February 28, 2019 / 6:17 AM / a year ago

UPDATE 2-S.Africa's Liberty puts some African units on chopping block

* Potential sales part of Liberty’s turnaround plan

* Includes asset management units in parts of Africa

* Liberty earnings drop 17 pct in 2018 (Recasts, adds CEO interview, share reaction, more details)

By Emma Rumney

JOHANNESBURG, Feb 28 (Reuters) - South Africa’s Liberty Holdings is considering the potential sale of a number of businesses bought in previous years as part of a since abandoned, expansion-focused strategy.

The insurer, a unit of Standard Bank in the middle of a turnaround plan, said on Thursday it had placed asset management and short-term insurance operations in a number of African countries, as well as health insurance arm Liberty Health, under “ownership review”.

It made the announcement while reporting a 17 percent drop in headline earnings in 2018, which dampened progress in the first full year of its turnaround strategy and prompted a 3 percent drop in its share price.

Liberty CEO David Munro said the move to review and potentially sell some of the businesses would refine the company’s portfolio.

“It’s these kind of steps that we’re taking that will... make sure that each of the businesses in the portfolio can deliver growth for Liberty and our shareholders,” he told Reuters in a telephone interview.

He declined to give a time frame for possible sales, but said negotiations were currently underway.

Munro took the helm in 2017 and has since then, with the backing of Standard Bank, worked to slow the acquisition-fuelled expansion drive which preceded his appointment to focus on Liberty’s home market - a move that had delivered rising profit.

The units under review have been deemed no longer central to the new strategy, and include asset management operations in Ghana, Uganda, Kenya and Botswana and short-term insurance businesses in Malawi and Namibia.


Liberty’s share price fell by around 3 percent on the news that its headline earnings per share - the most widely watched profit measure in South Africa - had fallen to 817.9 cents from 982.1 cents in 2017.

At 0926 GMT, it had recovered some losses to stand at 101.98 rand per share, down 1.7 percent.

Munro said the more salient part of the results was a 42 percent rise in normalised operating earnings, as this captured the performance of its core operations - South African insurance and asset management.

“We’ve made really significant progress in turning around our business,” he said, adding the results go a long way to restoring confidence of shareholders.

The headline number was pulled down by a more than 80 percent slump in earnings in a portfolio Liberty uses to invest the capital it has to hold against its insurance operations, to 250 million rand ($17.93 million).

Munro said this was the result of a “disastrous” year from investors’ perspective, characterised by market volatility and low returns.

Liberty announced on Wednesday that it had sold a loss-making technology platform - one of the units on the chopping block as part of the review - to Standard Bank.

($1 = 13.9437 rand)

Reporting by Emma Rumney; Editing by Subhranshu Sahu/Sherry Jacob-Phillips and Emelia Sithole-Matarise

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