Johannesburg –
Liberty says earnings will be lower in the year to December.
This, it
explains, is partially because of lower returns on an investment portfolio
caused by a stronger rand and write downs.
The company said
in a trading update issued on Friday that basic earnings per share will be
between 40 percent and 60 percent lower at between 597.4c and 896.1c a share.
In addition,
headline earnings per share – a key indicator of financial performance – will also
be between 40 percent and 60 percent lower, coming in at between 611.3c and
916.9c a share.
It adds that normalised
headline earnings per share are expected to be 35 percent to 55 percent lower
than the previous year, coming in at between 659c and 951.9c.
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It explains the main
contributors to the reduction in are lower returns on the investment portfolio
due to poor performance and the stronger rand as well as the write-down of
infrastructure investments held in the alternatives portfolio.
In addition, it
experienced net negative actuarial assumption changes in the Individual Arrangements
business relating mainly to worsening persistency. “This follows the negative
trends observed in the first half of the year continuing in the second half due
to ongoing difficult economic conditions and increased pressure on consumers.”
Liberty also
experienced abnormally higher risk claims in the South African Individual Arrangements
and Liberty Corporate businesses, contributing to reduced risk profits in the second
half and reduced earnings from Stanlib.
This was because
of operational write-offs in both the South African and East African asset management
businesses and the costs incurred on the implementation of the outsourcing of
the local retail administration function, it says.
“Management has
taken action to address persistency and the operational issues in the group.
The customer facing units continue to write good business and attract client
flows. The group remains profitable and well capitalised within its target
range.”
BUSINESS REPORT ONLINE