Pandemic pain for Liberty: group swings to R1.53bn loss

LIBERTY Holdings fell 6.79 percent to R68.32 a share yesterday after swinging to a loss during the year ended in December, underscoring the Covid-19 pandemic economic fallout.

Liberty, wholly owned by Standard Bank, swung to a R1.53 billion loss from R3.25bn profit a year ago on a positive adjustment of R37 million arising from the consolidation of the Liberty Two Degrees listed real estate investment trust (Reit).

The loss was R1.57bn compared with R3.2bn the prior year.

The group said the R1.59bn normalised operating loss from R2.2bn in 2019, included a R2.22bn net after tax cost of establishing the pandemic reserve which, if excluded from the result, would have normalised operating earnings for the year of R628 million.

Group financial director Yuresh Maharaj said 2020 was an unprecedented year with lockdown restrictions imposed across its footprint impacting new business volumes after face-to-face interactions were curtailed.

“We expect a prolonged economic and market uncertainty in the short to medium term with constrained disposable income and increasing unemployment levels,” said Maharaj. The group established a R3bn pandemic reserve before tax in December to prudently recognise the financial impact of Covid-19.

It said the Stanlib South Africa division’s assets under management increased,

Liberty Two Degrees division struggled as the hospitality sector was compromised by the early lockdown and foot traffic in malls fell drastically leading to the provision of rental relief.

However, there was a slow recovery in foot traffic and trading during the second half of the year. Liberty remained open for business during the lockdown and made R8.6bn in annuity payments to clients representing a 9.3 percent increase from 2019.

“This was a critical injection of income into society to sustain many vulnerable people in the latter years of their lives,” said the group. It also paid a staggering R11.7bn in total death and disability claims, up 11.4 percent compared to a year ago.

However, group long-term insurance indexed new business fell 10.1percent compared to the prior year to R7.3bn.