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LIBERTY HOLDINGS LIMITED - Financial results for the year ended 31 December 2019

Release Date: 27/02/2020 07:10
Code(s): LBH LBHP     PDF:  
Wrap Text
Financial results for the year ended 31 December 2019

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

Financial results for the year ended 31 December 2019 – Short form announcement

Resilience demonstrated in the current economic climate, while continuing to
invest for the future


Financial highlights:
                                                                              %
Rm (unless otherwise stated)                              2019     2018   change
Profit before taxation                                   6 297    4 297       47
Normalised headline earnings    (1)                      3 205    2 256       42
Normalised headline earnings per share (cents)   (1)   1 174,2    817,9       44
Headline earnings per share (cents)   (2)              1 220.0    981,5       24
Basic earnings per share (cents)                       1 153,2    889,1       30
Normalised return on IFRS equity (%) (1)                  14,0     10,1
Normalised group equity value per share (R)(1), (3)     147,82   138,64        7
Normalised return on group equity value (%) (1), (3)      11,5      3,8
Solvency capital requirement cover of Liberty
Group Limited (times covered) (3)                         1,99     1,87
Embedded value of new business (3)                         407      371       10
New business margin (%)   (3)                              1,0      0,9
Final dividend                                             436      415        5
(1)  Normalised: headline earnings, headline earnings per share, return on
IFRS equity, group equity value per share and return on group equity value.
These measures reflect the economic substance of the consolidation of the
listed Liberty Two Degrees REIT and the Black Economic Empowerment transaction
which differs from the required IFRS accounting treatment.
(2)   Headline earnings includes the adjustment for the remeasurement of
disposal groups classified as held for sale and the profit on sale of
subsidiary.
(3) Solvency capital requirement cover is the excess of assets over liabilities
required by an insurer to ensure that its assets remain larger than its
liabilities with a 99.5% level of certainty over a one-year time horizon,
with assets and liabilities valued in accordance with the Insurance Act, 2017.


Delivering exceptional client and adviser experiences is core to Liberty’s
strategy. In continuing to support our clients through their life journeys and
fulfilling our promises to them, death and disability payments made by Liberty in
2019 increased by 10% to R10,5 billion and annuity payments increased by 9% to
R7,8 billion. We are committed to continue investing in and utilising new digital
capabilities to offer our clients and advisers the best service and advice.

Normalised operating earnings for the year ended 31 December 2019 of R2 201
million increased by 10% on 2018, reflecting a good operational performance in
the current economic climate, particularly in STANLIB South Africa and the Africa
Regions continuing businesses. The Shareholder Investment Portfolio (SIP) earnings
of R1 004 million benefitted from improved investment market returns, particularly
in respect of foreign and local equities in 2019. Normalised headline earnings
of R3 205 million were 42% up on the previous year. Normalised return on equity
was 14,0%, compared to 10,1% in 2018.

Headline earnings for 2019 of R3 254 million, which includes a positive adjustment
of R55 million (31 December 2018: R397 million positive adjustment) arising from
the accounting mismatch on the consolidation of the Liberty Two Degrees listed
REIT, were 23% above 2018 headline earnings of R2 645 million.

Normalised group equity value per share increased by 7% to R147,82 (31 December
2018: R138,64). The normalised return on group equity value (RoGEV) increased to
11,5% from 3,8% in the prior year. The higher RoGEV was mainly attributable to
higher investment market returns during 2019 and a substantially improved
performance from STANLIB South Africa.

The group value of new business of R407 million was 10% up from R371 million in
the prior year with margin improvement from 0,9% to 1,0%. This outcome was mainly
attributable to product enhancements and margin management supported by continued
cost discipline, which mitigated the impact of low new business growth.

Group net external third-party client cash inflows increased to R13,3 billion
from R10,2 billion in 2018, supported mainly by good STANLIB South Africa net
external third-party client cash inflows. Total group assets under management
amounted to R738 billion (31 December 2018: R718 billion). Group assets under
management reduced by the transfers to other external managers of R25,4 billion
in respect of the STANLIB Africa entities which were disposed of during the year
and discontinued segregated mandates in STANLIB Kenya and Uganda. These outcomes
are consistent with the decision to exit asset management in these regions.

Group long-term insurance indexed new business of R8 125 million was 2% above
2018. Focus remains on sales efforts and new business volumes in the prevailing
consumer environment in South Africa.

The Solvency Capital Requirement cover of Liberty Group Limited, the group’s main
long-term insurance licence, of 1,99 times at 31 December 2019 is at the upper
end of the target range and underpins our ability to fulfil our promises to
policyholders and other stakeholders.

2019 Final dividend

In line with the group’s dividend policy, the board has approved and declared a
gross final dividend of 436 cents per ordinary share. The final dividend will be
paid out of income reserves and is payable on Monday, 6 April 2020 to all ordinary
shareholders recorded in the books of Liberty Holdings Limited on the record date.

The dividend of 436 cents per ordinary share will be subject to a local dividend
tax rate of 20%, which will result in a net final dividend, to those shareholders
who are not exempt from paying dividend tax, of 348,8 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, 31   March   2020
First trading day ex dividend on the JSE               Wednesday, 1   April   2020
Record date                                               Friday, 3   April   2020
Payment date                                              Monday, 6   April   2020

Share certificates may not be dematerialised or rematerialised between Wednesday,
1 April 2020 and Friday, 3 April 2020, 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, 6 April 2020.


Prospects

Management’s focus remains on improving the client and adviser experience,
delivering STANLIB’s investment performance in the top quartile, concluding
outcomes for the remaining operations under ownership review and optimising our
relationship with the Standard Bank Group.

Although we expect South African economic conditions to remain weak and are not
anticipating an improvement in the economic environment, we are confident that
our focus is appropriately directed to create sustainable longer-term value for
all stakeholders.


Short form statement

The annual financial statements including the audit opinion which sets out the
key audit matters and the basis for the unqualified opinion is available at:
https://www.libertyholdings.co.za/investor/Pages/Results-and-Reports.aspx.

This short form announcement is the responsibility of the directors. It is only
a summary of the information contained in the full announcement and does not
contain full or complete details. Any investment decision should be based on the
full announcement accessible from Thursday, 27 February 2020, via the JSE link
and available on the Company’s website at
https://www.libertyholdings.co.za/investor/Pages/Results-and-Reports.aspx.

Copies of the full announcement may also be requested by contacting Investor
Relations by email at sharon.steyn@liberty.co.za and are available for inspection
at the Company’s registered office at no charge, weekdays during office hours.

The JSE link is as follows:
https://senspdf.jse.co.za/documents/2020/jse/isse/LBH/FY19RESULT.pdf

27 February 2020

Sponsor:
Merrill Lynch South Africa (Pty) Limited

Date: 27-02-2020 07:10:00
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