory and published valuation methods                        58         58
Reverse CAR of subsidiaries                                                    10                      10
Reverse subordinated notes (including accrued interest)                   (4 601)                 (4 601)
Reverse inadmissible assets                                                   807           85        892
Frank Financial Services allowance for future expenses                      (100)                   (100)
Impact of discounting on deferred tax asset                                              (100)      (100)
BEE preference funding                                                        148                     148
Liberty Two Degrees normalisation adjustment(1)                                            330        330
Allowance for employee share options/rights                                  (33)         (27)       (60)
Normalised net worth                                                       11 717        3 374     15 091
Value of in-force - Individual Arrangements                                21 635                  21 635
Value of in-force - Group Arrangements: Liberty Corporate                   2 759                   2 759
Cost of required capital                                                  (1 641)                 (1 641)
Fair value adjustment - STANLIB South Africa(2)                                          5 013      5 013
Fair value adjustment - STANLIB Other Africa(2)                                            256        256
Allowance for future shareholder costs                                                 (1 892)    (1 892)
Normalised equity value                                                    34 470        6 751     41 221

(1) Represents the difference between Libertys' share of the net asset value of L2D as at 31 December 2016 and the listed 
    price of L2D units multiplied by the number of units in issue to Liberty at 31 December 2016.

(2) STANLIB total valuation:                       Rm
    South Africa                                5 790
    Other Africa                                  360
    Total                                       6 150

31 December 2015                                                       SA covered        Other
Rm (Audited)                                                             business   businesses      Total
Liberty Group Limited                                                      19 263                  19 263
STANLIB South Africa(2)                                                                    546        546
STANLIB Other Africa(2)                                                                    259        259
Liberty Health (including Total Health Trust)                                              373        373
Liberty Africa Insurance                                                                   736        736
Liberty Holdings                                                                           562        562
Shareholders' equity reported under IFRS                                   19 263        2 476     21 739
Difference between statutory and published valuation methods              (6 633)        (112)    (6 745)
Negative rand reserves                                                    (6 216)                 (6 216)
Deferred acquisition costs                                                  (651)                   (651)
Deferred revenue liability                                                    234                     234
Other                                                                                    (112)      (112)
Subordinated notes (including accrued interest)                             3 579                   3 579
CAR of subsidiaries                                                          (10)                    (10)
Reverse value of in-force acquired                                           (30)                    (30)
Inadmissible assets                                                         (584)            3      (581)
Statutory excess assets over liabilities                                   15 585        2 367     17 952
Reverse difference between statutory and published valuation methods                       112        112
Reverse CAR of subsidiaries                                                    10                      10
Reverse subordinated notes (including accrued interest)                   (3 579)                 (3 579)
Reverse inadmissible assets                                                   584          (3)        581
Frank Financial Services allowance for future expenses                      (100)                   (100)
Impact of discounting on deferred tax asset                                              (100)      (100)
BEE preference funding                                                        322                     322
Allowance for employee share options/rights                                  (61)         (48)      (109)
Normalised net worth                                                       12 761        2 328     15 089
Value of in-force - Individual Arrangements(1)                             21 521                  21 521
Value of in-force - Group Arrangements: Liberty Corporate                   2 504                   2 504
Cost of required capital                                                  (1 518)                 (1 518)
Fair value adjustment - STANLIB South Africa(2)                                          5 454      5 454
Fair value adjustment - STANLIB Other Africa(2)                                            371        371
Allowance for future shareholder costs                                                 (1 786)    (1 786)
Normalised equity value                                                    35 268        6 367     41 635

(1) Includes property liquidity fee.

(2) STANLIB total valuation:              Rm
    South Africa                       6 000
    Other Africa                         630
    Total                              6 630

4.2 Normalised group equity value earnings and value per share
 
                                                               2016                                  2015
                                                       SA                                  SA   
                                                  covered        Other                covered         Other
Rm (Audited)                                     business   businesses       Total   business    businesses       Total
      
Normalised equity value at the end of the year     34 470        6 751      41 221     35 268         6 367      41 635
Equity value at the end of the year                34 322        6 421      40 743     34 946         6 367      41 313
Liberty Two Degrees normalisation adjustment(1)                    330         330    
BEE preference shares                                 148                      148        322                       322
Net share buy-backs                                                477         477                      444         444
Funding of restricted share plan                       92         (92)                    112         (112)
Intragroup dividends                                3 500      (3 500)                  2 250       (2 250)
Dividends paid                                                   2 024       2 024                    1 876       1 876
Normalised equity value at the beginning of       
the year                                         (35 268)      (6 367)    (41 635)   (33 562)       (6 273)    (39 835)
Equity value at the beginning of the year        (34 946)      (6 367)    (41 313)   (30 564)       (8 653)    (39 217)
Change in measurement basis: recurring       
shareholder expenses                                                                  (1 315)         1 480         165
Change in measurement basis: LibFin Credit                                              (876)           900          24
BEE preference shares                               (322)                    (322)      (807)                     (807)
Normalised equity value earnings                    2 794        (707)       2 087      4 068            52       4 120
Normalised return on group equity value (%)           7,9       (11,8)         5,1       12,2           0,9        10,5
Normalised number of shares                                                282 615                              285 259
Number of shares in issue (000s)                                           272 247                              270 371
Shares held for the employee restricted share       
scheme (000s)                                                                3 794                                3 780
Adjustment for BEE shares (000s)                                             6 574                               11 108
Normalised group equity value per share (R)                                 145,86                               145,96
     
(1) Represents the difference between Libertys' share of the net asset value of L2D as at 31 December 2016 and the listed 
    price of L2D units multiplied by the number of units in issue to Liberty at 31 December 2016.

4.3  Sources of normalised group equity value earnings
   
                                                               2016                                  2015  
                                                       SA                                  SA  
                                                  covered        Other                covered         Other  
Rm (Audited)                                     business   businesses       Total   business    businesses      Total
Value of new business written in the year             454           29         483        684            45        729
Expected return on value of in-force business       2 997                    2 997      2 538                    2 538
Variances/changes in operating assumptions             43           12          55        756         (129)        627
Operating experience variances                        477           76         553        582            25        607
Property portfolio liquidity fee/STANLIB REIT        
Fund Managers(1)                                    (167)          240          73        182                      182
Operating assumption changes                        (295)        (304)       (599)      (111)         (154)      (265)
Changes in modelling methodology                       28                       28        103                      103
Development costs                                    (45)         (62)       (107)                     (41)       (41)
Headline earnings of other businesses                              185         185                      635        635
Operational equity value profits                    3 449          164       3 613      3 978           510      4 488
Non headline earnings adjustments                                                        (71)          (22)       (93)
Economic adjustments                                (683)         (67)       (750)         86         (231)      (145)
Investment return on net worth                        153         (67)          86        927         (231)        696
Investment variances(2)                             (963)                    (963)         37                       37
Change in economic assumptions                        127                      127      (878)                    (878)
(Decrease)/increase in fair value adjustments         
on value of other businesses                                     (825)       (825)                    (251)      (251)
Change in allowance for share options/rights           28           21          49         75            46        121
Group equity value earnings                         2 794        (707)       2 087      4 068            52      4 120

(1) Following the listing of Liberty Two Degrees in December 2016, STANLIB REIT Fund Managers (RF) Proprietary Limited (the Manager), 
    a 100% held subsidiary of LHL, was appointed as the Manager of L2D. The property portfolio liquidity fee which was previously earned 
    in Liberty Group Limited will be used to fund the asset management fee paid to STANLIB REIT Fund Managers. STANLIB REIT Fund Managers has 
    been valued using a 10 times multiple of the estimated sustainable earnings.
(2) Includes effect of R178 million (2015: negative R133 million) in respect of change in fair value of cash flow hedges supporting LibFin Credit.

4.4  Analysis of value of long-term insurance new business and margins

Rm (unless otherwise stated) (Audited)                                                  2016       2015
South African covered business:
Individual Arrangements                                                                1 652      1 761
Traditional Life                                                                       1 306   1 463(1)
Direct Channel                                                                            96         54
Credit Life                                                                               86         71
LibFin Credit uplift to Individual Arrangements                                          164        173
Group Arrangements: Liberty Corporate                                                    131        134
Traditional Business                                                                     113        117
LibFin Credit uplift to Group Arrangements                                                18         17
Gross value of new business                                                            1 783      1 895
Overhead acquisition (including underwriting) costs impact on value of new business  (1 243)    (1 116)
Cost of required capital                                                                (86)       (95)
Net value of South African covered new business                                          454        684
Present value of future expected premiums                                             42 370     38 886
Margin (%)                                                                               1,1        1,8
Group Arrangements: Liberty Africa Insurance 
Net value of new business                                                                 29         45
Present value of future expected premiums                                                519        679
Margin (%)                                                                               5,6        6,6
Total group net value of new business                                                    483        729
Total group margin (%)                                                                   1,1        1,8

(1) 2015 Traditional Life new business includes R71 million relating to Direct Channel new business, the equivalent of which 
    has been included under Direct Channel new business in 2016.

Long-term insurance new business
for the year ended 31 December 2016

Rm (Unaudited)                                                         2016     2015
Sources of insurance operations total new business by product type
Retail                                                               27 435   25 790
Single                                                               22 916   21 392
Recurring                                                             4 519    4 398
Institutional                                                         2 296    2 114
Single                                                                1 350    1 262
Recurring                                                               946      852
Total new business                                                   29 731   27 904
Single                                                               24 266   22 654
Recurring                                                             5 465    5 250
Insurance indexed new business                                        7 892    7 515
Sources of insurance indexed new business:
Individual Arrangements                                               6 639    6 421
Group Arrangements:                                                   1 253    1 094
Liberty Corporate                                                       842      790
Liberty Africa Insurance(1)                                             411      304

(1) Liberty owns less than 100% of certain 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 year ended 31 December 2016

Rm (Audited)                                                                          2016       2015
Net premiums by product type
Retail                                                                              43 150     40 532
Single                                                                              22 522     21 146
Recurring                                                                           20 628     19 386
Institutional                                                                       11 889     12 139
Single                                                                               3 170      3 915
Recurring                                                                            8 719      8 224
Net premium income from insurance contracts and inflows from investment contracts   55 039     52 671
Single                                                                              25 692     25 061
Recurring                                                                           29 347     27 610
Net claims and policyholders benefits by product type
Retail                                                                            (40 924)   (33 917)
Death and disability claims                                                        (6 570)    (5 947)
Policy surrender and maturity claims                                              (28 870)   (22 682)
Annuity payments                                                                   (5 484)    (5 288)
Institutional                                                                     (12 996)   (13 352)
Death and disability claims (3)                                                    (1 912)    (2 305)
Scheme terminations and member withdrawals(3)                                     (10 280)   (10 358)
Annuity payments                                                                     (804)      (689)
Net claims and policyholders benefits                                             (53 920)   (47 269)
Long-term insurance net cash flows(2)                                                1 119      5 402
Rm (Unaudited)
Sources of insurance operations net cash flows:
Individual Arrangements                                                              1 948      6 288
Group Arrangements:                                                                  (268)      (496)
Liberty Corporate                                                                    (751)      (891)
Liberty Africa Insurance(1)                                                            483        395
Asset Management:
STANLIB Multi-manager                                                                (561)      (390)

(1) Liberty owns less than 100% of certain of the entities that make up Liberty Africa. The information is recorded 
    at 100% and is not adjusted for proportional legal ownership.
(2) This excludes net cash inflows attributed to the off balance sheet GateWay LISP of R557 million (2015: R1 502 million).
(3) 2015 death and disability claims include R530 million claims relating to STANLIB Multi-Manager, the equivalent of which
    have been included under scheme terminations and member withdrawals in 2016.

Assets under management(1)
as at 31 December 2016

Rbn (Unaudited)                           2016   2015      
Managed by group business units            653    641        
STANLIB South Africa                       535    529
STANLIB Other Africa(2)                     51     50
LibFin Markets                              58     50
Other internal managers                      9     12
Externally managed                          23     27
Total assets under management(3)           676    668

(1) Includes funds under administration.
(2) Liberty owns less than 100% of certain of the entities that make up Stanlib Other Africa. The information is recorded 
    at 100% and is not adjusted for proportional legal ownership.
(3) Included in total assets under management are the following LISP December 2016 amounts:

                     Unit trusts listed (Rbn)

                 STANLIB        Other   
                 managed      managed      Total
             
STANLIB               36           72        108
Gateway                3            4          7

Asset management net cash flows - STANLIB(1)
for the year ended 31 December 2016

Rm (Unaudited)                                 2016         2015   
South Africa                                                       
Non-money market                                764        6 366   
Retail                                      (2 327)        8 511   
Institutional                                 3 091      (2 145)   
Money market                                  2 037        (672)   
Retail                                        1 007      (1 413)   
Institutional                                 1 030          741   
Net South Africa cash inflows                 2 801        5 694   
Other Africa(2)                                                    
Non-money market                              3 724          977   
Retail                                        (422)         (62)   
Institutional                                 4 146        1 039   
Money market                                  (761)        1 783   
Net Other Africa cash inflows                 2 963        2 760   
Net cash inflows from asset management        5 764        8 454   

(1) Cash flows exclude intergroup segregated life fund mandates and Delta LISP with effect from June 2016.
(2) Liberty owns less than 100% of certain of the entities that make up STANLIB Other Africa. The information is recorded at 
    100% and is not adjusted for proportional legal ownership.

Short-term insurance indicators
for the year ended 31 December 2016  
                 
Rm (Audited)                                                           2016    2015   
Net premiums                                                          1 484   1 249   
Liberty Health - medical risk                                           919     778   
Liberty Africa Insurance - motor, property, medical and other           565     471   
Net claims                                                            (994)   (771)   
Liberty Health - medical risk                                         (743)   (554)   
Liberty Africa Insurance - motor, property, medical and other         (251)   (217)   
Net cash inflows from short-term insurance                              490     478   
Unaudited                                                                             
Claims loss ratio (%)                                                                 
Liberty Health                                                           77      71
Liberty Africa Insurance                                                 44      46   
Combined loss ratio (%)                                                               
Liberty Health                                                          104     101   
Liberty Africa Insurance                                                 94      97   

Capital commitments
as at 31 December 2016 
                                           
Rm (Audited)                                                           2016    2015   
Equipment                                                               823     401   
Investment and owner-occupied properties                              1 485   1 495   
Business acquisitions                                                            45   
Committed capital(1)                                                    636     197   
Total capital commitments                                             2 944   2 138   
Under contracts                                                         657     903   
Authorised by the directors but not contracted                        2 287   1 235   

(1) Liberty has committed capital to certain infrastructure and development funds. The committed funds are only drawn down when required.

The above 2016 capital commitments will be financed by available bank facilities, existing cash resources, internally generated funds,
R60 million (2015: R255 million) from non-controlling interests in unincorporated property partnerships in respect of investment properties
and in 2016, R300 million from non-controlling interests in Liberty Two Degrees.

Business acquisition
Liberty has entered into agreements that will result in acquiring 75% of ownership in a Nigerian long-term insurer through an injection of
capital of R160 million. The transaction is subject to certain regulatory approvals. The impact of this transaction is not expected to have a
significant impact on the group's results.

Corporate actions
for the year ended 31 December 2016

Audited
Liberty Two Degrees
In order to improve policyholder investment options and to
provide access to Liberty's prestige direct property portfolio
to non policyholder investors, a portion of the Liberty Property
Portfolio (LPP) and Liberty PropCo Proprietary Limited (Liberty
PropCo - which owned 25% undivided share in the Melrose Arch
precinct in Johannesburg) was sold into a Real Estate Investment
Trust named Liberty Two Degrees (L2D).

L2D was successfully listed on the JSE on 6 December 2016.
A summary of the transactions leading to the listing are as follows:

-  LGL and Liberty PropCo sold 22% undivided shares in
   certain properties in LPP and the Melrose Arch precinct for
   626 315 789 units (526 315 789 units priced at R9,50 per unit
   and 100 000 000 units priced at R10 per unit) in L2D for a total
   of R6 billion. In addition LGL subscribed for 82 127 545 units
   priced at R9,50 per unit totalling R780 million.

-  315  789  474 units (R3 billion) were allocated to a new
   investment portfolio, Liberty Real Estate Portfolio (LREP) to
   match obligations to policyholders who voluntarily switched to
   this portfolio.

-  82 127 545 units (R780 million) were allocated to LREP to match
   obligations to policyholders who entered into new policies of
   insurance as part of a pre-listing offer.

-  The balance of 210 526 316 units priced at R9,50 per unit and
   100 000 000 units priced at R10 per unit (totalling R3 billion)
   were invested in the Shareholder Investment Portfolio of which
   R1 billion was sold to external investors on the listing day, at the
   market listing price of R10 per unit.

-  In addition, on listing, external investors subscribed for
   200 000 000 units at R10 per unit, totalling R2 billion.

Liberty is currently the most significant investor in L2D, with 67%
economic interest as at 31 December 2016. STANLIB REIT Fund
Managers (RF) Proprietary Limited (the Manager), a 100% held
subsidiary of Liberty Holdings Limited (LHL), was appointed as
manager of L2D. The Manager was also appointed as the asset
manager of LGL's remaining interest in the LPP.

On application of IFRS 10 Consolidated Financial Statements L2D is
consolidated by LHL.

LHL continues to disclose all of the previously directly owned
properties (prior to the listing of L2D), however with an increase
in external investors (disclosed as non-controlling interests).
Any transactions between external investors and LGL are regarded
as transactions between owners.

Certain insurance contracts in LGL have returns which are
contractually linked to the L2D units that are measured at fair value
(as defined under IFRS 13 Fair Value Measurement). The obligation
to the policyholder depends on the performance of the underlying
units. To match the obligations of the insurance policies, LGL has
invested in the L2D units.

Earnings volatility on consolidation of L2D
An accounting mismatch arises on consolidation of L2D as a result
of the different measurement bases required to be applied in the
Liberty Holdings Limited group annual financial statements for
L2D assets and for the corresponding LGL policyholder liabilities.
Specifically:

-  the investment property assets of L2D are included in the Liberty
   Holdings group annual financial statements at fair value; whereas

-  the corresponding obligations to LGL's policyholders in respect
   of the REIT units are required under IFRS to continue to be
   measured in the Liberty Holdings Limited group annual financial
   statements at the listed price of the L2D units.

The result of this accounting mismatch is that any increase in the
premium at which L2D's listed units trade relative to the underlying
net asset value (based on the underlying fair value of the properties)
of L2D, will result in a reported loss in the Liberty Holdings Limited
group annual financial statements.

The difference between the net asset value and the fair value of the
units held as part of the shareholder portfolio, where the market has
priced in a premium, results in a negative economic mismatch on
consolidation (representing the opportunity cost of consolidating a
listed entity in a group).

Presentation of normalised earnings
For the year ended 31 December 2016, an adjustment of
R304  million has been recognised under normalised earnings
to reverse the accounting mismatch arising on consolidation of
listed REIT, net of tax. The normalised adjustment relates only to
the accounting mismatch arising from the policyholder insurance
contract obligations linked to L2D units on consolidation.

Retirement benefit obligations
as at 31 December 2016

Audited

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 31 December 2016, the Liberty post-retirement medical aid
benefit liability was R493 million (31 December 2015: R480 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.

Related parties
for the year ended 31 December 2016

Audited
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 or have been contracted in the 31 December 2016 financial year:


1.   Summary of related party transactions with Standard Bank
1.1  Summary of movement in investment in ordinary shares held by the group in the group's holding company is
     as follows:

                                   Number      Fair value    Ownership
                                     '000              Rm            %
        
Standard Bank Group Limited        
Balance at 1 January 2016          10 501           1 192         0,66
Purchases                           6 926             918
Sales                             (7 855)         (1 083)
Fair value adjustments                                427
Balance at 31 December 2016         9 572           1 454         0,60

1.2 Bancassurance
The bancassurance business agreements with the Standard Bank
group caters for the manufacture, sale and promotion of insurance,
investment and health products through the Standard Bank's
African distribution capability. New business premium income
in respect of this business in 2016 amounted to R7 973 million
(2015: R7 503 million). In terms of the agreements, Liberty's group
subsidiaries pay 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 combined net profit share amounts accrued as payable to the
Standard Bank group for the year to 31 December 2016 is 
R1 005million (2015: R896 million).

The bancassurance business agreements are evergreen
agreements with a 24-month notice period for termination - as at
the date of the approval of these financial statements, neither party
had given notice.

A binder agreement was entered into with Standard Bank effective
from 31 December 2012. The binder agreement is associated
with the administration of policies sold under the bancassurance
business agreement, and shall remain in force for an indefinite
period with a 90-day notice period for termination. Fees accrued
for the year to 31 December 2016 is R150 million (2015: R110 million).

1.3 Purchases and sales of financial instruments
As per Liberty's 2016 group annual financial statements, in the
normal course of conducting business, Liberty deposits cash with
Standard Bank, purchases and sells financial instruments issued by
Standard Bank and enters into sale and repurchase agreements
and 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.

There are no other significant changes to related party transactions
as reported in Liberty's 2016 annual financial statements.

Offsetting, enforceable master
netting arrangements or similar agreements
as at 31 December 2016

The group does not have any financial assets or financial liabilities that are currently subject to offsetting in accordance with IAS 32 Financial
Instruments: Presentation. The table below sets out the nature of agreements and the types of rights relating to items which do not qualify
for offset but that are subject to a master netting arrangement (MNA) or similar agreement.

                                    NATURE OF AGREEMENT                                RELATED RIGHTS
Derivative assets and liabilities   International swaps and derivatives associations
                                                                                       The agreement allows for offset
Repurchase agreements               Global master repurchase agreements                in the event of default

Collateral deposits payable         Global master securities lending arrangements

                                                         Not subject      Subject
                                                              to MNA       to MNA
                                                          or similar   or similar     Financial
Rm (Audited)                                    Total     agreements   agreements    collateral       Net
2016
Assets
Assets held for trading and for hedging         8 609          (595)        8 014       (6 532)     1 482
Total assets                                    8 609          (595)        8 014       (6 532)     1 482
Liabilities 
Liabilities held for trading and for hedging    6 798           (49)        6 749       (6 532)       217
Repurchase agreements liabilities               7 064                       7 064       (7 064)
Collateral deposits payable                     4 684                       4 684       (4 684)
Total liabilities                              18 546           (49)       18 497      (18 280)       217
2015
Assets
Assets held for trading and for hedging        11 890          (163)       11 727       (9 979)     1 748
Total assets                                   11 890          (163)       11 727       (9 979)     1 748
Liabilities
Liabilities held for trading and for hedging   11 125          (143)       10 982       (9 979)     1 003
Repurchase agreements liabilities              10 239                      10 239      (10 233)         6
Collateral deposits payable                     5 920                       5 920       (5 920)
Total liabilities                              27 284          (143)       27 141      (26 132)     1 009

Financial collateral relates to these instruments that are subject to MNA or similar agreements.


Date: 24/02/2017 07:14:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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