Liberty Holdings Limited Financial results presentation 2015 · Group Arrangements 37 31 19 New business margins (%) 1.9 1.8 6 Individual Arrangements 2.1 2.0 5 Group Arrangements

Financial resultspresentation

Liberty Holdings Limited

For the six months ended 30 June

2015

financial results

Liberty Holdings Limited 1 Financial results for the six months ended 30 June 2015

Notes

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Liberty Holdings LimitedInterim resultspresentation 2015for the six months ended 30 June

Group financial performance reviewLiberty Holdings LimitedCasper Troskie, Group FD

2 Liberty Holdings Limited Financial results for the six months ended 30 June 2015

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Operating environment

Source: I-Net Bridge and Bloomberg1. Indices based to 31 Dec 2014 = 100

All Bond Index JSE All Share Index

11.55

12.17

8.048.41

ZAR/USD 10 year SA bond

SA market performance¹ ZAR/USD and bond yields

Jan 2015 Jun 2015Jan 2015 Jun 2015

• China slowdown, Greek crisis and risk of a Federal Reserve rate hike adds to uncertainty• Weak economic growth prospects continue to impact investment activity by SA private sector• Consumer confidence and sentiment continues to decline, impacting spending

4

Group financial summary

Rm (unless stated otherwise) Jun 15 Jun 14 % D

BEE normalised operating earnings 1 296 1 174 10

LibFin Investments 695 707 (2)

BEE normalised headline earnings per share (c) 705.5 664.7 6

BEE normalised headline earnings 1 991 1 881 6

Embedded value of insurance new business 369 346 7

Indexed long-term insurance new business 3 529 3 437 3

Long-term insurance net customer cash flows 2 852 3 583 (20)

Asset management net cash flows 10 317 11 618 (11)

Retail and Institutional excluding money market 5 378 4 123 30

Money market 4 939 7 495 (34)

LGL CAR cover (times covered) 3.07 2.58 19

BEE normalised Group Equity Value per share (R) 142.63 130.42 9

BEE normalised RoGEV (%) 11.8 14.7 (20)

BEE normalised RoE (%) 19.4 19.9 (3)

BOOKLET ONLY

financial results


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• Risk discount rate increased to 11.21% (37 basis points)

• Economic assumptions had a negative impact of R138m on Equity Value growth

• Whilst a number of smaller refinements were made to our assumptionsand models, none of these had a material impact on the results

• We remain comfortable with the overall ability of the Group to manageto operational assumptions

Changes in key assumptions

Insurance portfolio managed in line with expectations

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Business unit BEE normalised operating earnings

Rm Jun 15 Jun 14 % D

Individual Arrangements 873 795 10

Group Arrangements 103 90 14

Liberty Corporate 97 84 15

Liberty Africa Insurance 28 28 -

Liberty Health (22) (22) -

STANLIB 301 284 6

LibFin Markets 125 108 16

Credit portfolio 108 87 24

LibFin ALM 17 21 (19)

Central overheads and sundry income (106) (103) (3)

BEE normalised operating earnings 1 296 1 174 10


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Sources of BEE normalised Group Equity Value earnings


Value of long-term insurance new business 369 346 7

Expected return on SA covered business 1 107 1 048 6

Variances / changes in operating assumptions 325 19 >100

Headline earnings of other businesses 299 302 (1)

Operational Equity Value earnings 2 100 1 715 22

Development costs (29) (35) 17

Investment return on net worth and investment variances 206 639 (68)

Credit portfolio earnings, hedging and related cost of capital 22 38 (42)

Changes in economic assumptions – SA covered business (138) (76) (82)

Increase in fair value adjustment on value of other businesses 92 236 (61)

Change in allowance for share rights 15 24 (38)

Group Equity Value earnings 2 268 2 541 (11)

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Long-term insurance indexed new business¹

1. Excludes natural increases

Steady growth in insurance indexed new business off a high base


Individual Arrangements 3 058 2 944 4

Group Arrangements 471 493 (4)

South Africa 318 423 (25)

Rest of Africa 153 70 >100

Total 3 529 3 437 3

BOOKLET ONLY

financial results


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Value of new business

Retail margin remains within target range despite higher discount rates

Jun 15 Jun 14 % D

Value of new business (Rm) 369 346 7



New business margins (%) 1.9 1.8 6

Individual Arrangements 2.1 2.0 5

Group Arrangements 1.3 0.8 63

BOOKLET ONLY

101. Excludes Gateway LISP R0.7bn2. Includes STANLIB multi-manager

Long-term insurance net customer cash flows


Individual Arrangements¹ 3 509 2 348 49

Group Arrangements (657) 1 235 (>100)

South Africa² (865) 1 021 (>100)

Rest of Africa 208 214 (3)

Total 2 852 3 583 (20)

BOOKLET ONLY


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Assets under management

1. Excludes intergroup

Assets under management impacted by low investment returns

Rbn Jun 15 Dec 14 % D

Assets under management 645 633 2

STANLIB 560 551 2

LibFin 48 45 7

Other internal, external managers & GateWay LISP 37 37 -


STANLIB net cash flows¹ 10 317 11 618 (11)

Retail and Institutional 5 378 4 123 30

Money market 4 939 7 495 (34)

BOOKLET ONLY

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Gross return (%)

Selection of indices 2011 2012 2013 2014 1H15

SWIX 4.3 29.1 20.7 15.4 6.7ALBI 8.8 16.0 0.6 10.2 1.6STEFI 5.7 5.6 5.2 5.9 3.1R/$ exchange 22.0 4.7 23.8 10.3 5.2SIP gross return 8.1 16.0 14.6 10.3 4.4

LibFin Investments

95

100

105

110

115

120

Dec Jan Feb Mar Apr May JunLocal equity Local bonds Listed propertyForeign Local preference shares Shareholder Investment Portfolio

Asset class performance in 1H15

financial results


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LibFin Investments – Shareholder Investment Portfolio

1. For foreign currency split by asset class refer to supplementary information

Rm Jun 15 % Dec 14 %

South African Rand 20 273 78 20 023 78

Equities 2 727 11 3 823 15

Bonds 6 198 24 5 630 22

Cash 4 112 16 5 483 21

Preference shares 620 2 662 3

Property 4 462 17 3 427 13

Other 2 154 8 998 4

Foreign currency¹ 5 603 22 5 536 22

Total 25 876 100 25 559 100

Assets backing capital 13 694 53 10 958 43

Assets backing life funds 7 477 29 9 844 38

90:10 exposure 4 705 18 4 757 19

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1H15

LibFin Markets – ALM

Increased uncertainty in global markets managed by defensive ALM positioning

SWIX40 10 year swap 3 year SWIX40 implied volatility

Positive market performance despite weak second quarter

1H15

Rates marginally higher after initial bond rally

1H15

Implied volatility slightly lower on the back of positive equity returns

1.5%

1.5%

17%

BOOKLET ONLY


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LibFin Markets – Credit portfolio

• Growth in asset base of23% largely as a result of increased guaranteed policy sales by business units

• Greater allocation to the corporate sector with increased focus on African exposures outside of SA

Diversification continues to improve the risk adjusted return

Jun 15 Jun 14 % D

LibFin assets under management (Rbn) 48 39 23

Equity Value (Rm) 1 100 720 53

Credit portfolio Jun 15

Banks and Sovereign

Diversifiedcorporates

SOE

Industrials

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Capital position – 30 June 2015

RmLiberty

Holdings LimitedLiberty

Group Limited

IFRS

IFRS shareholder funds 20 488 18 258

BEE preference shares 340 340

BEE normalised shareholder funds 20 828 18 598

Regulatory capital

Shareholder assets 17 243 14 997

Regulatory capital requirement (5 309) (4 879)

Surplus above minimum requirement 11 934 10 118

Target minimum capital coverage ratio 1.50 1.50

Capital buffer 9 280 7 679

Capital ratio at period end 3.25 3.07

financial results


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• Capital management› Fitch rating affirmed at:

- Subordinated debt: ‘A+(zaf)’

- National IFS rating: ‘AA(zaf)’; outlook stable

• Return targets› Cost of equity; risk free rate + 4%

› Return targets (EV based); risk free rate + 5%

› Through the cycle ROE target >19%

• Capital buffer

› Required to attract annuity business

› >R1bn earmarked for acquisitions at LHL

› Maintain a strong capital ratio during the SAM transition

Capital management

Appropriate capital levels – continued focus on capital efficiency

BOOKLET ONLY

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SA covered business net worth – delivery on assumption

Continued delivery on the actuarial promises

Net worth (Rm) 1H15 2014 2013 2012 2011 2010

Expected net of tax transfer to net worth 1 779 3 266 2 816 2 569 2 324 2 371

Operating experience variances, assumption and modelling changes 175 566 141 52 16 (133)

Development expenses (5) (52) (53) (78) (61) -

Incentives (36) (103) (154) (181) (131) -

Change in allowance for fair valueof share options / rights 13 100 69 (125) 3 (28)

Actual net of tax transfer to net worth 1 926 3 777 2 819 2 237 2 144 2 210

Performance in line with expectation 108% 116% 100% 87% 92% 93%


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Distributions

The interim dividend has been declared in line with Liberty’s dividend policy

Per cycle – cents per share Jun 15 2014 % D

Interim 254 232 9

Final 402 -

Total 254 634 -

Business unitFinancial performance reviewLiberty Holdings LimitedCasper Troskie, Group FD

financial results


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Individual ArrangementsKey performance measures

Good performance in an increasingly difficult consumer environment

Rm (unless stated otherwise) Jun 15 Jun 14 % D

Headline earnings 873 795 10

Gross sales 12 392 11 802 5

Indexed new business 3 058 2 944 4

Insurance net customer cash flows (including LISP) 4 172 3 260 28

Value of new business 332 315 5

Retail margin excluding STANLIB (%) 2.3 2.2 5

STANLIB ‘on balance sheet’ margin (%) 0.0 0.1 -

New business margin including STANLIB (%) 2.1 2.0 5

221. Includes Liberty Health2. Includes STANLIB multi-manager

Group ArrangementsKey performance measuresRm Jun 15 Jun 14 % D


South Africa¹ 75 62 21

Rest of Africa 28 28 -

Indexed new business 471 493 (4)



Value of new business 37 31 19



Long-term insurance net cash flows (657) 1 235 (>100)

South Africa² (865) 1 021 (>100)

Rest of Africa 208 214 (3)


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STANLIBKey performance measuresRm Jun 15 Jun 14 % D


South Africa 271 254 7

Rest of Africa 30 30 -

Net client cash flows 10 317 11 618 (11)

South Africa 9 152 14 435 (37)

Rest of Africa 1 165 (2 817) >100

Rbn Jun 15 Dec 14 % D

AUM 560 551 2

South Africa 518 510 2

Rest of Africa 42 41 2

Operational performance reviewLiberty Holdings LimitedThabo Dloti, Chief Executive

financial results


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Individual Arrangements delivered ongoing strong insurance cash flows and sales with continued good retention • Focus on managing to better than model delivered another period of positive risk, persistency and

recurring expense variances

• Distribution focus on quality sales delivered higher value of new business at an improved margin

Group Arrangements improved earnings and grew new business in the rest of Africa• Continued expansion of distribution channels across the institutional market

• Recent large annuity deals contributed to earnings growth

• Management focus on expanding footprint in rest of Africa bearing fruit

• Strong new business and margin growth in the rest of Africa mainly from expanded footprint

STANLIB attracted good inflows from third party clients• Margin improvement from growth in retail flows

• Africa expansion progressing well

• Poor investment market growth in rest of Africa dampened earnings growth

A good operational performance driven by

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1H10 1H11 1H12 1H13 1H14 1H15

279

315332

2.2 2.2

2.3

1H13 1H14 1H15

VoNB (Rm) Margin (%)

976 949

206

1 064

1 424

180

Agency Broker

1H13 1H14 1H15

Individual Arrangements, focus on quality drives value

• On-going growth in both new and experienced advisers

• Continued good retention of experienced advisors

• Focus to improve productivity of distribution force

• Liberty@work channel reduced headcount due to productivity initiatives

• Focus on quality new business volumes

• Margins benefit from improved product mix offsetting higher risk discount rate

• Growth of in-force policy count supported by new products

• Successful sales efforts and continued focus on retention initiatives in a difficult environment

• Improvement in customer satisfaction levels

Focused distribution efforts grows quality sales

Continued growth in VoNB and margin¹

Growing in-force policy count

Liberty entrepreneur

1. Margin excludes STANLIB


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55%

2%

38%

5%

Broker Bancassurance

Tied Direct

12

19

10

0.40.5

0.4

1H13 1H14 1H15VoNB (Rm) Margin (%)

7882

100

65 66 69

1H13 1H14 1H15

Lives (000) CLR (%)¹

Group Arrangements, continues diversifying revenue

• Improved diversification of sales volumes through multiple channels – a key focus

• Launched new market leading index tracking investment range

• Expanding consulting business

• Slower single premium sales • Stable Growth Fund top

performing fund of its kind• Efficient delivery of umbrella

proposition• Total recurring premiums up

5% in a challenging market

• Blue growth exceeding 20%• Claims loss ratio at targeted

level• 2014 optimisation yielding

operational and cost efficiencies

• SA experienced termination of a key client

Expanded South Africandistribution channels

VoNB and margin impacted byslower large annuity sales

Increased demand for Liberty Blue medical expense risk product

1. Includes THT Medical expenses capitation business

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Liberty Africa – Group Arrangements, driving expansion initiatives

• Transactional channel launched in Standard Bank –diversification from credit driven sales

• 156 experienced agents recruited in Kenya

• Affinity channel sales continue to gain traction

• Promising early results from worksite marketing pilots

Focused strategy to diversifydistribution channels

Significant growth inindexed new business

Value of new businessup by more than 100%

51%

22%

27%

Broker / Affinity Bancassurance

Tied / Direct

71 70

153

1H13 1H14 1H15

16

12

27

11.3

5.7 7.1

1H13 1H14 1H15VoNB (Rm) Margin (%) Rm

New

bus

ines

s

• Premium income growth driven by Botswana, Namibia and Heritage Kenya

• New business in Zambia delivering ahead of expectation

• Earnings in East Africa were negatively impacted by investment markets

• Strong sales performance driven by Botswana, Kenya, Zambia and Uganda

• Margins benefit from volume, product mix and managing cost efficiencies

• New products launched to drive further volume uplift

• Increased distribution footprint planned for 2H15

financial results


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STANLIB

31 31

32

1H13 1H14 1H15

(5 051)

(2 817)

1 165

1H13 1H14 1H15

13 548

515

4 778

9 657

5 465

3 687

Non-money market Money market1H13 1H14 1H15

South African non-money market cash flows¹ improved (Rm)

South African margin growthfrom good retail inflows

Growth in net cash flows¹in the rest of Africa

1. Excludes intergroup

• Good retail flows intonon-money market products

• Money market fund flows are volatile, net inflows have continued

• Passive capability gaining traction, more than R1bnin mandates won

• AUM growth positively impacted by net cash inflows, with marginal market growth

• Retail margins benefited from flows to better margin products

• Investment performance reflective of tough market conditions

• Raised and closed R1.2bn infrastructure fund

Bps Rm

• Positive non-money marketflows from retail andinstitutional funds

• East African operationscontinue to grow

• REIT has received strong initial interest, target properties secured

• Building a visible brand on the African continent

ConclusionLiberty Holdings LimitedThabo Dloti, Group CE


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Diversifying earnings remains a key focus

873

1 296

103

301 19

692

IndividualArrangements

GroupArrangements

STANLIB Other 1H15 Expectedlong-term rateof return – SIP

Contribution to operating earnings 1H15

Contribution to operating earnings 1H14

10% 14% 6% >100% 10%

795

1 174

90

284 5

635

IndividualArrangements

GroupArrangements

STANLIB Other 1H14 Expectedlong-term rateof return – SIP

33% of Coreearnings

33% of Coreearnings

Y-YGrowth %

Rm

Rm

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South Africa

• Persistent low economic growth

• Pressure on disposable income, compounded by higher utility, interest and fuel costs

• Lowest business and consumer confidence in more than a decade

• Changing regulatory landscape

• Weaker global growth and commodity pricing increases currency pressure

Rest of Africa

• Slowing global growth – divergent issues impacting emerging and developed markets

• Commodity price weakness

• Improving regulatory and fiscal landscapes

• Revenue pressure on oil dependent economies

Headwinds expected to continue

We will navigate and adapt to continue driving sustainable value

financial results


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Individual Arrangements• Continue growing in the affluent market where our capabilities and strengths are proven

in distribution, product, risk pricing and cost efficiencies

Group Arrangements• Continue building capabilities and extending rest of Africa footprint using our comprehensive

suite of on- and off-balance sheet solutions

STANLIB• Accelerate the growth strategy to ensure we are able to capture opportunities identified

in alternative assets in South Africa and the rest of Africa

Strategic partners• Focus on opportunities identified with Standard Bank Group in the Rest of Africa

Africa expansion initiatives• Continue pursuing acquisition opportunities on the continent

We remain focused on what we need to deliver

Capture opportunities, leverage capabilities, expand and grow

Questions


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Financialresults



2015

Contents

Financial performance indicators 21

Financial review 22

Earnings by business unit 23

Accounting policies 27

Definitions 27

Consolidated statement of financial position 28

Consolidated statement of comprehensive income 29

Headline earnings and earnings per share 30

Condensed statement of changes in shareholders’ funds 31

Condensed statement of cash flows 31

Condensed segment information 32

Group equity value report 35

Long-term insurance new business 41

Long-term insurance net cash flows 42

Assets under management 43

Asset management net cash flows – STANLIB 43

Short-term insurance indicators 44

Capital commitments 44

Corporate actions 45

Retirement benefit obligations 46

Related parties 46

Offsetting 47

Appendix: Financial instrument measurement analysis and fair value hierarchy

Highlights

HighlightsGroup equity value R41 billion = R143 per share

BEE normalised operating earningsup 10%BEE normalised headline earnings up 6% BEE normalised return on IFRS equity

19%return on BEE normalised group equity value

12%value of long-term insurance new businessup 7%long-term insurance customer net cash inflows

R3 billionSTANLIB customer net cash inflows

R10 billionInterim dividendup 9%Liberty Group Limited CAR cover

3,1 timesassets under management

R645 billion

financial results


30 June2015

30 June2014

%change

31 December 2014

Liberty Holdings LimitedEarningsBEE normalised operating earnings (Rm) 1 296 1 174 10 2 586 Basic earnings per share (cents) 741,1 720,5 3 1 523,5 BEE normalised headline earnings per share (cents) 705,5 664,7 6 1 403,3 BEE normalised return on equity (%) 19,4 19,9 (3) 20,4 Group equity valueBEE normalised group equity value per share (R) 142,63 130,42 9 139,85 BEE normalised return on group equity value (%) 11,8 14,7 (20) 16,9 Distributions per share (cents) Normal dividend 254 232 9 634

Interim dividend 254 232 9 232 Final dividend n/a n/a 402

Total assets under management (Rbn) 645 639 1 633

Long-term insurance operationsIndexed new business (excluding contractual increases) (Rm) 3 529 3 437 3 7 789 Embedded value of new business (Rm) 369 346 7 941 New business margin (%) 1,9 1,8 6 2,1 Net customer cash inflows (Rm) 2 852 3 583 (20) 9 870 Capital adequacy cover of Liberty Group Limited (times covered) 3,07 2,58 19 3,07

Asset management – STANLIB (Rbn)Assets under management 559,6 561,4 550,9 Net cash inflows/(outflows) including money market(1) 10,3 11,6 (11) (7,3)

Retail and institutional net cash inflows excluding money market(1) 5,4 4,1 32 6,4Money market net cash inflows/(outflows)(1) 4,9 7,5 (35) (13,7)

(1) Excludes intergroup life funds.

Preparation and supervision:

This announcement on Liberty Holdings Limited interim financial results for the six months ended 30 June 2015 has been prepared and supervised by JC Hubbard (Group Chief Financial Officer) BCom CA (SA) and CG Troskie (Financial Director) BCom (Hons) CA (SA).

Financial performance indicatorsfor the six months ended 30 June 2015


The group’s 2015 first half performance has been characterised by continued good growth in operating earnings.

Group BEE normalised headline earnings of R1 991 million were 6% higher, representing 10% growth in operating earnings and 2% decrease in earnings from the SIP. The growth in operating earnings was supported by strong performances from Individual Arrangements, Liberty Corporate and LibFin Markets. The BEE normalised return on equity at 19,4% (30 June 2014: 19,9%) reflects ongoing efficient capital management.

In the group’s long-term insurance operations, indexed new business reflected modest growth at 3% to R3 529 million. The group’s retail Evolve investment product range continues to deliver good sales growth and there were strong linked-life annuity sales. Recurring premium risk product sales were at similar levels to the prior period.

Net customer cash inflows, while lower, remain strong with external flows of R10,3 billion (30 June 2014: R11,6 billion) into STANLIB asset management operations and R3,2 billion (30 June 2014: R4,1 billion) into the group’s long-term insurance businesses, which includes R0,4 billion net inflows into the Retail LISP. There were no large single premium Corporate business customer flows during the period, which are typically sporadic in nature. New business margins at 1,9% (30 June 2014: 1,8%) were broadly consistent with the prior year despite the increase in the risk discount rate. The insurance business continues to be managed well within the long-term actuarial expense and policyholder behaviour assumptions.

LibFin Markets ongoing build of the credit book contributed R108 million to earnings which is 24% higher than the corresponding period in 2014. Balance sheet risks were managed within mandate.

STANLIB performed in line with growth in assets under management with market value growth muted as a result of the higher weighting of interest rate sensitive assets. Margins achieved improved due to better product mix.

Total assets under management increased to R645 billion (31 December 2014: R633 billion).

The SIP gross performance of 4,4% (30 June 2014: 5,1%) was in line with benchmark, supported by good contributions from assets held in equities in international developed markets.

BEE normalised group equity value per share of R142,63 was up 9% on 30 June 2014, and reflected R2 268 million of equity value profits for the half year. This represents an annualised 11,8% (30 June 2014: 14,7%) return on opening group equity value. The higher risk discount rates that negatively impacted the value of the in-force book and lower investment returns were the main reasons for the reduction compared to 30 June 2014.

The group was managed within the board approved risk appetite and the capital position of the group’s main long-term insurance licence, Liberty Group Limited, remained strong with the capital adequacy ratio unchanged from 31 December 2014 at 3,07 times the regulatory minimum. This has been achieved despite the final dividend

payments and higher capital requirements arising from the planned increased exposure to credit assets.

Following the maturity of the various BEE ownership schemes, Liberty ordinary shares held in various financing vehicles reduced from 25,8 million ordinary shares to 11,4 million ordinary shares. Using the share price of R140,81 at the date of the release of the 31 December 2014 results as a proxy, significant value of R2,8 billion in total has been generated for the various participants.

Good progress has been made on transitioning Liberty’s organisational design to a more relevant operating model to support the recently adopted strategy with a time horizon to 2020. Key elements of this strategy are:

• A greater focus on customer centricity – with three customerfacing units now formed, namely Individual Arrangements, Group Arrangements and Asset Management, with the LibFin balance sheet management competency being retained as a specialist unit;

• Recognisingthesignificantchangesintheregulatoryenvironmentand government’s social agenda in South Africa which is likely to lead to a higher demand for products and services of Group Arrangements;

• Managing the core South African insurance operations withinacceptable sustainable long-term assumption sets;

• Launchinginnovativenewproductstoservicetargetedcustomersegments and profitably capture greater market shares;

• Optimisingthebalancesheetwithinboardapprovedriskappetitelimits;

• Accelerating the assetmanagement strategy into increasing ouralternative asset franchise offerings and capturing a greater share of flows into Africa;

• Expandingourgeographical footprint intoexpectedhighgrowthregions of sub-Saharan Africa; and

• MaximisingopportunitiesundertheStandardBankbancassuranceagreement.

We are well positioned to implement the Solvency Assessment and Management (SAM) framework (the proposed new long-term insurance solvency regime) which will become effective during 2016. Our 30 June 2015 capital calculations under the draft SAM guidelines confirm that the group is well positioned from a solvency and capital perspective.

We remain actively focused on adapting our business model to accommodate and take advantage of a number of significant other regulatory developments, including the recently announced tax changes for insurance companies, retirement and health reform and the expected consequences of the Financial Services Board’s Retail Distribution Review.

Financial review for the six months ended 30 June 2015

financial results


Earnings by business unitfor the six months ended 30 June 2015

Rm30 June

201530 June

2014%

change

12 months31 December

2014

Insurance Individual Arrangements 873 795 10 1 689 Group Arrangements 103 90 14 199

Liberty Corporate 97 84 15 170 Liberty Africa Insurance 28 28 59 Liberty Health (22) (22) (30)

Balance sheet management 125 108 16 220

LibFin Markets – credit portfolio 108 87 24 189 LibFin Markets – asset/liability matching 17 21 (19) 31

Asset management STANLIB 301 284 6 662

South Africa(1) 271 254 7 603 Other Africa 30 30 59

Central overheads and sundry income (106) (103) (3) (184)

Centre expenses and sundry income (124) (115) (8) (225)Liberty Properties(1) 18 12 50 41

BEE normalised operating earnings 1 296 1 174 10 2 586 LibFin Investments 695 707 (2) 1 382

BEE normalised headline earnings 1 991 1 881 6 3 968 BEE preference share adjustment (15) (28) 46 (53)

Headline earnings 1 976 1 853 7 3 915

(1) Liberty has entered into a strategic partnership with the retail division of JHI combining the collective property management service capabilities under a new joint venture entity, JHI Retail (Pty) Ltd. The transaction was effective 1 May 2015 with Liberty’s interest in JHI Retail being 49%. The results of operations to 30 April 2015 and the ongoing portfolio liquidity charge total R18 million were reflected in central overheads and sundry income. The Liberty Properties development capability and the 49% JHI Retail interest, which contributed R6 million to earnings, are reflected in STANLIB South Africa for the six months ended June 2015.


Individual ArrangementsHeadline earnings from the group’s South African retail operations were R873 million (30 June 2014: R795 million) reflecting an increase of 10%. An increased asset base on which management fees are charged, ongoing good expense management and positive risk variances were significant contributors to the result.

The innovative Evolve investment product range continues to be popular with single premium investment sales totalling almost R3 billion for the half year, increasing the total book size to R14 billion at 30 June 2015.

Indexed new business sales (excluding the Retail LISP and contractual increases) of R3,1 billion, increased by 4% over 2014. Recurring premium business increased by 3% on the comparative period. Growth was impacted by flat credit life sales and risk sales being affected by consumer pressures and banks shifting business to in-house product providers. The value of new business increased by 5% to R332 million at a margin of 2,1% (30 June 2014: 2,0%) which remains within the medium-term targeted range. The increase in the risk discount rate negatively impacted the total value by R13 million.

Net cash inflows (excluding the Retail LISP) were pleasing at R3,5 billion and were supported by lower policy withdrawals and claims.

Group ArrangementsLiberty CorporateHigher investment based fees and an improved contribution from the annuity book supported headline earnings increasing by 15% to R97 million. In contrast to 2014, there were no large single premium investment mandates written in the first half. These deals are sporadic in nature and indexed new business has consequently decreased by 25% to R318 million and value of new business is R10 million compared to R19 million at 30 June 2014. However, the new business pipeline, supported by our competencies in Liability Driven Solutions, remains strong. Net customer cash out flows were R859 million impacted by higher per member withdrawal values following good recent investment performance and the reduced single premium flows.

Liberty Africa InsuranceEast and Southern Africa (excluding South Africa) insurance businesses contributed R28 million (30 June 2014: R28 million) to Liberty’s headline earnings for the half year. Both the short- and long-term business have been negatively impacted by poor investment markets in East Africa. Net claims loss ratios (after re-insurance) have been consistent in the short-term insurance business. The take-on of Standard Bank’s credit life book in Zambia, along with good sales in Botswana and Namibia resulted in value of

new business growing to R27 million (30 June 2014: R12 million) at a margin of 7,1%.

The group continues to evaluate business opportunities for acquisition throughout the sub-Saharan African region and has reserved capital resources for this purpose.

Liberty HealthLiberty’s share of Liberty Health’s headline loss for the half year was R22 million (30 June 2014: R22 million loss).

Liberty’s medical expense risk product, the Liberty Blue range, is receiving growing support from corporates across sub-Saharan Africa and lives covered have increased by 22% to 100 000 from 30 June 2014. Claims loss ratios remain consistent with those evidenced in 2014.

The profitability of the South African administration business remains a challenge due to underutilisation of available capacity.

Balance sheet managementAsset liability management and credit portfolio (LibFin Markets)LibFin Markets contributed R125 million to headline earnings (30 June 2014: R108 million).

The Credit Portfolio, a diversified portfolio of government, state owned enterprise and corporate securities backing the guaranteed investment product set, contributed R108 million (30 June 2014: R87 million) in line with the growth of the portfolio and through diversification away from less efficient legacy assets.

The asset liability management earnings, the result of managing market risk arising from the guaranteed investment product set, including negative rand reserves and embedded derivatives, was R17 million for the half year benefiting from favourable interest rate and equity positioning despite elevated volatility in investment markets.

LibFin assets under management at 30 June 2015 was R48 billion (31 December 2014: R45 billion).

Shareholder Investment Portfolio (SIP) (LibFin Investments)LibFin Investments manages the SIP which comprises the group’s investment market exposure to the 90:10 book of business and the assets backing capital in the insurance operations. The portfolio which is managed under a low risk balanced mandate produced a gross return of 4,4% (30 June 2014: 5,1%) which was in line with benchmark for the half year period.

Financial reviewfor the six months ended 30 June 2015 (continued)

financial results


Financial reviewfor the six months ended 30 June 2015 (continued)

This portfolio is managed on a long term basis and in the context of the outperformance during 2013, remains significantly ahead of the past three years’ cumulative benchmarks. The return for the half year has benefited from favourable positioning to equities in international developed markets offset by underweight local equity market positions.

The portfolio contributed R695 million (30 June 2014: R707 million) to the group’s headline earnings in line with expectation.

Asset managementSTANLIBSTANLIB’s headline earnings of R301 million are 6% higher compared to the equivalent period in 2014. The group’s property development capability (previously housed under Liberty Properties) and the 49% interest in the JHI Retail partnership were transferred to STANLIB during the period and contributed R6 million to the half year earnings. Good net cash inflows (excluding intergroup) of R10,3 billion (30 June 2014: R11,6 billion), comprise inflows of R4,9 billion into the various STANLIB money market funds and R5,4 billion into higher margin retail and institutional mandates.

Total assets under management increased to R560 billion at 30 June 2015 (31 December 2014: R551 billion) reflecting the net external customer inflows, low incremental growth from investment market returns, and negative net cash flows of R6 billion in respect of intergroup flows.

The performance of 60% of the STANLIB surveyed core retail products is in the first or second quartiles over a five year time horizon.

Liberty PropertiesLiberty has entered into a strategic partnership with the retail division of JHI combining the collective property management service capabilities under a new joint venture entity, JHI Retail (Pty) Ltd. The transaction was effective 1 May 2015 with Liberty’s interest in JHI Retail being 49%. The results of operations to 30 April 2015 and the ongoing portfolio liquidity charge total R18 million and were reflected in central overheads and sundry income.

BancassuranceThe commercial bancassurance joint venture relationship with Standard Bank, which is applicable across the group’s asset management and insurance operations, continues to make a considerable contribution to new business volumes and earnings.

The total SA covered business embedded value of in-force contracts sold under the agreement attributable to Liberty at 30 June 2015 was R1,5 billion (31 December 2014: R1,5 billion). The growth in the value through new business has been offset by the increase in the risk discount rate which has negatively impacted the current value of the book.

Tax legislationThe 2014 Taxation Laws Amendment Act, has introduced a fifth tax fund with effect from 1 January 2016. Insurance entities will from the effective date need to write risk policies in this fund going forward. A number of details surrounding the transition and application have been included in the recently issued draft 2015 Taxation Laws Amendment Bill. We are currently investigating the consequential impacts to product pricing and profitability. Our initial assessment is that we do not anticipate significant changes to policyholder liability assumptions that were used in the 30 June 2015 measurement, however, it is likely that there will be upward pricing pressure on risk policies across the industry.

Capital adequacy coverThe capital adequacy cover of Liberty Group Limited remained strong at 3,07 times the statutory requirement (31 December 2014: 3,07 times). All the 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 30 June 2015 and 31 December 2014 reflected the higher amount as OCAR.

Dividends2015 interim dividendIn line with the group’s dividend policy, the board has approved and declared a gross interim dividend of 254 cents per ordinary share. The interim dividend will be payable out of income reserves and is payable to all ordinary shareholders recorded in the books of Liberty Holdings Limited at the close of business on Friday, 4 September 2015.

The dividend of 254 cents per ordinary share will be subject to a local dividend tax rate of 15% which will result in a net final dividend, to those shareholders who are not exempt from paying dividend tax, of 215,9 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

Friday, 28 August 2015

First trading day ex dividend on the JSE

Monday, 31 August 2015

Record date Friday, 4 September 2015

Payment date Monday, 7 September 2015

Share certificates may not be dematerialised or rematerialised between Monday, 31 August 2015 and Friday, 4 September 2015, 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, 7 September 2015.

ProspectsOur strategy 2020 places significant emphasis on growth throughout sub-Saharan Africa by enhancing customer value propositions while better leveraging and developing existing and new capabilities. Inherent in this strategy is our ability to adapt to and take advantage of the fast changing regulatory and consumer environments.

This strategic focus, combined with our proven ability to deliver return on group equity value in excess of our long-term targets, supports our confidence that we will continue to sustainably grow our business.

Thabo Dloti Jacko MareeChief Executive Chairman

7 August 2015

Liberty Holdings Limited Incorporated in the Republic of South Africa (Registration number: 1968/002095/06)JSE code: LBHISIN code: ZAE0000127148Telephone +27 11 408 3911

Transfer SecretariesComputershare Investor Services (Pty) Limited(Registration number: 2004/003647/07)Ground Floor, 70 Marshall Street, Johannesburg 2001PO Box 61051, Marshalltown 2107Telephone +27 11 370 5000www.libertyholdings.co.za

Sponsor

These results are available at www.libertyholdings.co.za

Financial review for the six months ended 30 June 2015

financial results


Accounting policies

The unaudited condensed interim consolidated financial statements for the six months ended 30 June 2015 have been prepared in accordance with and containing information required by:

• International Financial Reporting Standards (IFRS), includingIAS 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);

• theSAICAFinancialReportingGuidesasissuedbytheAccountingPractices Committee;

• FinancialPronouncementsas issuedbytheFinancialReportingStandards Council;

• theListingsRequirementsoftheJSELimited;and

• theSouthAfricanCompaniesActNo.71of2008.

The full interim report for the six months ended 30 June 2015 (which includes paragraph IAS 34 16A (j)) is available on the Liberty Holdings Limited website and upon request at the company’s registered offices.

The accounting policies applied in the preparation of these interim financial statements are in terms of IFRS and are consistent with those applied in the previous consolidated annual financial statements, except for the mandatory adoption of minor amendments to IFRS, which are effective for years commencing 1 January 2015. These changes have not resulted in any material impacts to the 2015 group’s reported results, comparative periods or interim disclosures.

Review/audit These interim results have not been reviewed or audited by the company’s auditors, PricewaterhouseCoopers Inc.

Definitions

BEE normalised: headline earnings per share, return on equity, group equity value per share and return on group equity valueThese measures reflect the economic reality of the Black Economic Empowerment (BEE) transaction as opposed to the required technical accounting treatment that reflects the BEE transaction as a share buy-back. Dividends received on the group’s BEE preference shares (which are recognised as an asset for this purpose) are included in income. Shares in issue relating to the transaction are reinstated.

Capital adequacy requirement (CAR)The capital adequacy requirement is the minimum amount by which the Financial Services Board requires an insurer’s assets to exceed its liabilities. The assets, liabilities and CAR must be calculated using a method which meets the Financial Services Board’s requirements. Capital adequacy cover refers to the amount of capital the insurer has as a multiple of the minimum requirement.

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

Long-term insurance operations – Indexed new businessThis 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 marginThe 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 ratioThis is a measure of underwriting risk and is measured as a ratio of claims incurred divided by the net premiums earned.

FCTRForeign Currency Translation Reserve.

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


Unaudited Unaudited Audited

Rm30 June

201530 June

201431 December

2014

AssetsEquipment and owner-occupied properties under development 1 009 948 975 Owner-occupied properties 1 463 1 423 1 464 Investment properties 29 273 25 645 27 022 Intangible assets 314 394 368 Defined benefit pension fund employer surplus 278 215 277 Deferred acquisition costs 643 563 590 Interests in joint ventures 512 6 Reinsurance assets 1 591 1 738 1 558

Long-term insurance 1 293 1 246 1 302 Short-term insurance 298 492 256

Operating leases – accrued income 1 222 1 221 1 261 Pledged assets measured at fair value through profit or loss(1) 16 522 6 364 6 991 Assets held for trading and for hedging 8 593 6 706 7 777 Interests in associates – measured at fair value through profit or loss 16 816 18 778 16 497 Financial investments 307 464 290 810 292 844 Deferred taxation 364 313 455 Prepayments, insurance and other receivables 6 014 5 042 3 668 Cash and cash equivalents 12 297 13 124 13 985

Total assets 404 375 373 290 375 732

LiabilitiesLong-term policyholder liabilities 295 353 278 898 287 516

Insurance contracts 199 488 189 034 195 356 Investment contracts with discretionary participation features 10 112 9 867 10 177 Financial liabilities under investment contracts 85 753 79 997 81 983

Short-term insurance liabilities 758 901 683 Financial liabilities 3 906 3 167 3 575 Third party financial liabilities arising on consolidation of mutual funds 41 375 42 456 34 501 Employee benefits 958 1 002 1 371 Deferred revenue 235 206 216 Deferred taxation 4 373 3 827 4 131 Deemed disposal taxation liability 272 268 Provisions 169 155 173 Derivative liabilities 5 933 6 523 5 148 Repurchase agreements liabilities and collateral received(1) 14 880 4 213 5 191 Insurance and other payables 11 455 8 876 9 060 Current taxation 326 678 265

Total liabilities 379 721 351 174 352 098

EquityShareholders’ interests 20 488 18 351 19 487

Share capital 26 26 26 Share premium 5 593 5 919 5 755 Retained surplus 15 401 13 356 14 599 Other reserves (532) (950) (893)

Non-controlling interests 4 166 3 765 4 147

Total equity 24 654 22 116 23 634

Total equity and liabilities 404 375 373 290 375 732 (1) The increase in pledged assets reflects higher utilisation of asset repurchase agreements and scrip lending.

Consolidated statement of financial positionas at 30 June 2015

financial results


Unaudited UnauditedAudited

12 months

Rm30 June

201530 June

201431 December

2014

RevenueInsurance premiums 18 741 18 541 42 139 Reinsurance premiums (800) (695) (1 415) Net insurance premiums 17 941 17 846 40 724 Service fee income from investment contracts 483 450 916 Investment income 10 178 7 257 15 796 Hotel operations sales 241 371 673 Investment gains 5 633 15 019 19 274 Fee revenue and reinsurance commission 1 324 1 197 2 322 Total revenue 35 800 42 140 79 705 Claims and policyholder benefits under insurance contracts (16 242) (15 821) (32 629) Insurance claims recovered from reinsurers 501 526 898 Change in long-term policyholder liabilities (4 175) (9 014) (15 469) Insurance contracts (4 168) (8 286) (14 559) Investment contracts with discretionary participation features (1) (813) (1 050) Applicable to reinsurers (6) 85 140 Fair value adjustment to policyholder liabilities under investment contracts (3 389) (5 074) (7 473) Fair value adjustment on third party mutual fund interests (1 300) (2 196) (3 585) Acquisition costs (2 228) (2 135) (4 579) General marketing and administration expenses (4 775) (4 578) (9 376) Finance costs (397) (291) (407) Profit share allocations under bancassurance and other agreements (435) (434) (876)Equity accounted earnings from joint venture 2 Profit before taxation 3 362 3 123 6 209 Taxation(1) (1 225) (1 121) (1 926) Total earnings 2 137 2 002 4 283 Other comprehensive loss (73) (57) (47) Items that may be reclassified subsequently to profit or loss (86) (46) (52) Net change in fair value on cash flow hedges (40) (65) (129) Income and capital gains tax relating to net change in fair value on cash flow hedges 12 16 36 Foreign currency translation (58) 3 41 Items that may not be reclassified subsequently to profit or loss 13 (11) 5 Owner-occupied properties – fair value adjustment 16 13 22 Income and capital gains tax relating to owner-occupied properties fair value adjustment (5) (5) (25) Change in long-term policyholder insurance liabilities (application of shadow accounting) (11) (8) (12) Actuarial gains/(losses) on post-retirement medical aid liability 19 (18) (16) Income tax relating to post-retirement medical aid liability (5) 5 4 Net adjustments to defined benefit pension fund (1) 2 62 Income tax relating to defined benefit pension fund (30)

Total comprehensive income 2 064 1 945 4 236 Total earnings attributable to:Shareholders’ interests 1 977 1 854 3 917 Non-controlling interests 160 148 366

2 137 2 002 4 283 Total comprehensive income attributable to:Shareholders’ interests 1 927 1 797 3 864 Non-controlling interests 137 148 372

2 064 1 945 4 236 Basic and fully diluted earnings per share Cents Cents Cents Basic earnings per share 741,1 720,5 1 523,5 Fully diluted basic earnings per share 704,7 659,1 1 392,4 (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.

Consolidated statement of comprehensive incomefor the six months ended 30 June 2015


Rm (unless otherwise stated)

Unaudited 30 June

2015

Unaudited 30 June

2014

Audited 12 months

31 December 2014

Reconciliation of total earnings to headline earnings attributable to shareholdersTotal earnings attributable to equity holders 1 977 1 854 3 917 Preference share dividend (1) (1) (2)

Basic and headline earnings attributable to ordinary shareholders 1 976 1 853 3 915 Net income earned on BEE preference shares 15 28 53

BEE normalised headline earnings attributable to ordinary shareholders 1 991 1 881 3 968

Weighted average number of shares in issue (‘000) 266 646 257 181 256 975 BEE normalised weighted average number of shares in issue (‘000) 282 227 282 977 282 771 Fully diluted weighted average number of shares in issue (‘000) 280 402 281 138 281 165

Earnings per share Cents Cents Cents

Total earnings attributable to ordinary shareholdersBasic 741,1 720,5 1 523,5 Headline 741,1 720,5 1 523,5 BEE normalised headline 705,5 664,7 1 403,3

Fully diluted earnings attributable to ordinary shareholdersBasic 704,7 659,1 1 392,4 Headline 704,7 659,1 1 392,4

Headline earnings and earnings per share for the six months ended 30 June 2015

financial results



Rm30 June

201530 June

201431 December

2014

Balance of ordinary shareholders’ interests at 1 January 19 487 17 654 17 654 Ordinary dividends (1 150) (1 056) (1 719) Total comprehensive income 1 927 1 797 3 864 Share buy-backs net of share subscriptions (337) (224) (355) Black Economic Empowerment transaction 492 95 153 Share-based payments 70 68 133 Preference dividends (1) (1) (2) Transactions between owners 18 (230) Common control transaction (11)

Ordinary shareholders’ interests 20 488 18 351 19 487

Balance of non-controlling interests at 1 January 4 147 3 702 3 702 Total comprehensive income 137 148 372 Unincorporated property partnerships net distributions (97) (63) (79) Non-controlling share of subsidiary dividend (21) (4) (38) Transactions between owners (18) 190

Non-controlling interests 4 166 3 765 4 147

Total equity 24 654 22 116 23 634

Condensed statement of cash flows for the six months ended 30 June 2015

Unaudited UnauditedAudited

12 months

Rm30 June

201530 June

201431 December

2014

Operating activities(1) 20 278 5 164 5 832 Investing activities(1) (21 928) (1 723) (1 928) Financing activities 1 (188) 179

Net (decrease)/increase in cash and cash equivalents (1 649) 3 253 4 083 Cash and cash equivalents at the beginning of the year 13 985 9 870 9 870 Cash and cash equivalents acquired through business acquisition 5 Foreign currency translation (39) 1 27

Cash and cash equivalents at the end of the period 12 297 13 124 13 985 (1) Both operating and investing activities have increased substantially due to the higher utilisation of asset repurchase agreements and scrip lending transactions.

Condensed statement of changes in shareholders’ funds for the six months ended 30 June 2015


The unaudited segment results for the six months ended 30 June 2015 are as follows:

Rm

Long-term insurance Short-term

insurance

Asset manage-

mentHealth

services Other Total

Reporting adjust-

ments(1)IFRS

reportedRetailInstitu-

tional

Total revenue 30 473 7 349 658 1 612 179 904 41 175 (5 375) 35 800

Profit/(loss) before taxation 2 270 265 40 429 (44) 276 3 236 126 3 362 Taxation (979) (66) (16) (102) 15 (77) (1 225) (1 225)

Total earnings/(loss) 1 291 199 24 327 (29) 199 2 011 126 2 137 Other comprehensive (loss)/income (49) 1 (20) (4) (1) (73) (73)

Total comprehensive income/(loss) 1 242 200 4 323 (29) 198 1 938 126 2 064 Attributable to: Non-controlling interests (15) 1 (3) 2 4 (11) (126) (137)

Equity holders 1 242 185 5 320 (27) 202 1 927 1 927

Reconciliation of total earnings/(loss) to headline earnings/(loss) attributable to equity holders Total earnings/(loss) 1 291 199 24 327 (29) 199 2 011 126 2 137 Attributable (to)/from non-controlling interests (13) (15) (8) (3) 2 3 (34) (126) (160)Preference share dividend (1) (1) (1)

Headline earnings/(loss) 1 278 184 16 324 (27) 201 1 976 1 976 Net income earned on BEE preference shares 15 15 15

BEE normalised headline earnings/(loss) 1 278 184 16 324 (27) 216 1 991 1 991 (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’.

Condensed segment information for the six months ended 30 June 2015

financial results


The unaudited segment results for the six months ended 30 June 2014 are as follows:


insurance

Asset manage-

mentHealth


Reporting adjust-

ments(1)IFRS

reportedRm RetailInstitu-

ional

Total revenue 33 829 9 636 602 1 582 143 977 46 769 (4 629) 42 140

Profit/(loss) before taxation 2 060 129 61 396 (74) 426 2 998 125 3 123 Taxation (1 002) (30) (11) (104) 12 14 (1 121) (1 121)

Total earnings/(loss) 1 058 99 50 292 (62) 440 1 877 125 2 002 Transfers between segments(2) (11) 5 (4) 10

Total earnings/(loss) after transfers 1 047 104 50 288 (62) 450 1 877 125 2 002 Other comprehensive (loss)/income (59) (1) 1 2 (57) (57)

Total comprehensive income/(loss) 988 103 50 289 (62) 452 1 820 125 1 945 Attributable to:Non-controlling interests (23) 2 (20) (4) 17 5 (23) (125) (148)

Equity holders 965 105 30 285 (45) 457 1 797 1 797

Reconciliation of total earnings/(loss) to headline earnings/(loss) attributable to equity holdersTotal earnings/(loss) 1 047 104 50 288 (62) 450 1 877 125 2 002 Attributable (to)/from non-controlling interests (23) 2 (20) (4) 17 5 (23) (125) (148)Preference share dividend (1) (1) (1)



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.

(2) Earnings reallocated as they are attributable to other segments (e.g. bancassurance agreement profit share attributable to asset management and release of regulatory project reserves to offset related shareholder expenses in “other”).

Condensed segment information for the six months ended 30 June 2015 (continued)


The audited segment results for the year ended 31 December 2014 are as follows:


insurance

Asset manage-

mentHealth


Reporting adjust-

ments(1)IFRS

reportedRm RetailInstitu-

ional

Total revenue 62 914 20 407 1 193 3 067 317 1 957 89 855 (10 150) 79 705

Profit/(loss) before taxation 3 944 405 107 944 (73) 587 5 914 295 6 209 Taxation (1 713) (102) (28) (230) 22 125 (1 926) (1 926)

Total earnings/(loss) 2 231 303 79 714 (51) 712 3 988 295 4 283 Other comprehensive (loss)/income (95) (3) 9 10 32 (47) (47)

Total comprehensive income/(loss) 2 136 300 88 724 (51) 744 3 941 295 4 236 Attributable to:Non-controlling interests (39) (23) (39) (8) 14 18 (77) (295) (372)

Equity holders 2 097 277 49 716 (37) 762 3 864 3 864

Reconciliation of total earnings/(loss) to headline earnings/(loss) attributable to equity holdersTotal earnings/(loss) 2 231 303 79 714 (51) 712 3 988 295 4 283 Attributable (to)/from non-controlling interests (37) (23) (35) (8) 14 18 (71) (295) (366)Preference share dividend (2) (2) (2)



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.

Condensed segment information for the six months ended 30 June 2015 (continued)

financial results


1. IntroductionLiberty presents a “group equity value” report to reflect the combined value of the various components of Liberty’s businesses.

Section 2 below describes the valuation bases used for each reported component. It should be noted the group equity value is presented to provide additional information to shareholders to assess performance of the group. The total equity value is not intended to be a fair value calculation of the group but should provide indicative information of the inherent value of the component parts.

2. Component parts of the group equity value and valuation techniques usedGroup equity value has been calculated as the sum of the following component parts:

2.1 South African covered business:The wholly owned subsidiary, Liberty Group Limited, comprises the cluster of South African long-term insurance entities and related asset holding entities. The embedded value methodology in terms of Actuarial Practice Note 107 issued by the Actuarial Society of South Africa continues to be used to derive the value of this business cluster described as “South African covered business”. The embedded value report of the South African covered business has been reviewed by the group’s statutory actuary. The full embedded value report is included in the supplementary information section.

2.2 Other businesses:

STANLIB Valued using a 10 times (June and December 2014: 10 times) multiple of estimated sustainable earnings.

Liberty Properties No longer a separate business. June and December 2014: 10 times multiple of estimated sustainable earnings.

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

Liberty Africa Insurance Liberty Africa Insurance is an emerging cluster of both long and short-term insurance businesses located in various African countries outside of South Africa. A combination of valuation techniques including embedded value, discounted cash flow and earnings multiples have been applied to value these businesses. The combined value of this cluster is not material relative to the other components of group equity value and therefore a detailed analysis of this valuation has not been presented. At 30 June 2015 the combined valuations approximated the group’s IFRS net asset value. Therefore the IFRS net asset value was used.

LibFin Credit LibFin originates appropriate illiquid assets that provide acceptable illiquidity premiums. The value of this origination is reflected at a 10 times (June and December 2014: 10 times) multiple of estimated sustainable earnings adjusting for related expenses and prudential margin.

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

2.3 Other adjustments: These comprise the fair value of share options/rights allocated to staff not employed by the South African covered businesses and allowance for certain shareholder recurring costs incurred in Liberty Holdings Limited capitalised at a multiple of 9 times (June and December 2014: 9 times).

Group equity value reportas at 30 June 2015


3. BEE normalised group equity value3.1 Analysis of BEE normalised group equity value

Unaudited 30 June 2015 Rm

SA covered

business

Other busi-

nesses

Group funds

investedAdjust- ments

Net worth

Value of in-force:

SA covered

business Total

SA insurance operations 13 694 13 694 (5 604) 8 090 23 310 31 400

Individual Arrangements 21 275 Group Arrangements 2 035

Value of in-force acquired 47 47 (47)Working capital and other assets(2) 4 517 4 517 (501) 4 016 140 4 156

South African insurance operations 18 258 18 258 (6 152) 12 106 23 450 35 556 Other group businesses:STANLIB 693 693 5 807 6 500 6 500

South Africa(2) 498 498 5 402 5 900 5 900 Other Africa 195 195 405 600 600

Liberty Health 312 312 312 312 Liberty Africa Insurance 604 604 604 604 LibFin Credit 1 100 1 100 1 100 Liberty Holdings 621 621 (100) 521 521 Cost of required capital (1 568) (1 568)

Net equity as reported under IFRS 18 258(1) 2 230 20 488 655 21 143 21 882 43 025 BEE preference funding 340 340 340 340 Allowance for future shareholders costs (365) (365) (365) (1 981) (2 346)Allowance for employee share rights (123) (92) (215) (215) (215)

BEE normalised equity value 18 475 1 773 20 248 655 20 903 19 901 40 804

Summary of adjustments:Negative rand reserves (5 604) (5 604)Deferred acquisition costs (624) (624)Deferred revenue liability 223 223 Frank Financial Services allowance for future expenses (100) (100)Carrying value of in-force business acquired (47) (47)Fair value adjustment of non SA covered business(2) 6 907 6 907 Impact of discounting on deferred tax asset (100) (100)

(6 152) 6 807 655 (1) Reconciliation to SA covered business net worth

as per analysis in supplementary informationNet equity of SA covered business as reported under IFRS 18 258

Adjustments as above (6 152)

Allowance for employee share options/rights (123)

BEE preference share funding 340

Net worth as reported in supplementary information 12 323

(2) Liberty Properties was previously valued as a separate business unit. After the transaction with JHI, the development operations and Liberty’s interest (49%) in the JHI Retail (Pty) Limited entity are included in the STANLIB South Africa valuation at R100 million. In addition, the liquidity fee component charge to the property portfolio is valued (R140 million) as part of the Liberty Group Limited value of in-force and disclosed as an adjustment to working capital and other assets.

Group equity value reportas at 30 June 2015 (continued)

financial results


3. BEE normalised group equity value (continued)

3.1 Analysis of BEE normalised group equity value (continued)

Audited 31 December 2014Rm

SA covered

business

Other busi-

nesses

Group funds

investedAdjust- ments

Net worth

Value of in-force:

SA covered

business Total

SA insurance operations 10 958 10 958 (5 508) 5 450 22 941 28 391

Individual Arrangements 20 927 Group Arrangements 2 014

Value of in-force acquired 74 74 (74) Working capital and other assets 6 183 6 183 (466) 5 717 5 717

South African insurance operations 17 215 17 215 (6 048) 11 167 22 941 34 108 Other group businesses:STANLIB 649 649 5 751 6 400 6 400

South Africa 444 444 5 356 5 800 5 800 Other Africa 205 205 395 600 600

Liberty Properties 45 45 280 325 325 Liberty Health 342 342 342 342 Liberty Africa Insurance 586 586 586 586 LibFin Credit 900 900 900 Liberty Holdings 650 650 (100) 550 550 Cost of required capital (1 456) (1 456)

Net equity as reported under IFRS 17 215(1) 2 272 19 487 783 20 270 21 485 41 755 BEE preference funding 807 807 807 807 Allowance for future shareholders costs (356) (356) (356) (1 952) (2 308) Allowance for employee share rights (136) (94) (230) (230) (230)

BEE normalised equity value 17 886 1 822 19 708 783 20 491 19 533 40 024

Summary of adjustments:Negative rand reserves (5 508) (5 508) Deferred acquisition costs (573) (573) Deferred revenue liability 207 207 Frank Financial Services Allowance for future expenses (100) (100) Carrying value of in-force business acquired (74) (74) Fair value adjustment of non SA covered business 6 931 6 931 Impact of discounting on deferred tax asset (100) (100)

(6 048) 6 831 783 (1) Reconciliation to SA covered business net worth

as per analysis in supplementary information

Net equity of SA covered business as reported under IFRS 17 215 Adjustments as above (6 048)

Allowance for employee share options/rights (136)

BEE preference share funding 807

Net worth as reported in supplementary information 11 838




3.2 BEE normalised group equity value earnings and value per share

Unaudited 6 months 30 June 2015

Audited 12 months 31 December 2014

RmSA covered

businessOther

businesses TotalSA covered

businessOther

businesses Total

BEE normalised equity value at the end of the period 32 224 8 580 40 804 31 371 8 653 40 024

Equity value at the end of the period 31 884 8 580 40 464 30 564 8 653 39 217 BEE preference shares 340 340 807 807

Capital transactions 337 337 355 355 Funding of restricted share plan 115 (115) 117 ( 117) Intergroup dividends 1 150 (1 150) 1 290 (1 290) Dividends paid 1 151 1 151 1 719 1 719 BEE normalised equity value at the beginning of the period (31 371) (8 653) (40 024) (27 959) (8 108) (36 067)

Equity value at the beginning of the period (30 564) (8 653) (39 217) (27 054) (8 108) (35 162) BEE preference shares (807) (807) ( 905) ( 905)

BEE normalised equity value earnings 2 118 150 2 268 4 819 1 212 6 031 BEE normalised return on group equity value (%) 14,0 3,6 11,8 17,3 15,4 16,9BEE normalised number of shares (’000) 286 074 286 201

Number of shares in issue (’000) 270 390 256 946 Shares held for the employee restricted share scheme (’000) 4 308 3 459 Adjustment for BEE shares (’000) 11 376 25 796

BEE normalised group equity value per share (rand) 142,63 139,85


financial results



3.3 Sources of BEE normalised group equity value earnings



Audited 12 months

31 December 2014

RmSA covered

businessOther

businesses TotalSA covered

businessOther

businesses Total Total

Value of new business written in the period 342 27 369 334 12 346 941 Expected return on value of in-force business 1 107 1 107 1 048 1 048 2 131 Variances/changes in operating assumptions 422 (10) 412 181 (83) 98 553

Operating experience variances (including incentive outperformance) 294 (10) 284 170 (19) 151 669 Transfer of shareholder expense reserve 64 (64) Operating assumption changes 21 21 8 8 (62) Changes in modelling methodology 107 107 (61) (61) (54)

One period replacement of shareholder expenses and inflating expenses (58) (29) (87) (58) (21) (79) (189) Headline earnings of other businesses 299 299 302 302 732

Operational equity value profits 1 813 287 2 100 1 505 210 1 715 4 168 Development costs (5) (24) (29) (21) (14) (35) (77) Economic adjustments 297 (64) 233 603 (2) 601 848

Investment return on net worth 308 (64) 244 356 51 407 680 Internally generated software 53 (53) Credit portfolio earnings, hedging remeasurement and related cost of capital 22 22 38 38 96Property portfolio liquidity fee 143 143 Investment variances (38) (38) 232 232 14 Change in economic assumptions (138) (138) (76) (76) 58

(Decrease)/increase in fair value adjustments on value of other businesses (51) (51) 236 236 911 Change in allowance for fair value of share rights 13 2 15 30 (6) 24 181

Group equity value earnings 2 118 150 2 268 2 117 424 2 541 6 031




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


Rm (unless otherwise stated)

6 months30 June

2015

6 months30 June

2014


2014

South African covered business:Individual Arrangements 747 712 1 640

Traditional Life 676 623 1 472 Direct channel 32 45 77 Credit Life 39 44 91


Gross value of new business 793 776 1 889 Overhead acquisition costs impact on value of new business (402) (392) (874) Cost of required capital (49) (50) (101)

Net value of South African covered new business 342 334 914 Present value of future expected premiums 18 749 19 442 44 916 Margin (%) 1,8 1,7 2,0

Liberty Africa Insurance:Net value of new business 27 12 27 Present value of future expected premiums 374 211 413 Margin (%) 7,1 5,7 6,5

Total group net value of new business 369 346 941 Total group margin (%) 1,9 1,8 2,1


financial results



Rm

6 months30 June

2015

6 months30 June

2014


2014

Sources of insurance operations total new business by customer segment

Retail segment 12 486 11 857 25 334

Single 10 398 9 862 20 987 Recurring 2 088 1 995 4 347

Institutional segment 727 1 721 6 029

Single 362 1 405 5 207 Recurring 365 316 822

Total new business 13 213 13 578 31 363

Single 10 760 11 267 26 194 Recurring 2 453 2 311 5 169

Sources of insurance indexed new business 3 529 3 437 7 789

Individual Arrangements 3 058 2 944 6 375 Group Arrangements:Liberty Corporate 318 423 1 195 Liberty Africa Insurance(1) 153 70 219

(1) Liberty owns less than 100% of the various entities that make up Liberty Africa. The information is recorded at 100% and is not adjusted for proportional legal ownership.

Long-term insurance new businessfor the six months ended 30 June 2015



Rm

6 months30 June

2015

6 months30 June

2014


2014

PremiumsRecurring 13 346 12 587 26 610

Retail segment 9 332 8 827 18 921 Institutional segment 4 014 3 760 7 689

Single 11 299 12 015 27 806

Retail segment 5 960 6 303 12 884 Institutional segment 988 2 116 7 627 Immediate annuities 4 351 3 596 7 295

Net premium income from insurance contracts and inflows from investment contracts 24 645 24 602 54 416

Claims and policyholders benefitsRetail segment (15 986) (16 185) (33 209)

Death and disability claims (2 711) (2 715) (5 613)Policy surrender and maturity claims (10 815) (11 259) (22 978)Annuity payments (2 460) (2 211) (4 618)

Institutional segment (5 807) (4 834) (11 337)

Death and disability claims (918) (991) (1 966)Scheme terminations and member withdrawals (4 431) (3 652) (8 971)Annuity payments (458) (191) (400)

Net claims and policyholders benefits (21 793) (21 019) (44 546)

Long-term insurance net cash flows 2 852 3 583 9 870 Sources of insurance operations cash flows by business unit:Individual Arrangements 3 509 2 348 5 921 Group Arrangements:Liberty Corporate (859) 949 3 438 Liberty Africa Insurance(1) 208 214 437 Asset management:STANLIB Multi-manager (6) 72 74

(1) Liberty owns less than 100% of the various entities that make up Liberty Africa. The information is recorded at 100% and is not adjusted for proportional legal ownership.

Long-term insurance net cash flowsfor the six months ended 30 June 2015

financial results


UnauditedRbn

30 June 2015

30 June 2014

31 December 2014

Managed by group business units 615 610 605

STANLIB South Africa 518 522 510 STANLIB Other Africa(2) 42 39 41 LibFin 48 39 45 Other internal managers 7 10 9

Externally managed 30 29 28

Total assets under management(3) 645 639 633 (1) Includes funds under administration.(2) Liberty owns less than 100% of the various entities that make up STANLIB other Africa. The information is recorded at 100% and is not adjusted for proportional legal ownership.(3) Included in total assets under management are the following LISP amounts:

Unit trusts listed (Rbn)STANLIB

managed Other managed TotalSTANLIB 41 62 103Gateway 2 2 4

Asset management net cash flows – STANLIB(1)

for the six months ended 30 June 2015

UnauditedRm

30 June 2015

30 June 2014

31 December 2014

South AfricaNon-money market 5 465 4 778 6 211

Retail segment 5 426 4 425 5 319 Institutional segment 39 353 892

Money market 3 687 9 657 (11 353)

Retail segment (939) (658) (3 359)Institutional segment 4 626 10 315 (7 994)

Net South Africa cash inflows/(outflows)(1) 9 152 14 435 (5 142)

Other AfricaNon-money market (87) (655) 206

Retail segment 249 85 517 Institutional segment (336) (740) (311)

Money market 1 252 (2 162) (2 385)

Net other Africa cash inflows/(outflows)(1)(2) 1 165 (2 817) (2 179)

Net cash inflows/(outflows) from asset management 10 317 11 618 (7 321)(1) Cash flows exclude intergroup life funds.(2) Liberty owns less than 100% of the various entities that make up STANLIB other Africa. The information is recorded at 100% and is not adjusted for proportional legal ownership.

Assets under management(1)

as at 30 June 2015


Rm

Unaudited6 months

30 June 2015

Unaudited6 months

30 June 2014

Audited12 months

31 December 2014

Premiums 571 507 1 037

Liberty Health – medical risk 366 338 694 Liberty Africa Insurance – motor, property, medical and other 205 169 343

Claims (343) (297) (612)

Liberty Health – medical risk (251) (224) (471)Liberty Africa Insurance – motor, property, medical and other (92) (73) (141)

Net cash inflows from short-term insurance 228 210 425

Claims loss ratio (%)Liberty Health 69 66 68 Liberty Africa Insurance 45 43 41

Combined loss ratio (%)Liberty Health 100 97 96Liberty Africa Insurance 96 89 94

Capital commitmentsas at 30 June 2015


Rm30 June

201530 June

201431 December

2014

Equipment 220 348 379Investment and owner-occupied property 2 283 2 426 4 427Unconsolidated structured entities(1) 351 1 957 482

Total capital commitments 2 854 4 731 5 288

Under contracts 2 005 3 637 3 486Authorised by the directors but not contracted 849 1 094 1 802

(1) These are undrawn commitments to various unconsolidated structured entities and mainly form part of the ongoing build of the LibFin credit book. Drawing is subject to covenant checks by Liberty.

The above 2015 capital commitments will be financed by available bank facilities, existing cash resources, internally generated funds and R231 million (31 December 2014: R160 million) from non-controlling interests in unincorporated property partnerships.

Short-term insurance indicatorsfor the six months ended 30 June 2015

financial results


UnauditedAcquisition of a share in an unincorporated joint operationDuring 2014, Liberty Group Limited, through a 100% held subsidiary, Liberty PropCo Proprietary Limited, entered into a partnership agreement to acquire a 25% undivided share in the developed properties and associated rental operations of the Melrose Arch precinct in Johannesburg for R1,7 billion. The final condition precedent, being the legal transfer of the properties, was met on 9 June 2015.

The partnership is classified as a joint operation and proportionally consolidated in terms of IFRS 11 Joint Arrangements. Liberty will accordingly recognise in relation to its interest in the joint operation, its share of assets and liabilities, and revenue and expenses relating to its 25% interest in the joint operation.

The purchase amount was funded through the group’s own funds of R1,4 billion and external debt issues of R0,3 billion. The portion funded by the group is entirely held as matching assets for policyholder obligations. Therefore the group’s interests and net share in income of the joint operation is allocated to policyholders, with shareholders earning contracted fees. The anticipated net investment return yield is in the region of 7,5%.

2015Rm

The following is the fair value of the asset acquired in the joint operation: Investment properties (25% share in Melrose Arch precinct) at fair value 1 744 Cash paid (1 744)

The fair value of the investment properties on acquisition includes any operating leases, accrued income or expenses. These will be separately disclosed as required under IAS 17 Leases post acquisition. There are no other assets or liabilities in the joint operation at the date of acquisition and no intangible assets were identified that would require measurement.

The external debt issues (senior secured debt) were subscribed for by the following related parties:349

The Standard Bank of South Africa Limited 223Mutual funds administered and managed by STANLIB:Liberty Income Fund 20STANLIB Aggressive Income Fund(1) 20STANLIB Income Fund(1) 70STANLIB Flexible Income Fund 16

(1) Designated as interests in associates measured at fair value through profit or loss

The external debt issues attract a funding rate of JIBAR plus a margin of 1,6%, payable quarterly on 5th July, October, January and April each year.

The annual net revenue (after satisfying policyholder obligations and debt requirements) estimated to be attributable to shareholders is less than R40 million.

Formation of JHI Retail (Pty) LimitedLiberty has entered into a strategic partnership with the retail management division of JHI (Properties) (Pty) Limited (JHI), which is a subsidiary of Excellerate Holdings Limited.

In terms of this partnership, Liberty and JHI transferred their property management service capabilities into a new entity, JHI Retail (Pty) Limited. Liberty Holdings Limited subscribed for 49% and JHI 51% in the shareholding of JHI Retail (Pty) Limited. The cost of the shares held by Liberty Holdings Limited was R3 million. No gain or loss was incurred in the formation of the partnership.

The rationale for the transaction is that the creation of JHI Retail (Pty) Limited will create additional capacity and enhance Liberty’s ability to deliver world-class property management services through a business solely focused on property management services. The partnership demonstrates Liberty’s strategic intent to focus on its core businesses and become a truly customer focused business, as well as establish strategic partnerships to grow its non-core, albeit strategic, business.

JHI Retail (Pty) Limited is classified as a joint venture under IFRS 11 Joint Arrangements and has been equity accounted from the effective date, being 1 May 2015.

Corporate actionsfor the six months ended 30 June 2015


Retirement benefit obligationsas at six months ended 30 June 2015

UnauditedStandard Bank Group Limited and any subsidiary (excluding Liberty) is referred to as Standard Bank in the context of this section.

The following selected significant related party transactions have occurred in the 30 June 2015 financial period:

1. Summary of movement in investment in ordinary shares held by the group in the group’s holding company is as follows:

Fair Number value Ownership

’000 Rm %

Standard Bank Group LimitedBalance at 1 January 2015 12 244 1 757 0,77Purchases 4 453 699Sales (2 905) (468)Fair value adjustments 221

Balance at 30 June 2015 13 792 2 209 0,87

2. Bancassurance The Liberty group has extended the joint venture bancassurance agreements with the Standard Bank group 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 2015 amounted to R3 829 million (2014 full year: R7 984 million). In terms of the agreements, Liberty’s group subsidiaries pay joint venture profit shares to various Standard Bank operations. The amounts to be paid are in most cases dependent on source and type of business and are paid along geographical lines. The total combined net profit share amounts accrued as payable to the Standard Bank group for the six months to 30 June 2015 was R436 million (2014 full year: R866 million).

The bancassurance agreements are evergreen agreements with a 24-month notice period for termination. As at 30 June 2015, neither party had given notice.

A binder agreement has been entered into with Standard Bank effective from 31 December 2012. The binder agreement is associated with the administration of policies sold under the bancassurance agreement, and shall remain in force for an indefinite period with a 90-day notice period for termination. Fees accrued for the six months to 30 June 2015 was R53 million (2014 full year: R100 million).

Related partiesfor the six months ended 30 June 2015

UnauditedPost-retirement medical benefitThe group operates an unfunded post-retirement medical aid benefit for permanent employees who joined the group prior to 1 February 1999 and agency staff who joined prior to 1 March 2005.

As at 30 June 2015, the Liberty post-retirement medical aid benefit liability was R411 million (31 December 2014: R423 million).

Defined benefit retirement fundsThe 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.

financial results


Related partiesfor the six months ended 30 June 2015 (continued)

3. Sale and repurchase agreementsThe group has entered into certain agreements of sale and repurchase of financial instruments as part of the group’s asset/liability matching processes.

As at 30 June 2015 a total of R10 billion in assets (2014 full year: R24 billion) have been traded with Standard Bank under a repurchase agreement with various repurchase dates to 13 August 2015. Open contracts totalled R4 billion as at 30 June 2015 (31 December 2014: R26 million). Finance costs recognised in respect of these agreements as at 30 June 2015 was R44 million (2014 full year: R174 million).

4. Purchases and sales of other financial instrumentsIn the normal course of conducting Liberty’s insurance business, Liberty deposits cash with Standard Bank, purchases and sells financial instruments issued by Standard Bank and enters into derivative transactions with Standard Bank. These transactions are at arm’s length and are primarily used to support investment portfolios for policyholders and shareholders’ capital.

5. There are no other significant changes to related party transactions as reported in Liberty’s 2014 annual financial statements.

Offsettingas at 30 June 2015

UnauditedThe group does not have any financial assets or financial liabilities that are currently subject to offsetting in accordance with IAS 32 Financial Instruments: Presentation.

Per financial positionSubject to master netting

arrangements

Rm30 June

201531 December

201430 June

201531 December

2014

Assets held for trading and hedging 8 593 7 777 8 270 7 552Derivative liabilities (5 933) (5 148) (5 918) (5 106)Collateral received (263) (263)

Net exposure 2 397 2 629 2 089 2 446


Notes

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South African covered business embedded valuefor the six months ended 30 June 2015 (continued)

financial results

Supplementaryinformation



2015


Contents

Group

Analysis of ordinary shareholders’ funds 51

Analysis of group earnings – core earnings 52

Summary of BEE transaction status 53

Reconciliation of business unit earnings to segment result 54

South African covered business embedded value 56

Bancassurance – Benefit to Liberty 61

Insurance

90:10 Shareholder exposure 62

Long-term policyholder liabilities IFRS reconciliation 62

South African insurance distribution headcount 63

Total long-term insurance premiums 63

Long-term insurance – New business by distribution channel 64

LibFin – Shareholder Investment Portfolio exposure 65

LibFin – Shareholder Investment Portfolio percentage allocation 65

LibFin – Shareholder Investment Portfolio portfolio return 66

Individual Arrangements

Individual Arrangements – Headline earnings 66

Individual Arrangements – Key performance indicators 67

Individual Arrangements – Indexed new business 67

Individual Arrangements – Maintenance cost per policy 67

Individual Arrangements – Negative rand reserves 68

Group Arrangements

Liberty Corporate – Headline earnings 68

Liberty Corporate – Key performance measures 68

Liberty Health – Headline earnings 69

Liberty Health – Lives serviced 69

Liberty Africa Insurance – Headline earnings 70

Liberty Africa Insurance – Key performance indicators 70

Asset Management

STANLIB South Africa – Headline earnings 71

STANLIB South Africa – Net cash flows and AUM by asset category 71

STANLIB South Africa – AUM breakdown by source and asset type 72

STANLIB South Africa – Retail investment performance 73

STANLIB South Africa – Institutional investment performance 73

STANLIB South Africa – Investment performance 74

STANLIB Other Africa – AUM 74

STANLIB Other Africa – AUM by geographical location 75

Appendix

Fair value measurement disclosures 76

financial results


Group funds invested Contribution to earnings

Rm30 June

201530 June

201431 December

201430 June

201530 June

201431 December

2014

South African insurance 18 258 15 795 17 215 1 790 1 694 3 461

Insurance operating surplus 1 338 1 245 2 550 Present value of in-force business 47 112 74 (27) (38) (76)Investment portfolios 13 694 9 618 10 958 398 335 729 Fixed assets and working capital(1) 8 017 9 065 9 683 185 241 438 Subordinated notes (excluding accrued interest) (3 500) (3 000) (3 500) (104) (89) (180)

Other insurance 916 589 928 6 6 29

Liberty Africa Insurance 604 544 586 28 28 59 Liberty Health 312 45 342 (22) (22) (30)

Asset management

STANLIB 693 609 649 301 284 662

South Africa(2) 498 425 444 271 254 603 Other Africa 195 184 205 30 30 59

Central overheads and sundry income (120) (130) (235)

Centre expenses and sundry income (138) (142) (276)Liberty Properties(2) 18 12 41

Liberty Holdings Limited 621 1 358 695Preference share dividend (1) (1) (2)

Headline earnings 1 976 1 853 3 915 Preference share dividend 1 1 2

Liberty Holdings shareholders’ funds/total earnings 20 488 18 351 19 487 1 977 1 854 3 917

BEE normalised:Liberty Holdings shareholders’ funds/headline earnings 20 488 18 351 19 487 1 976 1 853 3 915 BEE preference shares 340 842 807 15 28 53

BEE normalised shareholders’ funds/headline earnings 20 828 19 193 20 294 1 991 1 881 3 968 (1) With effect from 1 July 2005 Liberty Group Limited established a working capital funding loan between insurance operations and shareholder assets, subsequently supported

by the callable capital bonds issue. Inter-divisional interest is charged at 8.77% nacm. (2) Liberty has entered into a strategic partnership with the retail division of JHI combining the collective property management service capabilities under a new joint venture entity,

JHI Retail (Pty) Ltd. The transaction was effective 1 May 2015 with Liberty’s interest in JHI Retail being 49%. The results of operations to 30 April 2015 and the ongoing portfolio liquidity charge total R18 million were reflected in central overheads and sundry income. The Liberty Properties development capability and the 49% JHI Retail interest, which contributed R6 million to earnings, are reflected in STANLIB South Africa for the six months ended June 2015.

Analysis of ordinary shareholders’ funds for the six months ended 30 June 2015


Rm30 June

201530 June

201431 December

2014

Individual Arrangements planned margin release including annual contribution increases 939 852 1 770 Individual Arrangements credit life 70 73 144 Individual Arrangements VIF amortisation (27) (38) (76)LibFin Market portfolio performance 125 108 220 Expected long-term rate of return on Shareholder Investment Portfolio(1) 692 635 1 177 Other businesses headline earnings and shareholder net expenses 298 271 677

Liberty Corporate 97 84 170 STANLIB 301 284 662

South Africa(2) 271 254 603 Other Africa 30 30 59

Liberty Africa Insurance 28 28 59 Liberty Health (22) (22) (30)

Central overheads and sundry income excluding preference share income (106) (103) (184)

Centre expenses and sundry income (139) (143) (278)Liberty Properties(2) 18 12 41BEE preference share income 15 28 53

Core operating earnings 2 097 1 901 3 912 Individual Arrangements new business strain (182) (217) (402)Individual Arrangements operating variances, assumption changes and other 73 125 253

Adjusted core operating earnings 1 988 1 809 3 763 Variance to long-term rate of return on Shareholder Investment Portfolio 3 72 205

BEE normalised headline earnings 1 991 1 881 3 968 (1) The expected long term rate of return is based off that applied in the embedded value at 31 December 2010. To avoid volatility this base rate will only be adjusted when there is

evidence of a sustained material change.(2) Liberty has entered into a strategic partnership with the retail division of JHI combining the collective property management service capabilities under a new joint venture entity,

JHI Retail (Pty) Ltd. The transaction was effective 1 May 2015 with Liberty’s interest in JHI Retail being 49%. The results of operations to 30 April 2015 and the ongoing portfolio liquidity charge total R18 million were reflected in central overheads and sundry income. The Liberty Properties development capability and the 49% JHI Retail interest, which contributed R6 million to earnings, are reflected in STANLIB South Africa for the six months ended June 2015.

Analysis of group earnings – core earnings for the six months ended 30 June 2015

financial results


Safika Holdings

Proprietary Limited

Shanduka Group

Proprietary Limited

The Black Managers'

Trust

The LibertyCommunity

Trust Total

Number of sharesBalance at date of trading restrictions lifted 6 191 075 4 127 383 10 318 458 5 159 229 25 796 145 Shares traded or transferred to participant on settlement of proportional debt (6 191 075) (8 228 668) (14 419 743)

Balance at 30 June 2015 4 127 383 2 089 790 5 159 229 11 376 402

Preference share debt (Rm)Balance at date of trading restrictions lifted 191 127 324 165 807 Shares traded or transferred to participant on settlement of proportional debt (191) (12) (264) (467)

Balance at 30 June 2015 115 60 165 340

Liberty’s 100% held subsidiary, Liberty Group Limited, entered into a series of transactions during 2004 whereby an investment in aggregate of R1 251 million was made in cumulative redeemable preference shares. The proceeds of this were used by the BEE entities to purchase Liberty Group Limited shares. On 1 December 2008, in terms of a section 311 transaction to remove Liberty Holdings’ control structure, each BEE entity accepted an exchange of Liberty Holdings Limited ordinary shares for Liberty Group Limited shares on a one for one basis.

The cumulative redeemable preference shares attract dividends at 67% (with effect from 1 March 2008) of Standard Bank’s prime lending rate. The preference dividends are payable on each date the company (which has issued the preference shares) receives an ordinary dividend from Liberty Holdings Limited.

The preference shares do not meet the definition of a financial asset in terms of International Financial Reporting Standards and therefore the investment value of the preference shares has reduced group equity and is stated in the analysis of group equity as a negative empowerment reserve. Receipt of preference share redemptions and dividends are credited directly to reserves.

With effect from 1 January 2015 the trading restrictions on the underlying Liberty Holdings Shares securing the cumulative redeemable preference shares were lifted. If however, part or all these shares are traded, any related outstanding preference share liability would need to be settled from the proceeds.

Summary of BEE transaction status as at 30 June 2015


Reconciliation of business unit earnings to segment resultfor the six months ended 30 June 2015

Segment report

Business unit (Rm) Retail Corporate Short-term

Asset manage-

mentHealth


Individual Arrangements 1 088 (215) 873 Group Arrangements 21 122 16 (27) (29) 103

Liberty Corporate 95 2 97 Liberty Africa Insurance 21 27 11 (31) 28 Liberty Health 5 (27) (22)LibFin (Markets and Investments) 175 62 583 820 Asset management 301 301

STANLIB – South Africa 271 271 STANLIB – Other Africa 30 30 Central overheads and sundry income (6) 23 (123) (106)BEE normalised headline earnings 1 278 184 16 324 (27) 216 1 991 Preference share dividend 1 1 Net income earned on BEE preference shares (15) (15)Total earnings attributable to equity holders 1 278 184 16 324 (27) 202 1 977

for the six months ended 30 June 2014Individual Arrangements 800 (6) 1 795 Group Arrangements 8 83 30 (45) 14 90

Liberty Corporate 84 84 Liberty Africa Insurance 8 (1) 18 3 28 Liberty Health 12 (45) 11 (22)

LibFin (Markets and Investments) 215 23 577 815 Asset management 279 5 284

STANLIB – South Africa 249 5 254 STANLIB – Other Africa 30 30

Central overheads and sundry income 1 11 (115) (103)

BEE normalised headline earnings 1 024 106 30 284 (45) 482 1 881 Preference share dividend 1 1 Net income earned on BEE preference shares (28) (28)

Total earnings attributable to equity holders 1 024 106 30 284 (45) 455 1 854

financial results


Reconciliation of business unit earnings to segment resultfor the year ended 31 December 2014

Segment report

Business unit (Rm) Retail Corporate Short-term

Asset manage-

mentHealth


Individual Arrangements 1 798 (109) 1 689 Group Arrangements 32 212 44 (37) (52) 199

Liberty Corporate 168 2 170 Liberty Africa Insurance 32 44 37 (54) 59 Liberty Health 7 (37) (30)

LibFin (Markets and Investments) 367 68 1 167 1 602 Asset management (3) 665 662

STANLIB – South Africa (3) 606 603 STANLIB – Other Africa 59 59

Central overheads and sundry income 41 (225) (184)

BEE normalised headline earnings 2 194 280 44 706 (37) 781 3 968 Preference share dividend 2 2 Net income earned on BEE preference shares (53) (53)

Total earnings attributable to equity holders 2 194 280 44 706 (37) 730 3 917


South African covered business embedded valuefor the six months ended 30 June 2015

1. Description of embedded value of South African covered businessThe current version of Actuarial Practice Note (APN) 107 came into force for all financial years ending on or after 31 December 2012. APN 107 governs the way in which embedded values of life assurance companies are reported.

The embedded value consists of:

• Thenetworth;plus

• Thevalueofin-forcecoveredbusiness;less

• Thecostofrequiredcapital.

The net worth represents the excess of assets over liabilities on the statutory valuation method, adjusted for the elimination of the carrying value of covered business acquired and for the fair value of share options/rights granted to Liberty Group Limited employees.

The value of in-force covered business is the discounted value of the projected stream of after tax shareholder profits arising from existing in-force covered business. These shareholder profits arise from the release of margins under the statutory basis of valuing liabilities, which differs from the release of profits on the published accounting basis. This value is reduced by the present value of after-tax future shareholder recurring and non-recurring expenses. Covered business is defined as business regulated by the FSB as long-term insurance business written in Liberty Group Limited.

For reversionary and smoothed bonus business, the value of in-force covered business has been calculated assuming that bonuses are changed over time so that the full amount of the bonus stabilisation reserves is distributed to policyholders over the lifetime of the in-force policies.

The required capital is defined as the level of capital that is restricted for distribution to shareholders. This comprises the statutory CAR calculated in accordance with Standard Actuarial Practice (SAP) 104 plus any additional capital considered appropriate by the board given the risks in the business. Required capital has been calculated at 1,5 x CAR, consistent with risk appetite. The cost of required capital is the difference between the amount of required capital and the present value, at the risk discount rate, of the projected release of the required capital allowing for investment returns on the assets supporting the projected required capital.

The value of new business written is the present value at the point of sale of the projected stream of after-tax profits from that business, reduced by the cost of required capital. New business is defined as covered business arising from the sale of new policies and once-off premium increases in respect of in-force covered business during the reporting period. Risk policies with an inception date prior to the reporting date where no premium has been received are included in the embedded value and value of new business. The contractual terms of these policies state that Liberty Group Limited is on risk from the inception date, even though a premium may not have been received. This definition is consistent with that used in the financial statements.

The value of new business has been calculated on the closing assumptions. Investment yields at the point of sale have been used for new fixedannuities,guaranteedinvestmentplansandembeddedderivatives;forallotherbusinesstheinvestmentyieldsatthedateofreportinghave been used.

No adjustment has been made for the discounting of tax provisions in the embedded value.


financial results


2. BEE normalised embedded value

Rm (unless otherwise stated)30 June

201530 June

201431 December

2014

Risk discount rate (%)(a) 11,21 11,19 10,84Net worth 12 323 10 626 11 838

Ordinary shareholders’ funds on published basis 18 258 15 795 17 215 BEE preference share funding 340 842 807 Adjustment of ordinary shareholders’ funds from published basis(b) (6 005) (5 693) (5 874)

Negative rand reserves (5 604) (5 345) (5 508)Deferred acquisition costs (624) (544) (573)Deferred revenue liability 223 196 207

Adjustment for carrying value of in-force business acquired(c) (47) (112) (74)Allowance for fair value of share options (123) (206) (136)Frank Financial Services allowance for future expenses (100) (100)

Net value of life business in-force 19 901 18 503 19 533

Value of life business in-force 21 329 20 159 20 989 Property portfolio liquidity fee(d) 140 Cost of required capital (1 568) (1 656) (1 456)

BEE normalised embedded value 32 224 29 129 31 371

3. BEE normalised embedded value earningsEmbedded value at the end of the period 32 224 29 129 31 371 Funding of restricted share plan 115 97 117 Intergroup dividends 1 150 850 1 290 Less embedded value at the beginning of the period (31 371) (27 959) (27 959)

Embedded value earnings 2 118 2 117 4 819

Return on embedded value (%) 14,0 15,8 17,3



4. Analysis of BEE normalised embedded value earnings

6 months ended30 June

2015

6 months ended30 June

2014

12 months ended31 Dec 2014

RmNet

worth

Value of in-forcecovered

business

Cost of required

capital

Em-bedded

valueNet

worth

Value of in-force coveredbusiness

Cost ofrequired

capital

Em-bedded

value

Em-bedded

value

Embedded value at the end of the period 12 323 21 469 (1 568) 32 224 10 626 20 159 (1 656) 29 129 31 371 Plus dividends paid 1 150 1 150 850 850 1 290 Plus funding of restricted share plan 115 115 97 97 117 Embedded value at the beginning of the period (11 838) (20 989) 1 456 (31 371) (9 858) (19 667) 1 566 (27 959) (27 959)

Embedded value earnings 1 750 480 (112) 2 118 1 715 492 (90) 2 117 4 819

Components of embedded value earningsValue of new business written in the period (687) 1 078 (49) 342 (716) 1 100 (50) 334 914 Expected return on value of life business(e) 1 099 8 1 107 1 036 12 1 048 2 131 Expected net of tax profit transfer to net worth 1 779 (1 779) 1 654 (1 654)Operating experience variances(h) 139 134 21 294 129 49 (8) 170 709 Development expenses (5) (5) (21) (21) (52)Operating assumption changes 23 (2) 21 62 (54) 8 (62)One period replacement of shareholder expenses (58) (58) (58) (58) (122)Transfer of shareholder expense income to Liberty Holdings 64 64 69 Changes in modelling methodology(i) (23) 84 46 107 26 (87) (61) (54)

Embedded value earnings from operations 1 226 556 26 1 808 1 134 396 (46) 1 484 3 533 Economic adjustments 511 (76) (138) 297 551 96 (44) 603 1 186

Investment return on net worth(j) 308 308 409 409 1 018 Credit portfolio earnings, hedging remeasurement and cost of capital 80 (58) 22 38 38 96 Property portfolio liquidity fee 3 140 143 Investment variances 106 (62) (82) (38) 106 168 (42) 232 14 Changes in economic assumptions(k) 14 (154) 2 (138) (2) (72) (2) (76) 58

Change in allowance for fair value of share rights(l) 13 13 30 30 100

BEE normalised embedded value earnings 1 750 480 (112) 2 118 1 715 492 (90) 2 117 4 819


financial results


5. Notes to embedded valuea) Future investment returns on major asset classes and other economic assumptions have been set with reference to the market yield

on medium-term South African government stock.

Investment return p.a.

%30 June

201530 June

201431 December

2014

Government stock 8,41 8,39 8,04Equities 11,91 11,89 11,54Property 9,41 9,39 9,04Cash 6,91 6,89 6,54

The risk discount rate has been set equal to the risk free rate plus 80% of the equity risk premium 11,21 11,19 10,84

Maintenance expense inflation rate 5,41 5,39 5,06

b) Adjustment of ordinary shareholders’ funds from published basis The amounts represent the change in the amount of shareholder funds as a result of moving from a published valuation basis to

the statutory valuation basis. This is largely due to the elimination of certain negative rand reserves on the statutory valuation basis. The reduction in net worth results in a corresponding increase in the value of in-force.

c) Adjustment for carrying value of in-force business acquired The carrying value of business acquired by Liberty has been deducted from shareholders’ funds in order to avoid double counting.

For embedded value purposes, the value in respect of this acquired business is included in the value of life business in-force.

Rm30 June

201530 June

201431 December

2014

Capital Alliance Holdings Limited (CAHL) (47) (109) (73)Business previously acquired by CAHL (3) (1)

(47) (112) (74)

d) Following the transaction with JHI, the ongoing liquidity fee component charge to the property portfolio is valued at R140 million. This was previously earned by a fellow subsidiary of Liberty Holdings Limited, namely Liberty Properties (Pty) Limited. Going forward, the fee will be earned in Liberty Group Limited.

e) The expected return on the value of life business is obtained by applying the previous year’s risk discount rate to the value of life business in force at the beginning of the period and the current year’s risk discount rate from the point of sale to the valuation date in respect of the value of new business.

f) Taxation has been allowed for at rates and on bases applicable to section 29A of the Income Tax Act. Full taxation relief on expenses to the extent permitted was assumed. Capital gains taxation has been taken into account in the embedded value.

g) Other bases, bonus rates and assumptions Parameters reflect best estimates of future experience, consistent with the valuation bases used by the statutory actuaries, excluding

any compulsory or discretionary margins. However, in contrast to the assumptions in the valuation basis, the embedded value makes allowance for non-compulsory automatic premium and benefit increases.



5. Notes to embedded value (continued)

h) Operating experience variances consist of the combined effect on net worth and value of in-force of operating experience being different to that anticipated at the prior year end. The net 30 June 2015 operating experience variance of R294 million (31 December 2014: R709 million, 30 June 2014: R170 million) comprises:

Operating experience variances (Rm)Net

worth

Value of in-force

covered business

Cost of required

capitalEmbedded

value

30 June 2015


Mortality and morbidity 135 43 178 Policyholder behaviour 1 89 90 Other, including tax variances 7 30 37

Group Arrangements 28 (28) Cash settled incentives linked to share price (14) (14)Short term incentives outperformance (36) (36)Other (non-Individual Arrangements) 18 21 39

Total 139 134 21 294

30 June 2014Individual Arrangements 94 73 167

Mortality and morbidity 135 31 166 Policyholder behaviour (8) 42 34 Other, including tax variances (33) (33)

Group Arrangements 59 (24) 35 Cash settled incentives linked to share price (7) (7)Short-term incentives outperformance (35) (35)Other (non-Individual Arrangements) 18 (8) 10

Total 129 49 (8) 170

31 December 2014Individual Arrangements 381 67 448

Mortality and morbidity 182 3 185 Policyholder behaviour 22 97 119 Other, including tax variances 177 (33) 144

Group Arrangements 152 (36) 116 Cash settled incentives linked to share price (22) (22)Short-term incentives outperformance (103) (103)Other (non-Individual Arrangements) 72 198 270

Total 480 31 198 709

i) The amount of R107 million (31 December 2014: negative R54 million, 30 June 2014: negative R61 million) comprises a number of minor modelling and data refinements.


financial results


5. Notes to embedded value (continued)

j) Reconciliation of embedded value investment return on net worth to LibFin Investments earnings

Rm30 June

201530 June

201431 December

2014

LibFin Investments 695 707 1 382 Adjustments for differences between the statutory and published basis (162) (57) (124)90:10 book (145) (238) (328)Frank Financial Services (65) (37) (47)Frank Financial Services tax asset impairment (53)Bancassurance obligations relating to Liberty Africa and STANLIB (6) (27) (32)Software asset impairment reversal 53 53 Frank Financial Services allowance for future expenses (100)BEE preference scheme 25 32 55 Other, including positive tax variances 19 (24) 159

Investment return on net worth 308 409 1 018

k) The amount of negative R138 million (31 December 2014: positive R58 million, 30 June 2014: negative R76 million) relates to changes in economic assumptions as described in note a.

l) The amount of R13 million (31 December 2014: R100 million, 30 June 2014: R30 million) in respect of the change in the fair value of share options/rights arises from the change in the number of shares under option/share rights for staff employed by Liberty Group Limited and the increase in the market value of Liberty Holdings Limited share price over the reporting period.

m) The assets backing the required capital are consistent with the long-term strategic mix of shareholder funds approved by the Liberty Holdings Board in February 2015.

Bancassurance – Benefit to Libertyas at 30 June 2015

Liberty share (Rm)30 June

201530 June

2014

Credit LifeIFRS headline earnings 70 73 Embedded value of in-force contracts 441 427 Other insurance productsEmbedded value of new business 40 38 Embedded value of in-force contracts 1 042 908 STANLIB Net service fees on assets under management sourced from Standard Bank distribution 173 232

Standard Bank branded money market unit trusts 173 180Direct distribution(1) 52

(1) Standard Bank branded unit trusts now rebranded as STANLIB.


90:10 Shareholder exposure as at 30 June 2015

The “90:10 exposure” refers to the shareholders exposure to certain policyholder portfolios on which a fee arrangement exists whereby the investment return on the portfolios is shared between the policyholders and shareholders in a 90:10 ratio.

As a result of the market risk that arises for shareholders on this exposure it is managed as part of the Shareholders Investment Portfolio (SIP) and consequently the earnings form part of the SIP returns and are included in the LibFin Investments revenue account.

Because of its nature as a management fee the present value of these 90:10 fees are included in the Value of In Force of the business and the annual expected amount forms part of the expected transfer to Net Worth in the AoEV. There is therefore an inconsistency between the IFRS revenue account (shown as LibFin Investments revenue) and the AoEV (shown as expected Life Fund Operating earnings).

Rm30 June

201531 December

2014

Exposure as at the beginning of the period 4 757 4 671

Expected earnings 152 306 Variance (7) 22

Total net earnings 145 328

Long-term policyholder liabilities IFRS reconciliationas at 30 June 2015

Rm30 June

201531 December

2014

Policyholder liabilities at beginning of the year net of reinsurance 286 214 262 783 Transfers to policyholder liabilities 7 956 23 318

Net premium income from insurance contracts 17 370 39 687 Net inflows from investment contracts 7 275 14 729

Net premium income from insurance contracts and inflows from investment contracts 24 645 54 416 Investment returns 13 209 28 949 Claims, policyholder benefits and payments (21 793) (44 546)Acquisition costs (1 970) (4 169)Management expenses, finance costs and profit share allocations (3 629) (7 011)Taxation (1 050) (1 825)Operating profit from insurance operations (1 456) (2 496)

Foreign currency translation reserve (110) 113

Policyholder liabilities at end of period net of reinsurance 294 060 286 214 Reinsurance assets 1 293 1 302

Policyholders liabilities at end of period as published 295 353 287 516

financial results


South African insurance distribution headcountas at 30 June 2015

Total long-term insurance premiumsfor the six months ended 30 June 2015

Recurring premiums Single premiums Total premiums

Rm30 June

201530 June

201430 June

201530 June

201430 June

201530 June

2014

Individual Arrangements 9 117 8 697 10 290 9 771 19 407 18 468 Liberty Corporate 3 804 3 621 888 1 909 4 692 5 530 Liberty Africa Insurance 425 269 37 133 462 402 STANLIB Multi-manager 84 202 84 202

Total premiums 13 346 12 587 11 299 12 015 24 645 24 602

% change Individual Arrangements 5 5 5 % change Liberty Corporate 5 (53) (15)% change Liberty Africa Insurance 58 (72) 15 % change STANLIB Multi-manager (58) (58)Indexed premiums 14 476 13 788

Individual Arrangements 10 146 9 674 Liberty Corporate 3 893 3 812 Liberty Africa Insurance 429 282 STANLIB Multi-manager 8 20

The difference between the single premiums reported under total long-term insurance premiums and single premiums reported under long-term insurance new business by distribution channel arises mainly from different treatment for extensions of matured policies, reinvestment of fund withdrawals, conversions of standalone funds to umbrella funds and fund member movements within Liberty administered funds.

0

200

400

600

800

1 000

1 200

1 400

1 600

Agency1 Liberty entrepreneurs1 Liberty@work1 Standard Bank Financial Consultants

Broker1 Tied agents.

June 2013 December 2013 June 2014 December 2014 June 2015

1 064

909

711

180

1 424

1 033

1 049

742

181

1 285


Recurring premiums Single premiums Total premiums Indexed premiums

Rm30 June

201530 June

201430 June

201530 June

201430 June

201530 June

201430 June

201530 June

2014

Total(1)

Retail 2 614 2 573 10 398 9 861 13 012 12 434 3 655 3 559

Broker 569 490 2 910 2 743 3 479 3 233 860 764 Bancassurance 1 147 1 102 2 670 2 966 3 817 4 068 1 414 1 399 Tied channels(2) 798 778 4 708 3 968 5 506 4 746 1 269 1 175 Other 100 203 110 184 210 387 112 221

Institutional 365 316 362 1 405 727 1 721 401 457

Broker 182 175 88 96 270 271 191 185 Bancassurance 12 12 12 12 12 12 Tied channels(2) 153 118 134 166 287 284 166 135 Other 18 11 140 1 143 158 1 154 32 125

Total new business 2 979 2 889 10 760 11 266 13 739 14 155 4 056 4 016

Split between:South Africa(1)

Retail 2 547 2 539 10 371 9 840 12 918 12 379 3 585 3 522

Broker 569 490 2 910 2 743 3 479 3 233 860 764 Bancassurance 1 083 1 070 2 656 2 952 3 739 4 022 1 349 1 365 Tied channels(2) 798 778 4 708 3 968 5 506 4 746 1 269 1 175 Other 97 201 97 177 194 378 107 218

Institutional 283 283 352 1 401 635 1 684 318 424

Broker 166 170 78 92 244 262 174 180Bancassurance 7 11 7 11 7 11 Tied channels(2) 109 94 134 166 243 260 122 111 Other 1 8 140 1 143 141 1 151 15 122

Total new business 2 830 2 822 10 723 11 241 13 553 14 063 3 903 3 946

Liberty Africa InsuranceRetail 67 34 27 21 94 55 70 37

Bancassurance 64 32 14 14 78 46 65 34Other 3 2 13 7 16 9 5 3

Institutional 82 33 10 4 92 37 83 33

Broker 16 5 10 4 26 9 17 5 Bancassurance 5 1 5 1 5 1 Tied channels(2) 44 24 44 24 44 24 Other 17 3 17 3 17 3

Total new business 149 67 37 25 186 92 153 70(1) Includes premium escalations for Individual Arrangements; excludes STANLIB Multi-manager.(2) Tied channels include Agency, Franchise and Liberty@work.

Long-term insurance – New business by distribution channelfor the six months ended 30 June 2015

financial results


30 June 2015 31 December 2014

Local Foreign Total Local Foreign TotalExposure category Rm Rm Rm % Rm Rm Rm %

Equities 2 727 5 036 7 763 30 3 823 4 034 7 857 31 Bonds 6 198 81 6 279 24 5 630 157 5 787 23 Cash 4 112 119 4 231 17 5 483 949 6 432 25 Preference shares 620 620 2 662 662 3 Property 4 462 4 462 17 3 427 3 427 13 Other 2 154 367 2 521 10 998 396 1 394 5

Total 20 273 5 603 25 876 100 20 023 5 536 25 559 100

Assets backing capital 13 694 53 10 958 43 Assets backing life funds 7 477 29 9 844 38 90:10 exposure 4 705 18 4 757 19

LibFin – Shareholder Investment Portfolio percentage allocationas at 30 June 2015

30 June 2015 31 December 2014

%

Assetbacking

capital

Assetbacking

life funds90:10

exposure Total

Asset backing capital

Asset backing life

funds90:10

exposure Total

Local assetsEquities 3 2 6 11 7 3 5 15 Bonds, cash and property 24 26 7 57 15 32 9 56 Preference shares 2 2 3 3 Other 9 9 4 4 Foreign assets Equities 14 1 4 19 10 2 4 16 Bonds, cash and property 1 1 3 1 1 5 Other 1 1 1 1

Total 53 29 18 100 43 38 19 100

LibFin – Shareholder Investment Portfolio exposureas at 30 June 2015


LibFin – Shareholder Investment Portfolio returnas at 30 June 2015

Rm30 June

201530 June

2014

Realised gross result 1 095 1 174Taxation (237) (310)Bond cost (145) (123)Expenses (including asset management fees) (18) (34)

Net profit 695 707

Gross return (%) 4,4 5,1

Taxation note: The taxation treatment of income derived from assets backing capital is the normal taxation rules applicable to life investment portfolios. The taxation applicable to income derived from assets backing life funds and the 90:10 exposure is determined by the tax rates pertaining to each life tax fund to which the assets are allocated (I-E tax). In addition there is transfer tax at 28% on the net surplus, after the applicable I-E tax.

Individual Arrangements – Headline earningsfor the six months ended 30 June 2015

Rm30 June

201530 June

2014

Expected profit and premium escalations 1 436 1 305 Variances, modelling and assumption changes 279 248 New business strain (253) (301)Project, outperformance incentive and non cost per policy expenses (59) (84)Direct Financial Services (45) (51)Other (107) (44)Taxation (399) (300)

Earnings before bancassurance 852 773 Liberty share of credit life bancassurance (net of all taxes) 70 73 Complex bancassurance preference dividend (49) (51)

Headline earnings 873 795 Modelling and assumption changes 2 (15)New business strain 182 217

Adjusted headline earnings 1 057 997

financial results


Individual Arrangements – Key performance indicatorsas at 30 June 2015

Rm (unless stated otherwise)30 June

201530 June

201431 December

2014

Net customer cash flows 4 172 3 260 7 880

Insurance products 3 509 2 348 5 921 LISP 663 912 1 959

Gross sales (excluding LISP) 12 392 11 802 25 216 Indexed new business (excluding LISP) 3 058 2 944 6 375 Value of new business 332 315 793 Retail margin excluding STANLIB (%) 2,3 2,2 2,5STANLIB ‘on balance sheet’ margin (%) 0,0 0,1 0,0Retail new business margin including STANLIB (%) 2,1 2,0 2,3

Individual Arrangements – Indexed new businessas at 30 June 2015

Indexed premium (Rm)30 June

201530 June

201431 December

2014

Individual Arrangements Insurance (excluding emerging consumer market) 2 677 2 632 5 670 Emerging consumer market 120 114 262

Total Individual Arrangements Insurance 2 797 2 746 5 932 Direct Financial Services 54 50 127 STANLIB ‘on balance sheet’ sales 207 148 316

Total ‘on balance sheet’ sales 3 058 2 944 6 375 STANLIB ‘off balance sheet’ sales 912 1 056 1 859 GateWay LISP ‘off balance sheet’ sales 113 115 242

Total Retail distribution 4 083 4 115 8 476

Individual Arrangements – Maintenance cost per policyas at 30 June 2015

R30 June

201530 June

201431 December

2014

Valuation basis Complex 493 469 481 Simplex 246 234 240 Annuities 246 234 240


Rm30 June

201531 December

2014

Published IFRS basis 19 086 19 423 Statutory basis 10 753 11 175 (1) Gross of taxation.

By their nature “negative rand reserves” include offsets between policies with positive and negative reserves. The Directive 145 adjustment is applied only to policies with negative reserves.

Liberty Corporate – Headline earnings for the six months ended 30 June 2015

Rm30 June

201530 June

2014

Gross contribution 528 501

Underwriting margin 225 224 Fee income 280 263 Pension businesses and other income 23 14

Expenses and other items (394) (385)

Pre-tax operating profit 134 116 Taxation (37) (32)

Headline earnings 97 84

Liberty Corporate – Key performance measures for the six months ended 30 June 2015


201530 June

201431 December

2014

Gross sales 635 1 684 5 868 Indexed new business 318 423 1 195 Value of new business 10 19 121 New business margin (%) 0,4 0,5 1,1 Net customer cash flows (859) 949 3 438

Individual Arrangements – Negative rand reserves(1)

as at 30 June 2015

financial results


Rm30 June

201530 June

2014

Earnings before depreciation and amortisation (5) (14)Amortisation and depreciation (18) (28)

Operating loss (23) (42)Finance costs (16)Taxation 5 10

Headline loss (18) (48)

Headline loss attributable to Liberty (22) (22)

Liberty Health – Lives servicedfor the six months ended 30 June 2015

Thousands30 June

201530 June

201431 December

2014

Risk lives – Liberty Blue 100 82 90 Risk lives – THT(1) 238 239 236 Administration lives 446 476 441

South Africa 129 171 132 Other Africa (including THT) 317 305 309

IT Lives 935 912 914

South Africa 411 447 410 Other Africa (including THT) 524 465 504

(1) Total Health Trust (THT) offers capitation medical insurance with limited risk.

Liberty Health – Headline earningsfor the six months ended 30 June 2015


Liberty Africa Insurance – Headline earningsfor the six months ended 30 June 2015

Rm30 June

201530 June

2014

Headline earnings (before head office expenses)(1) 82 78

Long-term insurance operations 55 43 Short-term insurance operations 27 35

Headline earnings – Liberty share (before head office expenses) 50 47 Less head office expenses (22) (19)

Attributable to Liberty 28 28 (1) The headline earnings result is shown at 100% of the earnings of the various entities that make up Liberty Africa Insurance.

Liberty Africa Insurance – Key performance indicatorsfor the six months ended 30 June 2015


201530 June

201431 December

2014

Embedded value of new business written in period 27 12 27 New business margin (%) 7,1 5,7 6,5 Long term:Indexed new business 153 70 219 Net customer cash flows 208 214 437 Short term:Net customer cash flows 113 96 202 Claims loss ratio (%) 45 43 41

financial results


STANLIB South Africa – Headline earningsfor the six months ended 30 June 2015


201530 June

2014

Net fee income 842 798

Base fees 845 800 Performance fees (3) (2)

Operating expenses (505) (483)

Profit before investment income 337 315 Other income 14 29

Pre-tax profit 351 344 Taxation (86) (90)

Headline earnings of STANLIB asset management 265 254

Property development and equity accounted earnings from JHI Retail 6

Total headline earnings 271 254

Average margin (bps) 32 31 Average assets under management (Rbn) 514 517

STANLIB South Africa – Net cash flows and AUM by asset category as at 30 June 2015

Net cash flows AUM

Rm30 June

201530 June

201430 June

201531 December

2014

Retail 4 487 3 767 238 874 227 920

Fixed interest 846 1 155 40 075 39 118 Equity (104) (742) 15 405 14 923 Property 183 (1 176) 12 383 11 741 Money Market (939) (658) 25 653 26 454 Other 4 501 5 188 145 358 135 684

Institutional 4 665 10 668 96 955 94 645

Fixed interest (626) 1 882 18 072 20 602 Equity (129) (1 181) 2 373 2 429 Property (62) (864) 8 415 8 209 Money Market 4 626 10 315 49 720 46 003 Other 856 516 18 375 17 402

Liberty – intergroup (6 115) (11 980) 181 417 187 125

Total 3 037 2 455 517 246 509 690


STAN

LIB

Sout

h Af

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dow

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l 7

6 77

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financial results


STANLIB South Africa – Retail investment performance as at 30 June 2015

Core retail funds – quartile performanceRolling period

1 Year 3 Year 5 YearFund name 2015 2014 2015 2014 2015 2014

STANLIB SA Equity 3 3 3 1 2 1STANLIB Equity 3 3 2 1 1 1STANLIB Growth 4 3 4 3 3 3STANLIB Value 4 4 4 3 4 3

STANLIB Balanced 3 3 2 1 1 1STANLIB Balanced Cautious 3 3 3 3 2 2STANLIB Inflation Plus 5% 4 4 4 4 4 4STANLIB Inflation Plus 3% 4 3 4 4 4 4STANLIB Absolute Plus 4 4 4 4 4 4

STANLIB Bond 3 3 3 1 1 1STANLIB Income 3 1 3 2 1 1STANLIB Money Market 4 2 3 2 2 2STANLIB Flexible Income 3 3 4 2 2 1STANLIB Aggressive Income 2 4 4 3 3 3

STANLIB Property Income 2 2 3 3 2 1

STANLIB South Africa – Institutional investment performance as at 30 June 2015

Rolling period

Survey funds (Alexander Forbes Surveys– quartile performance)

1 Year 3 Year 5 Year2015 2014 2015 2014 2015 2014

Large Manager – Global 3 4 3 2 2 2Full Global Mandate 3 4 3 2 2 1Domestic Only Mandate 4 4 4 2 2 2

Stanlib Core Equity 3 4 3 2 3 1Stanlib Growth Equity 3 4 4 3 3 3Stanlib Research 3 3 2 2 2 2Stanlib Value 4 4 4 3 4 3Stanlib Enhanced Index 2 4 1 1 1 2

Absolute Return 4 4 4 4 4 4Domestic Absolute Return 3 4 4 4 4 4

Stanlib Core Bond 3 4 3 2 2 2Money Market 4 3 4 3 3 2Stanlib Institutional Property 3 4 3 3 3 2


STANLIB Other Africa – AUMas at 30 June 2015

Assets under management (Rm)30 June

201530 June

201431 December

2014

Opening market value 41 257 37 676 37 676 Net cash inflows/(outflows) 1 142 (2 705) (2 090)Capital (depreciation)/appreciation (69) 4 118 5 671

Closing market value 42 330 39 089 41 257

Segregated funds 24 007 20 637 21 922 Unit trusts 6 909 6 615 6 446 Money market 11 414 11 837 12 889

Total AUM 42 330 39 089 41 257

STANLIB South Africa – Investment performance

% of Core Retail Products in 1st and 2nd quartile (June 2015)

0

20

40

60

80

100

1 Year 3 Year 5 Year

13%

13%

60%

2012 2013 2014 2015

% of Institutional Funds in 1st and 2nd quartile (June 2015)

0

20

40

60

80

100

1 Year 3 Year 5 year

8%

15%

46%

2012 2013 2014 2015

financial results


STANLIB Other Africa – AUM by geographical locationas at 30 June 2015

Rm30 June

201530 June

201431 December

2014

Southern region(1) 25 568 24 344 23 915

Fixed interest 7 553 8 103 7 983 Equity 8 099 7 317 7 150 Property 48 42 48 Money Market 9 557 8 567 8 319 Other 311 315 415

Eastern region(2) 15 692 14 745 16 276

Fixed interest 7 718 6 623 6 194 Equity 4 150 3 242 3 719 Property 2 054 1 610 1 793 Money Market 1 770 3 270 4 570

Western region(3) 1 070 1 066

Fixed interest 70 162Equity 8 Money Market 87 38Other 905 866

Total AUM 42 330 39 089 41 257

CombinedFixed interest 15 341 14 726 14 339 Equity 12 257 10 559 10 869Property 2 102 1 652 1 841 Money Market 11 414 11 837 12 927Other 1 216 315 1 281

42 330 39 089 41 257 (1) Southern region includes Botswana, Swaziland, Lesotho and Namibia. (2) Eastern region includes Kenya, Tanzania and Uganda.(3) Western region is Ghana.

financial results


Appendix: Fair value measurement disclosuresas at 30 June 2015

Financial instruments measurement analysis

Unaudited Measurement basis Fair value hierarchy

Designation per Financial Position StatementRm

Amortised cost(1)

Equity accounted

Financial soundness

value(2) Fair value TotalProvided

belowNot

provided(3)

AssetsPledged assets 16 522 16 522 16 522 Derivative assets 8 593 8 593 5 337 3 256 Interest in associates – measured at fair value 16 816 16 816 16 816

Interest in joint ventures 5 507 512 507 5Financial instruments 1 305 306 159 307 464 306 159 Prepayments, insurance and other receivables 6 014 6 014 6 014

Cash and cash equivalents 12 297 12 297 12 297 Properties (investment and owner-occupied) 31 958 31 958 31 958

Total financial instrument and property assets

1 305 5 398 866 400 176 377 299 21 572

Fair value of amortised cost assets

1 158

LiabilitiesInvestment contracts with discretionary participation features

10 112 10 112

Financial liabilities under investment contracts 85 753 85 753 85 753

Financial liabilities 3 576 330 3 906 330 Third party financial liabilities arising on consolidation of mutual funds

41 375 41 375 41 375

Derivative liabilities 5 933 5 933 5 933 Repurchase agreements liabilities and collateral received 14 880 14 880 14 880

Insurance and other payables 11 455 11 455 11 455

Total financial instrument liabilities

3 576 10 112 159 726 173 414 133 391 26 335

Fair value of amortised cost liabilities

3 411

(1) Amortised cost The R1 305 million financial instrument asset relates to policyholder loans. The fair value has been determined by utilising a discounted cash flow model utilising discount rates ranging between 11,5% and 17,3%. The financial liabilities comprise subordinated bonds of R3 571 million and redeemable preference shares of R5 million. The fair value of these liabilities is R3 406 million and R5 million respectively, using discount rates ranging between 7,4% and 9,9%.

(2) Financial soundness value The financial soundness valuation methodology is described in SAP 104 issued by the Actuarial Society of South Africa. With regards to investment contracts with discretionary participation features, the group cannot reliably measure the fair value of the investment contracts with discretionary participation features (DPF). The DPF is a contractual right that gives investors in these contracts the rights to receive supplementary discretionary returns through participation in the surplus arising from the assets held in the investment DPF fund. These supplementary returns are subject to the discretion of the group. Given the discretionary nature of these investments returns and the absence of an exchange market in these contracts, there is no generally recognised methodology available to determine fair value. These instruments are issued by the group and the intention is to hold the instruments to full contract term.

(3) Fair value hierarchy not provided The fair value of prepayments, insurance and other receivables, collateral deposits, cash and cash equivalents, equity accounted joint ventures, insurance and other payables and repurchase agreement liabilities and collateral received approximate their carrying value and are not included in the hierarchy table. In most cases their settlement terms are short-term and therefore, from a materiality perspective, fair values are not required to be modelled.

financial results


Appendix: Fair value measurement disclosures as at 30 June 2015 (continued)

Financial instruments measurement analysis (continued) as at 31 December 2014

Audited Measurement basis Fair value hierarchy

Designation per Financial Position StatementRm

Amortised cost(1)

Financial soundness

value(2) Fair value TotalProvided

belowNot

provided(3)

AssetsPledged assets 6 991 6 991 6 991Derivative assets 7 777 7 777 4 978 2 799Interest in associates – measured at fair value 16 497 16 497 16 497Financial instruments 1 327 291 517 292 844 291 517Prepayments, insurance and other receivables 3 668 3 668 3 668Cash and cash equivalents 13 985 13 985 13 985Properties (investment and owner-occupied) 29 747 29 747 29 747

Total financial instrument and property assets 1 327 370 182 371 509 349 730 20 452

Fair value of amortised cost assets 1 194

LiabilitiesInvestment contracts with discretionary participation features 10 177 10 177Financial liabilities under investment contracts 81 983 81 983 81 983Financial liabilities 3 575 3 575Third party financial liabilities arising on consolidation of mutual funds 34 501 34 501 34 501Derivative liabilities 5 148 5 148 5 148Repurchase agreements liabilities and collateral received 5 191 5 191 5 191Insurance and other payables 9 060 9 060 9 060

Total financial instrument liabilities 3 575 10 177 135 883 149 635 121 632 14 251

Fair value of amortised cost liabilities 3 506(1) Amortised cost

The R1 327 million financial instrument asset relates to policyholder loans. The fair value has been determined by utilising a discounted cash flow model utilising discount rates ranging between 11,3% and 18,0%. The financial liabilities comprise subordinated bonds of R3 570 million and redeemable preference shares of R5 million. The fair value of these liabilities is R3 501 million and R5 million respectively, using discount rates ranging between 8,3% and 9,8%.

(2) Financial soundness value The financial soundness valuation methodology is described in SAP 104 issued by the Actuarial Society of South Africa. With regards to investment contracts with discretionary participation features, the group cannot reliably measure the fair value of the investment contracts with discretionary participation features (DPF). The DPF is a contractual right that gives investors in these contracts the rights to receive supplementary discretionary returns through participation in the surplus arising from the assets held in the investment DPF fund. These supplementary returns are subject to the discretion of the group. Given the discretionary nature of these investments returns and the absence of an exchange market in these contracts, there is no generally recognised methodology available to determine fair value. These instruments are issued by the group and the intention is to hold the instruments to full contract term.

(3) Fair value hierarchy not provided The fair value of prepayments, insurance and other receivables, collateral deposits, cash and cash equivalents and insurance and other payables, and repurchase agreements and collateral received approximate their carrying value and are not included in the hierarchy table as their settlement terms are short-term and therefore, from a materiality perspective, fair values are not required to be modelled.

Fair value hierarchy of instruments measured at fair valueThe information below analyses assets and liabilities which are carried at fair value at each reporting period, by level of hierarchy as required by IFRS 7 and IFRS 13. The different levels in the hierarchy are defined below:

Level 1 – Values are determined using readily and regularly available quoted prices in an active market for identical assets or liabilities. These prices would primarily originate from the Johannesburg Stock Exchange, the Bond Exchange of South Africa or an international stock or bond exchange.Level 2 – Values are determined using valuation techniques or models, based on assumptions supported by observable market prices or rates either directly (that is, as prices) or indirectly (that is, derived from prices) prevailing at the financial position date. The valuation techniques or models are periodically reviewed and the outputs validated.Level 3 – Values are estimated indirectly using valuation techniques or models for which one or more of the significant inputs are reasonable assumptions (that is unobservable inputs), based on market conditions.

Appendix: Fair value measurement disclosuresas at 30 June 2015 (continued)

Financial results


Fair value hierarchy of instruments measured at fair valueThe table below analyses the fair value measurement of applicable assets by level:

UnauditedRm Level 1 Level 2 Level 3 Total

30 June 2015Equity instruments 134 806 1 567 136 373

Listed ordinary shares on the JSE 95 455 95 455 Foreign equities listed on an exchange other than the JSE 39 351 39 351 Unlisted equities 640 640 Interest in joint ventures – measured at fair value 507 507 Interest in associates – measured at fair value 420 420

Debt instruments 59 314 52 058 1 197 112 569

Preference shares on the JSE or foreign exchanges 1 209 1 209 Unlisted preference shares 481 222 703 Listed term deposits(1) on BESA, JSE or foreign exchanges 58 105 12 269 59 70 433 Unlisted term deposits(1) 39 308 395 39 703 Interest in associates – measured at fair value 521 521

Mutual funds(2) 2 914 80 232 270 83 416

Active market 2 914 77 346 80 260

Property 32 2 317 2 349 Equity 191 17 753 17 944 Interest-bearing instruments 18 194 18 194 Mixed 2 691 39 082 41 773

Non-active market 2 886 270 3 156

Equity 2 441 46 2 487 Interest-bearing instruments 445 140 585 Mixed 84 84

Investment policies 6 465 1 181 7 646 Derivatives 5 337 5 337

Equity 1 472 1 472 Foreign exchange 14 14 Interest rate 3 851 3 851

Properties (investment and owner-occupied) 31 958 31 958

Assets subject to fair value hierarchy analysis 197 034 144 092 36 173 377 299

Comprising:Held-for-trading 5 337 5 337 Designated as at fair value through profit or loss 197 034 138 755 4 215 340 004 Properties measured at fair value 31 958 31 958

Total assets carried at fair value 197 034 144 092 36 173 377 299 (1) Term deposits include instruments which have a defined maturity date and capital repayment. These instruments are by nature interest bearing at a predetermined rate, which

is either fixed or referenced to quoted floating indices.(2) Mutual funds are categorised into property, equity or interest-bearing instruments based on a minimum of 80% of the underlying asset composition of the fund by value being

of a like category. In the event of “no one category meeting this threshold” it is classified as mixed assets class.

During the period, financial instruments with a value of Rnil million (year ended 31 December 2014: R56 million) transferred from level 1 to level 3 and financial instruments with a value of R1 108 million (year ended 31 December 2014: R249 million) transferred from level 2 to level 3.


Financial results


Fair value hierarchy of instruments measured at fair value (continued)

AuditedRm Level 1 Level 2 Level 3 Total

31 December 2014Equity instruments 127 573 1 301 128 874

Listed ordinary shares on the JSE 91 712 91 712Foreign equities listed on an exchange other than the JSE 35 861 35 861Unlisted equities 895 895Interest in associates –measured at fair value 406 406

Debt instruments 52 084 45 236 1 220 98 540

Preference shares listed on the JSE or foreign exchanges 1 252 1 252Unlisted preference shares 480 211 691Listed term deposits(1) on BESA, JSE or foreign exchanges 50 832 13 392 139 64 363Unlisted term deposits(1) 31 364 326 31 690Interest in associates – measured at fair value 544 544

Mutual funds(2) 3 503 76 184 261 79 948

Active market 3 503 73 519 77 022

Property 55 2 032 2 087Equity 416 19 698 20 114Interest-bearing instruments 124 18 160 18 284Mixed 2 908 33 629 36 537

Non-active market 2 665 261 2 926

Equity 2 421 47 2 468Interest-bearing instruments 244 187 431Mixed 27 27

Investment policies 7 643 7 643Derivatives 4 978 4 978

Equity 1 304 1 304Foreign exchange 34 34Interest rate 3 640 3 640

Properties (investment and owner-occupied) 29 747 29 747

Assets subject to fair value hierarchy analysis 183 160 134 041 32 529 349 730

Comprising:Held-for-trading 4 978 4 978 Designated as at fair value through profit or loss 183 160 129 063 2 782 315 005 Properties measured at fair value 29 747 29 747

Total assets carried at fair value 183 160 134 041 32 529 349 730 (1) Term deposits include instruments which have a defined maturity date and capital repayment. These instruments are by nature interest bearing at a predetermined rate, which

is either fixed or referenced to quoted floating indices.(2) Mutual funds are categorised into property, equity or interest-bearing instruments based on a minimum of 80% of the underlying asset composition of the fund by value being

of a like category. In the event of “no one category meeting this threshold” it is classified as mixed assets class.


Financial results



The table below analyses the fair value measurements of applicable financial instrument liabilities which are all categorised as level 2.

Rm

Unaudited 30 June

2015

Audited 31 December

2014

Liabilities Long-term investment contracts 85 753 81 983Third party financial liabilities arising on consolidation of mutual funds 41 375 34 501Derivatives 5 933 5 148Financial liabilities – senior secured term facility 330

Total financial instrument liabilities carried at fair value 133 391 121 632

Comprising:Held-for-trading 5 933 5 148Fair value through profit or loss 127 458 116 484

Total financial instrument liabilities carried at fair value 133 391 121 632

There were no transfer between levels 1, 2 and 3 during the period.

Reconciliation of level 3 assetsThe table below analyses the movement of level 3 assets (investment and owner-occupied property and financial instruments) for the period under review:

Rm

Unaudited 30 June

2015

Audited 31 December

2014

Balance at the beginning of the year 32 529 31 236Reclassification from level 1(1) 56Reclassification from level 2(1) 1 108 249Fair value adjustment recognised in profit or loss as part of investment gains(2) 608 1 086Fair value adjustment recognised in other comprehensive income 16 22Foreign currency translation (9) 13Additions 2 015 2 680Disposals (133) (3 268)Movements on third-party share of financial instruments in mutual funds 39 455

Balance at the end of the period 36 173 32 529

Investment and owner-occupied properties 31 958 29 747Financial instruments – equity and mutual funds 1 837 1 562Financial instruments – debt 1 197 1 220Financial instruments – other 1 181

(1) In 2015 due to extended levels of illiquidity relating to certain investment policies these assets have been transferred from level 2 to level 3 during the current period. African Bank Investments Limited (listed on the JSE) and its various subsidiaries was placed under curatorship on 10 August 2014. In 2014 the various debt and equity instruments immediately became illiquid and were therefore transferred from levels 1 and 2 to level 3 at this date. The various curator announcements have led to the expectation that the equity, subordinated debt and preference share instruments have nil value. The senior debt instruments are likely to have value and have been modelled accordingly.

(2) Included in the fair value adjustment is a R618 million (31 December 2014: R1 061 million) unrealised gain.


Financial results



Level 3 – significant fair value model assumptions and sensitivitiesInvestment and owner-occupied propertyInvestment properties (including owner-occupied properties) fair values were derived by determining sustainable net rental income, to which an appropriate capitalisation rate is applied. Capitalisation rates are adjusted for control factors, occupancy levels, age of the building, location and expected future benefit of recent alterations.

The capitalisation rates applied at 30 June 2015 range between 6,8% to 10,5% (31 December 2014: 6,8% to 10,5%). This compares to the ten year government yield of 8,41% (31 December 2014: 8,04%). The non observable adjustments included in the valuation can therefore be referenced to the variance to the ten year government rate.

The table below indicates the sensitivity of the aggregate market values for a 0,5% change in the capitalisation rate. It should be noted that as both the investment and the owner-occupied properties are entirely linked to policyholder benefits and consortium non-controlling interests there is no impact to group ordinary shareholder comprehensive income or equity for any changes in the fair value measurement.

Change in capitalisation rate

Unaudited30 June 2015 Rm

0,5% increase

0,5% decrease

Properties between 6,8 – 8,5% capitalisation rate 27 081 25 309 29 122 Properties between 8,6 – 10,5% capitalisation rate 4 877 4 660 5 118

Total 31 958 29 969 34 240

Audited 31 December 2014

Properties between 6,8 – 8,5% capitalisation rate 24 921 23 284 26 806 Properties between 8,6 – 10,5% capitalisation rate 4 826 4 611 5 064

Total 29 747 27 895 31 870

Financial instrument assetsEquities R1 697 million (31 December 2014: R1 375 million) – discount rates applied between 10% and 19% (December 2014: 10% and 19%).

Debt and other instruments R2 518 million (31 December 2014: R1 407 million) – discount rates applied between 8% and 12% (December 2014: 9% and 12%).

Of the equities, debt and other instruments, approximately 81% (December 2014: 61%) of these assets by value are allocated to policyholder and third-party mutual fund liabilities unit-linked portfolios and therefore changes in estimates would be offset by equal changes in liability values.

The net shareholder exposure is approximately R781 million (31 December 2014: R1076 million). Changes to discount rates applied of 50bps would result in between positive R25 million to negative R23 million (31 December 2014: positive R32 million to negative R29 million) after taxation net impact to profit or loss and shareholder funds.

Group’s valuation processThe group’s appointed asset managers have qualified valuators that perform the valuations of financial assets and appointed independent valuators to determine fair values of properties required for financial reporting, including level 3 fair values. These valuations are reviewed and approved every reporting period by the group balance sheet committee. The committee is chaired by the group’s financial director.

The fair value of level 3 instruments are determined using valuation techniques that incorporate certain assumptions that are not supported by prices from observable current market transactions in the same instruments and are not based on available observable market data. Such assumptions include the assumed risk adjusted discount rate applied to estimate future cash flows and the liquidity and credit spreads applied to debt instruments. Changes in these assumptions could affect the reported fair value of these financial instruments.


Financial results



Valuation techniques used in determining the fair value of financial assets and liabilities classified within level 2

Instrument Valuation basis/techniques Main assumptions

Unlisted preference shares Discounted cash flow model (DCF) Bond and interbank swap interest rate curves Agreement interest rate curvesIssuer credit ratingsLiquidity spreads

Unlisted term deposits, illiquid listed term deposits and senior secured term facility

DCF Bond and interbank swap interest rate curvesIssuer credit ratingsLiquidity spreads

Mutual funds Quoted put (exit) price provided by the fund manager

Price – not applicableNotice period – bond interest rate curves

Investment policies Quoted put/surrender price provided by the issuer, adjusting for any applicable notice periods (DCF)

Price – not applicableBond interest rate curves

Derivative assets and liabilities Option pricing models Volatility and correlation factorsDCF Bond and interbank swap interest

rate curvesForward equity and currency rates

Policyholder investment contracts liabilities

– unit-linked policies Current unit price of underlying unitised financial asset that is linked to the liability, multiplied by the number of units held

Not applicable

– annuity certains DCF Bond and interbank swap interest rate curvesOwn credit/liquidity

Third party financial liabilities arising on the consolidation of mutual funds

Quoted put (exit) price provided by the fund manager

Not applicable


Financial results



Valuation techniques used in determining the fair value of assets and liabilities classified within level 3

Instrument Valuation basis/techniques Main assumptions

Investment and owner-occupied properties

DCF Capitalisation discount ratePrice per square meterLong-term net operating income marginVacanciesMarket rental trends (average net rental growth of between 2,3% – 2,5%)Economic outlookLocationHotel income trends/inflation basedHotel occupancy (range between 50% – 75%)

Sale price (if held for sale) Not applicable

Unlisted equities, including associates and joint ventures – measured at fair value

DCF/earnings multiple Cost of capitalBond and interbank swap interest rate curvesConsumer price indexGross domestic productIf a property investment entity, then assumptions applied are as above under investment and owner-occupied properties

Recent arm’s length transactions Not applicable

Unlisted preference shares DCF Bond and interbank swap interest rate curvesAgreement interest rate curvesIssuer credit ratingsLiquidity spreads

Recent arm’s length transactions Not applicable

Unlisted term deposits and illiquid listed term deposits

DCF Bond and interbank swap interest rate curves Issuer credit ratingsLiquidity spreads

Mutual funds Quoted put (exit) price provided by the fund manager, adjusted for liquidity

Price – not applicableNotice periods and estimated repayment – bond interest rate curvesLiquidity spreads

Investment policies Probalistic valuation methodologyDCF

Face valuePremium burdenLife expectancyBond and interbank swap interest rate curves

Investor RelationsSharon SteynTel: +27 (11) 408 [email protected]@liberty.co.za

Financial DirectorCasper TroskieTel: +27 (11) 408 [email protected]

Chief Financial OfficerJeff HubbardTel: +27 (11) 408 [email protected]

Statutory ActuaryDavid JewellTel: +27 (11) 408 [email protected]

Company SecretaryJill ParrattTel: +27 (11) 408 [email protected]

Head Office and Registered AddressLiberty Life Centre, 1 Ameshoff StreetBraamfontein, Johannesburg 2001Postal address: PO Box 10499, Johannesburg 2000Tel: +27 (11) 408 3911Registration number: 1968/002095/06

Transfer SecretariesComputershare Investor Services (Proprietary) Limited(Reg No 2004/003647/07)70 Marshall Street, Johannesburg 2001Tel: +27 (11) 370 5000

AuditorsPricewaterhouseCoopers Inc.2 Eglin Road, Sunninghill 2157Postal address: Private Bag X36, Sunninghill 2157Tel: +27 (11) 797 4000

Website: www.libertyholdings.co.zaCustomer Call CentreTel: 0860 456 789

Contact details

www.libertyholdings.co.za

Documents

Liberty Holdings Limited Financial results presentation 2015 · Group Arrangements 37 31 19 New business margins (%) 1.9 1.8 6 Individual Arrangements 2.1 2.0 5 Group Arrangements