BY BONNIE MODIAKGOTLA
The South African financial services behemoth, Liberty Holdings Limited, will be disposing of its asset management subsidiary in Botswana as part of the group’s wide exit of operations.
The operations have been identified as no longer central to the turnaround strategy, the company announced in its latest financial statements report for the year ended December 2018.
Liberty, which operates its asset management business units under the banner STANLIB, has announced that it has kick-started a process on negotiations with potential partners to dispose of STANLIB Botswana, STANLIB Ghana, STANLIB Kenya and STANLIB Uganda, together with its short-term insurance technology start-up, Health Solutions, and Liberty Africa Insurance short-term insurance business in Malawi and Namibia. The assets have now since been classified as for sale in the latest financial report released last week.
“Based on the requirements of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, the assets and liabilities have been disclosed as disposal groups, and are separately disclosed on the statement of financial position. The disposal groups are measured at the lower of carrying amount and fair value less costs to sell, which lead to various impairments,” said Liberty, adding that it has determined the net assets of the business units held for sale at R619 million (P466.6 million)
The operations under review raked in a huge loss of R166 million (P125 million) last year ÔÇô which was lower than the whooping R322 million (P242.7 million) in 2017, an improvement down to successful remedial action taken in the asset management operations in East Africa. The earnings for its insurance and asset management businesses in Southern Africa ÔÇô excluding South Africa ÔÇô came at R8 million (P6 million), after a negative impact of lower investment market claims and adverse claims experienced in the short-term insurance businesses in East Africa. However, the group says the asset management performed according to expectations.
“As part of the strategy refresh exercise conducted during 2018, various cash-generating units were identified as either sub scale or no longer applicable to Liberty’s revised strategy. Consequently the board approved a process of disposals and strategic partnership negotiations which is likely to lead to loss of control of these cash-generating units during 2019,” Liberty disclosed in the report.
With the disposal of its asset management operations in other Africa markets, Liberty will focus its assets management business in South Africa, and remaining operations made up of STALIB Namibia, STANLIB Swaziland and STANLIB Lesotho. By far STANLIB South Africa is the group’s largest asset manager with assets under management valued at R549 billion (P414 billion), with earnings last year growing 41 percent to bring in R355 million (PP267.6 million).
“We made significant strategic shifts to simplify and re-orientate our business to better serve our clients. These changes are reflected in our performance for the year which is underpinned by a significant improvement in earnings in our core SA retail business, better investment performance for STANLIB SA, enhanced client experience and a reduction in costs,” said David Munro, Liberty Group chief executive officer.
“Our overriding priority for 2019 is the ongoing execution of our strategic priorities. We will continue to focus on our business in South Africa where we have a strong and competitive client base and work closely with our majority shareholder, Standard Bank. Our ultimate goal is to improve the way in which we serve our financial advisers and clients by delivering exceptional experience.”