2015 · responsible financial services S24 Build social and relationship capital S27 Additional...

Online sustainability review

Liberty Holdings Limited

For the year ended 31 December 2015

IntroductionThe board is committed to ensuring that Liberty is a sustainable business and a respected corporate citizen. We are committed to transparency and accountability, which is essential if our group is to thrive and succeed in the short, medium and long term.

COntents

Introduction S1

About this review S1

Determining our material issues S2

About us S3

Who we are S3

Why invest in Liberty S4

Our brands S5

Our business model S6

Our strategy 2020 at a glance S7

Our organisational structure S9

Our strategy delivery S10

Deliver sustainable financial results S11

Focus on our customers S13

Attract and retain quality employees S18

Provide compliant and responsible financial services S24

Build social and relationship capital S27

Additional information

statement of assurance S34

GRI G4 Index

Abbreviations S36

Definitions S37

About this review The Liberty Holdings Limited’s 2015 online sustainability review (the review) presents a comprehensive analysis of Liberty’s performance with regard to the issues material to its sustainability.

This review covers the 2015 performance of Liberty Holdings Limited and its subsidiaries (referred to as Liberty or the group) with relevant comparison to prior periods. It highlights Liberty’s sustainability performance over the period 1 January 2015 to 31 December 2015.

The most recent prior review was released on 31 March 2015 and covers our previous financial year. This review is intended for the group’s broad base of stakeholders.

The scope and boundaries of this review focus on the material matters of Liberty’s business in relation to our strategy, which results in more emphasis being placed on the group’s South African operations. STANLIB is a wholly-owned subsidiary of Liberty and we report on their behalf. In order to better understand Liberty’s approach to determining material matters, refer to page S2.

We are guided by the King Code of Governance Principles for South Africa (King III) and the Global Reporting Initiative (GRI) G4 sustainability reporting guidelines. This is the second year that Liberty has adopted the GRI G4 guidelines in accordance with the G4 core option. An index of these indicators, together with Liberty’s response to each of them, can be found on our corporate website. Liberty responds to the carbon disclosure project (CDP) annually.

This sustainability report contains certain forward-looking statements which, by their nature, involve risk and uncertainty because they relate to future events and circumstances that may be beyond Liberty’s control. In addition, regulations of the Johannesburg Stock Exchange (JSE) prohibit making price-sensitive forecasts without considerable independent review and process. The directors therefore advise readers to use caution regarding interpreting any forward-looking statements in this review.

UsInG tHIs RevIeW

This review forms part of Liberty’s suite of reporting. The following icons indicate where further information can be found:

• Refers readers to additional information available online.

• IR

Refers readers to additional information contained in the 2015 integrated report.

• SR

Refers readers to additional information available in other sections within the sustainability review.

Assurance• Limited Assurance expressed over selected key performance indicators provided by PwC (page S34).• For a complete review of the other indicators assured, refer to the performance review in the 2015 integrated report, the annual

financial statements (AFS) and supporting information for the year ended 31 December 2015. IR

Feedback• We welcome your feedback. Please send your comments and questions to [email protected].

Liberty Holdings LimitedOnline sustainability review 2015 s1 In

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nLiberty Holdings Limited

Online sustainability review 2015 s2

Introduction (continued)

determining our material issuesLiberty recognises that the changing business landscape presents both risks and opportunities to the group. To be the trusted leader in insurance and investment products, we must strive to enhance the well-being of all our stakeholders by facilitating economic growth and social development in the areas in which we operate.

Our macroeconomic and socioeconomic operating context informs the material issues we identify and address. These concerns are not separate sustainability issues but are rather those matters linked to the achievement of the group’s strategic objectives, which are managed on a daily basis to ensure the group’s long-term sustainability.

We manage these material issues in order to fulfil our commitment to deliver on our purpose of guiding relevant stakeholders to financial freedom, thus enabling better living.

In considering our material issues, in both the integrated report and this online sustainability review, we considered the following:

• Previous issues reported to the board and sustainability subcommittees;

• Material issues reported on by the Standard Bank Group (our majority shareholder);

• Material issues reported on by competitors;

• Our strategic objectives and top ten risks; and

• Issues raised by stakeholders, including the media.

Our material issues were confirmed by the board as unchanged from the prior year. Liberty is a South African company with a strategic intent to increase its presence in sub-Saharan Africa. Currently, due to the larger presence and scale of operations, most emphasis is placed on South Africa.

Our material issues are: Our key partnerships are with:

Deliver sustainable financial results Investors – who provide financial capital

Focus on our customers Customers – who purchase our products and services (after obtaining appropriate advice on their financial needs) to achieve their financial goals and manage life’s uncertainties

Attract and retain quality employees

Employees – who supply the necessary skills and expertise to deliver on our promises to stakeholders

Provide compliant and responsible financial services

Regulators – who govern financial stability and market conduct for our industry (includes government agencies and industry associations)

Build social and relationship capital Communities – who provide us with our social relevance, future customers and employees

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Liberty is a financial services group that offers an extensive, market-leading range of products and services to help customers build and protect their wealth and lifestyle. These include life and health-related insurance, investment management and financial support for retirement. Liberty’s advisers expertly equip customers with knowledge to make financial decisions that add value throughout their various life stages.

Liberty is listed on the JSE and is part of the Standard Bank group, which owns 53,6% of the issued ordinary share capital.

LesothoSwaziland

Botswana

South Africa

NamibiaZimbabwe

Zambia Mal

awi

Mozambique

Tanzania

Mauritius

Nigeria

Ghana

Uganda

South-Sudan

Kenya

KEY

Health

Property

Life insurance

Short-term insurance

Asset management

Our presence in Africa

our vision our purpose

to be the trusted leader in insurance and investment in Africa

We make a difference in people’s lives by making their financial freedom possibleThis is our passion

our values

Involvement Our humanity and empathy

Innovation Our ingenuity and curiosity to find a better way

Integrity Our fairness and honouring our promises

Insight Our knowledge and understanding

Action We roll up our sleeves and find a way to make things happen

About usWho we are

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About us (continued)Why invest in Liberty

our proud historyFor nearly 60 years, Liberty has created value for investors by meeting customers’ financial needs through developing and delivering appropriate insurance and investment products and services. During this period, Liberty has produced attractive returns for its shareholders.

our core competenciesDistribution capacity is a key strength and is being enhanced by our investment in digital and direct channels

Innovative product development makes us the market leader in our chosen markets

LibFin provides world-class balance sheet management and facilitates differentiating features in product offerings

Our relationship and bancassurance partnership with standard Bank is a competitive advantage on the African continent

We serve customers in multiple geographies – represented in 18 African countries

stAnLIB provides asset management expertise, especially in managing fixed income and property asset classes

our strategyCapitalise on the strong market position of our Individual Arrangements business

Grow Group Arrangements by building capabilities using new solutions

Accelerate Asset Management growth strategy into alternative asset classes

• Maintain dominance in sA's mass-affluent consumer segment

• Accelerate growth and market share in the sA corporate market

• seamless transfer of core capabilities to wherever there are opportunities

• establish and grow significant presence in nigeria and Kenya

• Preferred Asset Manager for asset flows in Africa• standard Bank preferred partner in all geographies

A sustainable and attractive return on investment, realised over time through dividends and share price growth

our targets

sustainable return on group equity value of long bond rate plus a margin within a range of

4 – 5%sustainable dividend growth of between

8 – 10%

Return on International Financial Reporting standards (IFRs) equity of

19%

Liberty todayLargest provider of insurance solutions in the retail affluent market in sA

One of the largest in the retail unit trust market including money market

Largest bancassurance partnership in sA by value of new business

4th largest provider of insurance solutions in sA employee benefits market

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About us (continued)our brands

The advantage of knowing

OUR BRAnD essenCe OUR PURPOse OUR BeLIeF

Your pioneering

guide to financial freedom

We make a difference in people’s lives

by making their financial

freedom possible

This is our passion

We believe that our customers should have the opportunity to grow their wealth and leave a legacy for their family. We understand the value of knowledge and its power to change realities when set in action

Intellectual Curiosity Applied

creating financial freedom

for our clients

We embrace diversity and encourage individual focus. We believe diversity and individual focus, together, create sustainable growth and excellence ... this is our promise to ourselves, our clients and society at large

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About us (continued)our business model

Our business model is to utilise and renew available capital resources sustainably to create value by providing solutions to individuals (or represented groups of individuals) in respect of their insurance risks and investment needs.

In return, we either charge an appropriate fee, or derive underwriting profits through pooling similar insurable risks, enhanced by optimising offsetting risks. We maximise our ability to generate revenue through identifying customer needs and producing innovative product solutions and effective distribution and servicing.

We have extensive product design experience and skillour asset management expertise, particularly in managing fixed income and property asset classesThis allows us to optimise the use of our human and intellectual capital

our operating model includes three separate customer facing units to target chosen customer segments and to address evolving regulationsThis allows us to focus on our customers and enhance our brand capital

Liberty has been a trusted brand for nearly 60 yearsSubstantial investment in building on technology advances

to differentiate our service delivery

This further builds our brand capital

our LibFin capability provides world-class balance sheet management capabilityThis allows us to optimise the use of

our financial capital within the board approved risk appetite

our extensive South African distribution network is providing key insights in developing our distribution capacity

throughout AfricaA significant advantage is our Standard Bank relationship including the

bancassurance partnershipThis allows us to expand our sources of financial, intellectual and human capital

InsURAnCe UnDeRWRItInG PROFIt

Contracted premium income for risks insured, less claims and related acquisition and service expenses (actual and expected over contract duration)

InvestMent InCOMe

Net investment income on shareholder investment market exposures (capital invested and derived exposures from insurance contract obligations), less group administration and strategic expenses

Asset MAnAGeMent PROFIt

Performance and asset based fees earned for managing and administering customer mandates, less related acquisition and service expenses

entity value creationvALue IS creATed From THree mAIn AcTIvITIeS

A pioneering guide to financial freedom

market and distribute to chosen

markets

Leverage our balance sheet

design and develop

innovative products

and services

understanding our customers’ financial needs

Fulfil our promises to customers

Key strategic differentiators which drive our value creation

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About us (continued)our Strategy 2020 at a glance

our vision: To be the trusted leader in insurance and investment in Africa

our chosen geography

Liberty is focused on sub-Saharan Africa

The African continent has a population in excess of 1,1 billion. A number of African countries have sustained economic growth in excess of 5% for the past decade.

The increasing rate of urbanisation and expanding labour force is leading to the rise of the African middle class consumer, whose discretionary spending power is growing. Insurance, investment and asset management markets are growing rapidly across the continent due to rising incomes and retirement reforms.

This economic growth, together with retirement reform, micro insurance legislation and increased urbanisation, offers market penetration opportunities in a region that currently has extremely low insurance penetration rates. Most countries also lack a social security network, or the resources to provide one, which requires individuals and employers, through group schemes, to make their own arrangements in this regard.

consumer segments we

will serve

Liberty is focused on the following selected customer segments

High net worth and affluent segment – These are individuals with significant net investable assets, typically looking to grow wealth rather than protect it.

mass-affluent segment – Customers in this segment are individuals in South Africa and other territories with sufficient demographic numbers that have investable assets of R250 000 or investable monthly income of at least R750 or a tertiary education that provides the ability to move up the income scale. The number of equivalent mass-affluent customers in Nigeria and Kenya is growing rapidly.

employees, members of group schemes and affinity groups – This segment includes customers who can be targeted through Group Arrangements. These individuals are targeted through multinationals, large corporates, SMEs, global insurers and affinity groups.

Liberty in 2020

Be the No. 1 provider in South Africa to the

mass-affluent consumer segment

Be in Top 10 in Nigeria and Top 3 in Kenya,

gaining insurance market share and achieving

significant growth in sub-Saharan Africa

Accelerate growth and market share in the

SA corporate market to become a Top 3 player

Be the preferred manager for asset flows

destined for Africa

Be the preferred partner for Standard Bank in all its

African geographies

Leverage and ensure seamless transfer

of core capabilities of the group to wherever

there are opportunities

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About us (continued)our Strategy 2020 at a glance (continued)

How we organise

ourselves to differentiate

Our ambition through our business model is to take a market position that addresses the challenges the industry faces, protects our current business and enables us to take a bigger share of the market in a changed world.

This necessitates that we make a cultural shift and adopt a more customer-centric approach to doing business. We will also need to leverage the entire group by transporting and investing in capabilities that can maximise opportunities – as a group and not as individual business units – so that we become more agile and can transform rapidly in the face of a changing environment.

Sustainable value creation

for our shareholders

is a key priority

We will create sustainable value for our shareholders by maintaining meaningful relationships with our customers, our employees, our partners and our communities.

• We place the customer at the centre of everything we do.• We leverage group synergy and business unit focus to maximise value for our customers, our people, our

partners, our communities and our shareholders. • Fair play underpins all our business activities and our relationships – with our customers, our people,

our partners, our communities and our shareholders. • We believe in investing in our people to realise their full potential, to achieve our goals. • We believe that we create more value together than we could on our own, and we strive at all times to

leverage our synergies. • We believe in going out of our way to ensure that the customer comes before the organisation,

the organisation before the team, and the team before the individual.

Ultimately, Liberty's Strategy 2020 aims to generate sustainable and progressive operating earnings growth and cash generation supporting dividends and capital creation, leading to a significantly increased group equity value.

Group enablement

Group g

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d execution

Individual Arrangements CFU

Group Arrangements CFU

Asset Management CFU

LibFin and Investment Platform

Standard Bankbancassurance partnership

Standard Bankbancassurance partnership

We foster growth by focusing on a few core businesses with a clear market focus

We free up management bandwidth to sharpen our focus

We create value through clear areas of group wide leverage

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About us (continued)

our organisational structure

To optimise our ability to achieve Liberty's 2020 strategic goals, a new operating model was implemented to maximise our focus on our chosen customer segments, and more effectively leverage group shared capabilities.

CUstOMeR FACInG UnIts

Individual ArrangementsProvides insurance and investment solutions to

individual mass-affluent and affluent consumers, mainly

in south Africa.

Group ArrangementsProvides insurance

and investment solutions to corporate customers

and retirement funds across sub-saharan Africa.

Asset ManagementProvides asset management

capabilities to manage investment assets invested in Africa.

stAnDARD BAnK BAnCAssURAnCe PARtneRsHIP

Supported and enabled by:

stRAteGIC COMPetenCy UnIts

LibFinManages market and credit risk inherent in the south African insurance operations, originates

credit portfolios and oversees investment management of the group's financial capital.

Investment platformA single investment platform to service

investment products sold by the group is under development.

GROUP enABLeMent

Delivers common services to the group businesses, the key objective of which is to create efficiency through economies of scale while freeing up management bandwidth in the customer facing and strategic competency units. Group enablement operates through six areas, being technology services, technology solutions, shared operations, customer services, real estate services and professional services.

group governAnce And execuTIonthe group's mandatory governance functions, stakeholder reporting

and strategic support and oversight.

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About us (continued)

our strategy delivery

Significant progress was made in transforming the business during 2015 in response to Strategy 2020. Key achievements in 2015 include:

• The organisation was restructured and the Individual Arrangements, Group Arrangements and Asset Management Customer Facing Units (CFUs), as well as the Group Enablement and Group Governance and Execution functions, were established. This structure provides focus on customer segments, frees up management bandwidth to enable focus on customer value propositions and allows efficient leveraging of the whole by identifying unique capabilities required across the group.

• Competitive strategies and customer value propositions are being developed by each CFU to unlock identified market opportunities in selected target markets based on our growing understanding of customer needs.

• The customer fairness committee was established as a sub-committee of the group executive committee (exco) and has developed customer fairness principles (CFPs), that provide a common approach to how Liberty treats its customers.

• Operating principles to guide the group as it transitions from being product-driven to customer-focused have been developed. Notably, the concept of Liberty Citizenship has been introduced, which sets out the standards of how Liberty employees relate to our customers and other stakeholders and, importantly, how they relate to each other as they focus on making financial freedom possible for our customers.

• We have continued to grow our presence across the continent entrenching our position in the East Africa region through acquiring a short-term insurance business in Uganda and launching the first income real estate investment trust, the Fahari I-REIT, through STANLIB Kenya, as well as continued investment in distribution in our insurance business in Kenya. We also obtained a licence in Lesotho to operate a life and health business, which will allow us to strengthen our strategic partnership with Standard Bank in that country.

• In line with freeing up management bandwidth by outsourcing non-core parts of our operations, strategic partnerships have been entered into in respect of our property management service capabilities and asset management operations.

The Liberty citizenship principles enable the delivery of our strategy

As a purpose-guided organisation, Liberty strives to make a difference in people’s lives by making their financial freedom possible. Strategy 2020 sets out how the organisation intends to achieve this purpose. Furthermore, the Liberty of the future positions the customer at the heart of the organisation. This dedication to customer-centricity and fairness will build a legacy of leadership, influence, and impact as Liberty transforms lives across the African continent by making financial freedom possible.

Within this strategic context, a stronger focus on the customer demands a stronger focus on how the organisation operates. Liberty will foster growth by focusing on a few core businesses with clear growth prospects and market orientation. To sharpen focus, Liberty will create management bandwidth that will see the business pay more attention to its customers through clear and differentiated value propositions. Furthermore, management recognises that Liberty creates more value collectively than what it would as individual units, and so Liberty will strive at all times to leverage group-wide synergies.

Enabling this vision relies on Liberty’s people who are willing to go out of their way to ensure that the customer comes before the organisation, the organisation comes before the team, and the team comes before the individual (defined as Liberty Citizenship), people who collectively share the dream of making financial freedom a possibility.

Fair play underpins all Liberty’s business activities and sets out the desired relationship objectives for Liberty’s people, partners, customers, communities and shareholders.

Liberty Holdings LimitedOnline sustainability review 2015 s11

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deliver sustainable financial results

A primary objective of the group is to deliver a sustainable attractive return on investment to shareholders. We are fully committed to generating competitive sustainable value. We acknowledge that our duty is to ensure Liberty’s sustainability before short-term maximisation of profits.

Liberty produced a solid increase in earnings with strong net customer cash flows and good cash generation. This result has been produced against the backdrop of challenging operating conditions and a slowdown in equity markets.

Group BEE normalised headline earnings of R4 128 million were 4% higher, representing 7% growth in BEE normalised operating earnings and a 2% decrease in earnings from LibFin Investments – Shareholder Investment Portfolio (SIP). The growth in operating earnings was supported by strong performances from Individual Arrangements, Liberty Corporate, a division of Group Arrangements, and LibFin Markets. The SIP gross performance of 9,6% (2014: 10,3%) was substantially ahead of benchmark, supported by overweight exposure to foreign assets. The BEE normalised return on equity at 19,5% (2014: 20,4%) reflects ongoing efficient capital

management. The life operations benefited from continued positive operating variances against modelled expectations that supported good cash generation in 2015.

Net customer cash inflows were substantially higher at R15,2 billion (2014: R4,2 billion) due to significantly improved STANLIB asset management cash flows. This included external inflows of R8,4 billion (2014: outflows of R7,3 billion) into the asset management operations. Long-term insurance net customer cash inflows of R5,4 billion remained strong, however, were lower than the 2014 inflows of R9,9 billion due mainly to significantly reduced large single premium Liberty Corporate customer flows during the year, which are typically sporadic in nature.

The year in review

group equity valuereturn on Bee normalised group equity value

Bee normalised returns on IFrS equity

r42 billion 10,5% 19,5%

Bee normalised operating earnings up

Liberty group Limited capital Adequacy ratio (cAr) cover Final dividend up

7% 3 times 9%Long-term insurance customer net cash flows STAnLIB customer net cash inflows

r5 billion r8 billion

This section provides a high level overview of the group’s financial performance. For a more detailed understanding of the group’s performance and how it generates sustainable financial returns, refer to the following sources:

• 2015 integrated report;• 2015 annual results presentation;• 2015 annual financial statements and supporting information, including risk management; and• 2015 business unit reviews. IR


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deliver sustainable financial results (continued)

In the group’s long-term insurance operations, indexed new business was 4% lower at R7 515 million, impacted by the reduced single premium business in Liberty Corporate. The group’s retail Evolve investment product range and linked-life annuities continued to deliver good sales growth. Recurring premium risk product sales were at similar levels to 2014.

New business margins at 1,8% (2014: 2,1%) were lower, mainly as a result of a change in the product mix to lower margin products as well as the increase in the risk discount rate to 12,8% (2014: 10,8%). The insurance business continues to be managed well within the long-term actuarial expense and policyholder behaviour assumptions.

Total assets under management increased to R668 billion (2014: R633 billion), reflecting net external customer inflows and relatively low incremental growth from investment market returns.

BEE normalised group equity value per share of R145,96 was up 4% on 2014, and reflected R4 120 million of equity value profits for the year. This represents an annualised 10,5% (2014: 16,9%) return on opening group equity value. The significantly higher risk discount rate that negatively impacted the value of the in-force book, together with lower investment returns and the lower earnings growth from STANLIB, accounted for the lower return compared to 2014.

Good progress continues to be made in transitioning Liberty’s organisational design to a more relevant operating model to support the recently adopted strategy with a time horizon to 2020. For more information on the group’s strategy, refer to pages S7 – S8.

capital adequacy coverThe 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 at 3,03 (2014: 3,07) times the regulatory minimum. This has been achieved despite higher capital requirements arising from the increased exposure to credit assets as well as rating downgrades of certain credit assets.

All 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 31 December 2015 and 2014 reflected OCAR as the higher amount.

dividendsIn line with the group’s dividend policy, the board has approved and declared a gross final dividend of 437 cents per ordinary share. The final dividend will be paid out of income reserves and is payable on Monday, 11 April 2016 to all ordinary shareholders recorded in the books of Liberty Holdings Limited on Friday, 8 April 2016, the record date.

The dividend of 437 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 371,45 cents per ordinary share. The number of ordinary shares in issue in the company’s share capital at the date of declaration is 286 202 373.

BEE normalised headline earnings

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R bi

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2 000

3 000

4 000

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1 9651 382 1 3561 878

1 7232 198

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BEE normalised headline earnings and dividends(1) per share

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Cent

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1 5001 300

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528581

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Focus on our customers

Our purpose at Liberty is clearly defined: “We make a difference in people’s lives by making their financial freedom possible – this is our passion.” This means everything that we do as a business needs to be aligned to this purpose: our strategy; the products we develop; the people we employ to serve our customers and the distribution channels we put in place.We aim to secure the trust of our customers by meeting their requirements for a financial services company that understands their stated and unstated needs.

The year in review

Launched

Agile retirement range– south Africa’s first retirement solution that provides partial guaranteed income

Launched

Fahari I-ReIt– the first income real estate investment trust in east Africa

2,4 million

total credit life policies in-force (sA and Rest of Africa)

2,7 million total retail policies in-force (sA)

1,7 million emerging consumer market (eCM) policies in-force

total policy membership of

5,35 million 25% reduction

in the number of cases referred to the Ombudsman

We focus on our customers by:• Building a customer-centric culture;

• ensuring robust governance;

• engaging with our customers;

• Delivering to our customers; and

• Pursuing service excellence.


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Building a customer-centric cultureAn important part of Strategy 2020 is customer-centricity – this means putting customers at the centre of everything we do. This necessitates that we make a cultural shift within the group. Our Liberty Citizenship Principles form the basis of this cultural shift, guiding how we as Liberty will engage with our customers and other stakeholders.

At Liberty we support the objectives of Treating Customers Fairly (TCF) as required by the Financial Services Board (FSB). The TCF outcomes below are fully supported by an established governance framework and guiding principles that intend driving appropriate behaviours and a shift in our culture.

The TcF six core consumer outcomes1: Customers are confident that they are dealing with firms where the

fair treatment of customers is central to the firm culture.

2: Products and services marketed and sold in the retail market are designed to meet the needs of identified customer groups and are targeted accordingly.

3: Customers are given clear information and are kept appropriately informed before, during and after the time of contracting.

4: Where customers receive advice, the advice is suitable and takes account of their circumstances.

5: Customers are provided with products that perform as firms have led them to expect, and the associated service is both of an acceptable standard and what they have been led to expect.

6: Customers do not face unreasonable post-sale barriers to change product, switch provider, submit a claim or make a complaint.

Our position on customer fairness however, extends beyond the minimum regulatory compliance standards of TCF. During the year, we developed Liberty-specific standards to guide how we interact with our customers. These standards, called our CFPs, exceed the minimum requirements of TCF and are used to differentiate Liberty in the market in terms of fairness and market conduct.

Liberty is dedicated to developing long-term sustainable relationships with customers based on the principle of fairness. This dedication to customer-centricity and fairness is the foundation on which we are building a sustainable business that can transform lives across the African continent by making financial freedom possible. Our CFPs are embodied in the individualised customer value propositions developed for each CFU – see page S8 for more information.

our customer fairness principles

principle Typical behaviour required

Leadership accountability

We own the issue and don’t pass the blame

Customer led We consider the customer’s interest first

Simple, clear and transparent

We communicate in plain language. We make it easy for our customers to understand us

Reliable engagement We make promises we can keep, and we keep the promises we make

Listen and empower We provide the right solution for the right reasons that will empower our customers to make informed decisions

Continuous improvement

We evolve, adapt and continuously improve in line with customer expectations and changing needs

Monitor and reporting We evidence what we say and what we do

For more information on how we are actively building a customer-centric culture in our employees, refer to page S18.

ensuring robust governanceWe believe that robust and transparent governance structures are necessary to ensure customer fairness is embedded throughout the organisation. While the Liberty board is ultimately responsible for ensuring the group delivers on its customer mandate, the board is supported by governance structures at all levels of the group.

The social, ethics and transformation committee (SET) oversees customer fairness in the group and TCF is a standing item for discussion at SET meetings, demonstrating the board’s commitment to treating customers fairly.

Customer fairness committees (CFCs), at both group and unit levels, ensure that customer-centricity is entrenched at every level of our business. The group CFC is chaired by the group chief executive officer (CEO) and meets on a quarterly basis to review and report the group’s performance against the CFPs. At an operational level, each CFU has a CFC. These committees report into the group CFC a subcommittee of the group exco.

The CFC utilises customer management information to proactively identify customer trends and customer fairness opportunities. It also makes decisions on customer fairness matters that have a financial, operational, policy or stakeholder impact on the business. It influences the way decisions are made; how we handle and engage with customers; how actions are taken; and the provision of the correct level of evidence to demonstrate customer fairness.

Focus on our customers (continued)

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engaging with our customersThe quality of our relationship with customers is directly related to the quality of engagement and communication. We focus on building trust and respect. Ensuring the optimal quality of customer information is imperative to facilitate credible communication. The better the quality of the information we have, the better we can service our customers. Our objective is to ensure that by 2020, customer experiences with Liberty are:

• Simple;

• Consistent; and

• Personal.

We have a range of access points and communication channels to engage with our customers. In addition to our distribution network (see page S6), customers can communicate with Liberty through our call centres, communicating with an average of 15 000 customers per day. We have built extensive servicing capabilities to communicate with our customers that include online and mobile communication technology to cater for changing customer engagement and communication preferences. We ensure that our customer information and interactions are protected at all times.

Performance during 2015

In 2015, a number of initiatives were implemented to better service our customers, and further projects and initiatives will be launched during 2016 and 2017. These projects range from refining how we gather insights about customers, not just demographic information but also psychographic information, which will give us greater insights into the drivers of customer behaviour and help simplify the ways in which customers can interact with Liberty.

delivering appropriate solutions to our customersUnderstanding our customers’ needs is not only critical to developing solutions that are attractive, affordable and deliver on our promises; but which also create value for both customers and shareholders.

As discussed on page S9, Liberty has been organised into three CFUs that focus on distinct customer needs. Each CFU has developed its own distinct customer value proposition (CVP) that responds to the needs of its identified customers. The process of developing a distinct CVP has been to understand the demographic and behavioural attributes of the customer, develop insights on how to educate and empower customers about the most appropriate solutions for their financial needs and developing appropriate propositions and solutions.

Our CFUs have dedicated product development teams led by senior executives focusing on specific customer segments and their needs. The group employs in excess of 50 professionals in product design, made up of actuaries, accountants, legal advisers and economists.

Service delivery is as important as product development. Support processes are therefore developed in tandem to ensure that administration and service support processes are in place when products are launched. In addition, prior to the launch of products, the relevant risk officers review the product and support processes to ensure that we can deliver on the marketing promise.

Our solutions are sold and delivered directly to the individuals, or to a more formalised grouping of individuals through authorised representatives.

Ensuring that the right culture is created amongst our financial advisers and intermediaries is key to excellence in customer delivery. To create this culture, we constantly recruit, train, develop and manage our sales force. We recruit to a detailed specification, we train to levels above the industry norm, and we develop to ensure skills remain high current and relevant. Our innovative product range is supported by a distribution force that is trained to deliver appropriate advice to our customers, in line with the Financial Services Board’s regulations.

Performance during 2015 In 2015, our Individual Arrangements CFU launched an innovative solution to meet the retirement needs of customers. The Agile Retirement Range gives customers the option to have a guaranteed partial income in retirement combined with the ability to invest in multiple portfolios according to their retirement strategy.

Our Asset Management CFU, STANLIB, launched a bond index tracking fund: a unit trust fund that provides investors with a platform to invest in government and quasi-government bonds at a relatively low cost.

Liberty Kenya launched and listed an income real estate investment trust (Fahari I-REIT) on the Nairobi Securities Exchange’s Alternative Investment Market Segment in October 2015. The I-REIT enables customers to invest in a select portfolio of properties and pay clients' returns at a pre-agreed rate within a secure and regulated investment vehicle that is aligned with international standards and good governance.

Our distribution force is key to providing customers with high quality advice and delivering our products to them. In 2015, our tied distribution force reduced by 6% due to slightly higher than anticipated turnover and attrition. Our focus, however, remains on the quality of our advisers.

In 2015, Liberty experienced an increase in the number of advisers with more than five years’ experience. We also grew the Liberty entrepreneurs headcount by 5% in 2015 and the agency headcount decreased by 5%.

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pursuing service excellence

customer satisfaction All customer service and retention functions were consolidated into our contact centre during 2014 and a strong focus was placed on driving a customer-centric culture, with the implementation of a number of interventions aimed at improving the overall customer experience.

Liberty continued using the Net Promoter Score (NPS) measurement to determine customer sentiment and loyalty towards the brand. Generally, there has been a notable improvement in the NPS across Liberty’s customer base.

Many of the elements measured in determining the NPS were also covered in our 2015 “customer is KING” project. This project was designed to establish an integrated customer measurement framework for Liberty.

Liberty uses the customer service index to measure the overall level of customer satisfaction throughout the year.


Performance is measured against the above metrics using various tools and surveys. Transactional NPS for Individual Arrangements is determined across various touch points including claims, retention, call centre, shared service operations and new business. During 2015, the transactional customer service index, which measures the overall level of customer satisfaction, improved compared to 2014. Areas receiving management focus include the turnaround time for resolving customer enquiries and complaints.

The customer satisfaction index increased to 79% (2014: 74%) for the year 2015.

customer complaints (escalated to group customer relations)One of the main aspects of driving customer-centricity is to ensure that customer complaints are handled with empathy and fairness. A complaint mapping exercise was completed, which enabled the Individual Arrangements business to define training models and improvement opportunities to drive the customer-centric culture across the business. The most common reasons for complaints were found to be poor service, alleged misrepresentation, and payment, claim or value enquiries.

Performance during 2015 The number of complaints handled by the group’s customer relations department in 2015 increased marginally compared to 2014. Many of the cases forwarded to the Ombudsman are associated with claims and are the result of either non-disclosure by the customer or errors during the sales process.

As we improved our complaint handling and dispute resolution processes, we achieved a substantial reduction in the number of cases that were referred to the Ombudsman. However, as the number of cases declined, the rate at which Liberty was overturned increased in line with the complexity of the cases. The increasing overturn ratio is receiving management attention through improved systems, training and feedback to financial advisers.

0

300

600

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1 200

1 500

Agency(1) Liberty entrepreneurs(1) Liberty@work(1) Standard Bank �nancial consultants

Brokerconsultants(1)Tied agents

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going forward, we will focus on: • Continuing to engage with our customers to understand their needs;• Delivering excellent service to our customers; • entrenching our customer-centric culture in the group;• Developing innovative products to meet customer needs; and• Building brand awareness in the market.


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Attract and retain quality employees

Strategy becomes a reality through the day-to-day activities of our employees. Attracting and retaining high calibre employees is essential for the execution of the group's strategy.Liberty recognises that talent is a constrained resource across the geographical regions in which we operate. In order to deliver customer service excellence, we have responded to this challenge by striving to maintain Liberty's reputation as an employer of choice.

our people philosophy Our strategy can only be achieved through our people, who are central to our success.

Our success is based on our employees’ valuable contributions, as individuals and teams, towards realising our collective purpose and passion for making financial freedom possible. We believe that our employees’ experience of financial freedom is a precursor to realising the experience of financial freedom for our customers

across the continent. We invest in our people to help them realise their full potential and achieve their goals.

We believe that we create more value together and therefore strive at all times to leverage our synergies. Our culture is one where the customer comes before the organisation, the organisation before the team and the team before the individual.

The year in review

To enable our strategic ambitions, we will focus on the following areas:• Redefining our organisational culture; • engaging our employees; • Proactively managing the transition into our new operation model;• embracing diversity and inclusion;• Managing talent; and• Rewarding performance.

10 442 total number of employees

(permanent and commission-remunerated agents)

Invested

R75,5 million in training of salaried

employees and commission-remunerated agents

Accredited as a Top employer

by the top employers Institute for the seventh

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>60 qualified actuaries;

>110 student actuaries;

>70 chartered accountants; and

>170 certified financial planners employed

our permanent employees consist of

58,6% women

and 77,2% black


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Attract and retain quality employees (continued)

Transitioning to our new operating modelAn important part of transitioning to our new operating model is ensuring we have the right people in the right places to deliver on our strategic aims. Furthermore, we understand that we need to build a culture of collaboration and service to support our new operating model.

During 2015, we revised our operating model and constituted three CFUs, as discussed on page S8. In addition to the creation of CFUs, two areas were created with a distinct focus on Group Enablement and Group Governance and Execution capabilities.

The implementation of our new operating model has resulted in significant changes across all levels of our organisation. We are committed to dealing with our new operating model in a manner that ensures our employees are engaged and empowered.

We believe that transitioning to our new operating model requires a co-ordinated, group-wide approach. As a result, we established a group-wide centralised integrated change management process to provide a systematic and consistent approach to managing the change across the organisation and ensure a seamless transition to the new organisational structure. Within this process, one of the established workstreams is focused on managing change for our employees as we reorganise our business, enlisting and engaging employees into the organisation’s purpose and strategy.

employee engagement We engage regularly with our employees to gain insight into their needs and ensure that they understand the role they play in realising the strategy of the organisation. We use both formal and informal mechanisms to engage with them, including staff road shows, quarterly internal publications and employee surveys.

As a result of the reorganisation that took place in 2015, we postponed our biennial group-wide employee attitudinal survey. As an interim measure, change awareness assessments were

conducted. In addition to the change awareness assessments conducted during the year, some business units assessed the current sentiment of employees through engagement surveys.

Liberty aims to deal proactively with potential employee issues. Quantitative measures of the internal labour climate include formal and informal disciplinary matters and litigation through the Commission for Conciliation, Mediation and Arbitration (CCMA) and the Labour Court.


Engagement through a wide variety of means at a group level and business unit level took place during the year and included informing staff of the transition to a new operating model and structure, and the progress to achieving our Strategy 2020 goals.

During the year, regular forums were held with senior management to provide updates on key initiatives, strategic priorities and planned organisational changes as well as provide tools to assist them in understanding and managing change within their teams. Furthermore, we introduced the concept of Liberty Citizenship Principles during the year, which will inform the design of our new ways of working.

As is customary during times of change, the feedback received from employees indicated levels of anxiety caused by the creation of CFUs, the amalgamation of some business units and leadership changes. In response to employee concerns, staff engagement meetings were held in all business units to discuss the implementation of Strategy 2020 and the potential for greater career development aligned to the strategy.

As we have continued to restructure our business to enable Strategy 2020, we have seen a change in our staff profile and turnover ratios. The group’s staff complement reduced by 1,15% during 2015, primarily due to restructuring within the business. Liberty entered into a strategic partnership in property management service capabilities with JHI to ensure that we have the right capabilities.

Total workforceemployee headcount % change 2015 2014 2013

Salaried employees – South Africa (3,46) 5 636 5 838 5 858

Salaried employees – other African operations (1,54) 767 779 729

Commission-remunerated agents – South African operations (6,53) 3 147 3 367 3 057

Commission-remunerated agents – other African operations 54,06 892 579 545

Total (1,15) 10 442 10 563 10 098

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While the average tenure of Liberty’s employees in 2015 remained unchanged (2014: seven years), the voluntary turnover ratio in South Africa, excluding retrenchments, dismissals, intra-group transfers, mutually-agreed separations and movements due to restructures, increased to 14,13% in 2015 (2014: 13,19%). While this is above our internal desired target of 11,0%, we continue to monitor and manage these issues as we transition our operating model.

Overall staff turnover increased to 18,84% but is in line with the industry norm of 18,9% (PwC – Salary and Wage Movement Survey: September 2015). When considering this turnover ratio we have to take into account the change that the organisation experienced and the levels of anxiety employees experienced as a result of this change. Approximately 1 700 employees (approximately 31%) were transitioned to newly created business units during the year.

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South African voluntary sta turnover (%)

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Our focused efforts to manage the changes at both group and business unit level has positively contributed to retaining employees during a time of organisational change. Pre-hire and exit surveys are conducted and the outcomes are analysed to ensure that our employee value proposition that attracts our employees matches the value proposition and organisation climate that retains employees. We remain committed to creating an environment that is conducive to retaining the key talent required to deliver on our strategy.

Despite the transitions within the organisation, Liberty was accredited as a Top Employer by the Top Employers Institute for the seventh consecutive year. This accreditation reaffirms Liberty’s competitive people practices.

diversity and inclusionHaving a workforce that reflects the diversity of the countries in which we operate enables the group to perform effectively in the markets that we serve. The group aims to create a multi-cultural environment that fosters and respects equality for all employees. We do this through establishing a transformation culture

throughout our organisation. The senior executives are committed annually to quantitative and qualitative initiatives to support the group’s transformation goals. There are regular diversity dialogues within the business units to enhance the understanding between employees of different cultural backgrounds. Employment equity is key to our transformation agenda, which is supported by our employment equity plan.

For more information on Liberty’s transformation journey refer to page S29.

employment equity in South AfricaThe principal driver behind Liberty’s transformation journey includes developing a sustainable transformation culture that is aligned to Liberty’s vision, purpose, strategy and values. In order to achieve this, we commit to setting, measuring and monitoring targets and communicating our transformation achievements to all employees.

The board is ultimately responsible for ensuring Liberty meets its transformation targets. The SET committee, is mandated by the board to provide guidance on the implementation of the employment equity plan and ensures alignment to Liberty’s transformation vision and strategy. At the executive management level, transformation is driven by the people, social and ethics committee (PSET), a subcommittee of exco, which is mandated to execute Liberty’s transformation plan.

Liberty adheres to the Employment Equity Act of 1998 and the Financial Sector Code (FSC) in South Africa. The employment equity plan is part of an integrated people development strategy that includes talent management and leadership development. Liberty’s employment equity plan includes numerical, affirmative action targets, which are executive management key performance indicators. The current employment equity plan came into effect on 1 January 2014 and will be completed by 31 December 2017.


In 2015, Liberty met its employment equity targets across all occupational levels. Black representation at top management increased to 50% (2014: 36%) and to 49% (2014: 44%) in senior management positions. The majority of employees across the group are female (58,6% ).

defined black representation2015

%2014

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During the year, the annual exco transformation workshop took place. The workshop is focused on setting the group’s measurable internal transformation targets as well as agreeing on key actions and behaviours for the year ahead.

Several diversity dialogue workshops were hosted by the heads of the business units and 196 employees attended during 2015.

Talent management

creating a sustainable talent pipeline A long-term view of our human capital requirements is needed to support the execution of our strategy and ensure the long-term sustainability of the group. Our realigned talent management framework supports the identification of core capabilities required to deliver on our customer-centric strategy. By understanding the talent and capabilities we have and appropriately matching these to core roles in the organisation, we ensure maximisation of our employees potential.

Investing in skills development grows the strength of human resources in all geographies in which we operate and ensures the seamless mobility of our talent across the continent. We fulfil our commitment to skills development through offering our employees a variety of programmes to strengthen the group's talent pipeline. Development programmes include growing competence and knowledge holistically across technical, leadership, product and compliance training.

Our three leadership programmes have been developed in partnership with Duke Corporate Education and aim to build leadership capabilities across the group as an enabler of our strategy. Three programmes ensure the building of leadership capability across the organisation.

Our Insights programme is aimed at junior management and focuses on operations within our South African context. The Navigators programme is aimed at middle management and provides a transition to learning how South Africa interacts with the rest of the continent while building awareness of global market trends. The Pioneers programme is the most senior programme offered and provides international exposure, learning from other key economies and the changing global landscape.

Liberty encourages employees to further their tertiary education through a bursary programme that is designed to assist employees in gaining a range of qualifications in a number of relevant fields.

In addition to the in-house and external training provided to permanent employees, Liberty has an extensive learnership programme aimed at introducing young talent to a career in the financial services sector that includes workplace experience.

The learnership programme is supported by the Insurance Sector Education and Training Authority (INSETA) and learners receive an NQF Level 4 qualification as well as eight months’ work experience.

Our actuarial development programme is designed to address the shortage of actuarial skills within Liberty and the industry as a whole. Liberty’s programme includes a mentorship component for actuarial graduates in the workplace who are completing their qualifying examinations.


During the year, an increased focus was placed on optimising the use of internal training resources. The average number of training hours received by Liberty’s South African employees increased from 11,3 hours per annum to 15,9 hours, despite the overall decline in training spend as a result of the reduced spend on external service providers.

During 2015, the total amount invested in training programmes in South Africa was R35 million (2014: R47 million). The 2015 training spend represents 0,9% of the South African payroll costs (2014: 1,2%). Of the total training expenditure, 2,1% was spent on training at the senior management level and 82,4% of the employees that attend the training were black (2014: 82,4%). The group’s management of training spend is decentralised within the CFUs in order to optimise the effectiveness of training for the benefit of the group and employees.



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Training statistics for South African workforce

commission-remunerated agents Salaried employees

2015 2014 2013 2015 2014 2013

Total training spend (R million)* 40,5 28,6 27,4 35,0 47,0 40,4Average training spend per employee (R) 5 212 5 303 6 313 4 592 6 730 4 209Average training hours per employee trained 1,8 1,3 1,8 16 11 15Black employees as a % of staff trained 42 42 46 82 82 80Black females as a % of staff trained 32 30 37 62 64 79

Training spend as a % of staff costs 0,9 1,2 1,1

* Training spend includes all spend on internal and external training for permanent, salaried employees excluding bursaries. Staff costs amounted to R3,95 billion in 2015 (2014: R3,83 billion) and R35 million spent on training in South Africa.

During 2015, we delivered two iterations of the Insights programme, one Navigators programme and one Pioneers programme. A total of 397 employees participated in these programmes during the year (2014: 474). Of these participants, 72% were black (2014: 59%) and 48% were women (2014: 58%).

In 2015, the group enrolled 147 learners (2014: 134) in the INSETA learnership programme all of whom were black and 50 whom were disabled (2014: 57). There were 173 participants on the actuarial development programme during 2015 (2014: 185). For more information on our development programmes, see below.

Key stAtIstICs

Actuarial Development

total participants: 173 (2014: 185)

total investment: R1,6 million (2014: R2,0 million)

students who qualified: 2 (2014: 3)

Liberty Learnership

total learners who started the programme: 147 (2014: 147)

total learners who graduated: 139 (2014: 134)

Permanent placements within Liberty: 58% (2014: 59%)

deveLopmenT progrAmme

In 2015, we awarded bursaries to 716 employees (2014: 799) to further their tertiary education in a number on relevant fields.

rewards and performance Competitive remuneration and rewards for excellence, engagement and commitment are key components to attracting and retaining staff. Liberty’s remuneration structure is designed to attract, motivate and retain talented people at all levels of the organisation.

Remuneration packages are geared towards employees’ levels of influence and their role complexity within the group. The balance between guaranteed and variable pay is appropriately structured according to seniority and roles and does not reward risk-taking outside the board approved risk mandates.

Feedback on performance is an important part of how we engage with our employees. All of our permanent salaried employees receive a minimum of two performance reviews per annum. These engagements are aimed at helping employees better understand the group’s performance expectations and facilitate more accurate performance-related rewards.

For more information on remuneration and rewards, refer to pages 46 to 56 of our 2015 integrated report.

employee wellness and occupational health and safety (oHS)Ensuring our employees are safe and well remains an ongoing focus. The on-site Wellness centre at Liberty's head office allows for the assessment of many medical conditions and treatment or referral to another healthcare provider depending on the medical ailment.

Year-round occupational health and safety training and awareness campaigns are conducted including simulated disasters to verify that procedures are understood and adhered to, thereby ensuring the appropriate responses if a real event were to occur.

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During 2015, there were 128 trained health and safety representatives across the group (2014: 268). These representatives help identify hazards in the workplace and assist in accident investigations. While the number of the representatives declined from the prior year, we focused on enhancing the skill level of the existing representatives in 2015. Health and safety representatives from the business units received specific training that extends the ability to mitigate against OHS risks. Branch managers are now appointing health and safety representatives to assist with injuries on duty and general safety at the branches.

In 2015, we ran a successful awareness campaign about injuries on duty to ensure that staff are aware that they need to report all injuries that occur while on duty. Following the awareness campaign there has been an increased incidence of reported

cases. The reported injuries during 2015 were minor and related to cuts, abrasions, burns, slips, trips and fractures. We believe that the increased reporting of incidents is a positive step towards accident prevention.

We experienced 22 days lost due to injury in 2015, significantly less than the 110 days in 2014. The 2014 figure was unduly high, predominantly due to three cases that occurred during the year. The first case related an employee accident where the injuries incurred were severely exacerbated by a pre-existing injury and resulted in 65 days lost due to injury. The other two cases each resulted in 12 lost days due to injury. Following these incidents in 2014, we took steps to understand and address the cause of the accidents. As a result, we believe we have experienced a significant reduction in time lost due to injury in 2015.

Health and safety statistics for South African salaried employees2015 2014 2013

Number of injuries reported per OHS Act(1) 25 20 22

Number of injuries reported to the Department of Labour(2) 14 20 22

Number of days lost due to injury(3) 22 110 58

Injury frequency rate (per 200 000 hours)(4) 1,3 1,1 0,1

Total number of sick leave days taken 20 580 20 163 21 613

Average sick days per employee 3,9 2,7 3,7

Absenteeism rate (%)(5) 1,5 1,1 1,5

(1) Any injuries on duty that have been reported/investigated and escalated to the compensation commissioner for processing. (2) Any injuries on duty that have been reported/investigated and escalated to the compensation commissioner for processing. These incidents and injuries include any section 24

injuries or incidents (loss of limb/unconsciousness/release of hazardous materials; refer to OHS Act of 1993 – section 24).(3) Number of sick days taken as a result of injuries experienced in the workplace. (4) Lost time injury frequency rates (LTIFR) are the number of lost time injuries within a given accounting period relative to the total number of hours worked in the same accounting

period.(5) The rate of employees that have been absent from work calculated per 200 000 hours worked.

going forward, we will focus on:• Developing the employee value position;• shaping our organisational culture; and• Investing in skills development for employees.


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provide compliant and responsible financial services

Liberty operates in a highly regulated industry. Maintaining the flexibility to adapt to regulatory changes is critical to the group’s long-term success. The group’s compliance department is responsible for monitoring compliance with all regulatory requirements across all business units.

Liberty provides access to financial services to under-served communities and incorporates environmental, social and governance (ESG) issues into its investment practices.

The year in review

creating value through compliance and engagementLiberty is committed to maintaining the highest level of compliance, instilling ethics in all areas of the business and preventing fraud. Regulatory and legislative compliance requirements are identified and implemented through the development of appropriate policies and procedures that are regularly monitored and reported on. Internal compliance management forums continually identify and interpret regulatory requirements and ensure that the business units meet these requirements.

The group has a clear code of ethics, as well as financial crime and whistle-blowing policies, all of which are aimed at establishing accountabilities for preventing, monitoring and reporting of fraud, corruption, ethical breaches and any other related irregularity across the group.

The group’s code of ethics is a clear statement that Liberty is not a company that will exploit legal loopholes, break the law or tolerate fraud. The code applies to the group, including all subsidiaries, both in South Africa and abroad, and includes all directors, officers, employees and direct representatives. Management is required to ensure compliance within its sphere of influence and unethical behaviour is dealt with consistently and decisively at all times.

The financial services sector remains vulnerable to threats posed by fraud and corruption. Liberty remains mindful of these risks and has a dedicated group forensic services (GFS) unit working to prevent, detect, investigate and remediate instances of possible fraud and corruption. GFS consists of highly trained specialists who use forensic data analytics technologies to prevent financial crime, fraud and corruption.

The financial crime policy includes updated terms on whistle- blowing and articulates the group’s principles for preventing, monitoring and reporting fraud, corruption and any other related irregularities. The policy also establishes accountability and applies

We provide compliant and responsible financial services by:• Communicating openly with regulators;• Complying with all legislative and regulatory requirements;• Implementing a fraud detection and prevention management system; and• Considering esG factors when investing.

Provision of products to lower income segment clients to promote financial inclusion

Constituent of the Jse’s socially Responsible Investment (sRI) Index

signatories to the Code for Responsible Investing by Institutional Investors in south Africa (CRIsA)

R3,4 billion 916 26invested in renewable energy projects across the continent

new fraud and corruption cases referred for further investigation in south Africa

corrective actions taken against fraud in 2015


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provide compliant and responsible financial services (continued)

to all staff, contractors, vendors and financial advisers. Non-compliance may lead to disciplinary action or other measures including criminal and civil proceedings. All investigations and actions are pursued without regard to the suspected perpetrator’s length of service, position or relationship to Liberty.

Liberty is a member of the Association of Certified Fraud Examiners, an international body providing best practice anti-fraud training and guidelines, as well as a member of the Association for Savings and Investment South Africa (ASISA) forensic standing committee, an industry initiative aimed at combating fraud.

Liberty seeks positive and constructive engagement with regulators and policymakers, both directly and through appropriate participation in industry forums, to partner with them in ensuring optimal regulatory outcomes for the industry and all its stakeholders. Through this engagement, insights are introduced to Liberty’s strategy development, ensuring business opportunities are targeted and optimised.

The group engages with the FSB, South African Reserve Bank and National Treasury and actively participates in ASISA forums on an ongoing basis, to promote Liberty and industry interests. We also engage extensively with regulators in other countries, notably Kenya (Insurance Regulatory Authority) and Nigeria (National Insurance Commission).


During 2015, we continued to engage with regulators and prepare for the impending regulations. For more information on the nature of these regulatory reforms, refer to pages 58 to 60 of the integrated report. GFS reported a total of 26 corrective actions undertaken in 2015.

Types of incidents

group-wide corrective actions 2015 2014 2013

Warnings 18 4 9

Verbal 0 1 9Written 1 1 0Final written 17 2 0

Staff dismissals 7 8 18Terminations 0 15 41

Broker agreements 0 13 21

Agency agreements 0 2 20

Debarments 1 0 13Criminal convictions 0 0 13Supplier contract terminations 0 1 0

Total actions 26 28 94

The number of new fraud and corruption cases recorded for further investigation was 916 (2014: 847 ). A group-wide fraud saving of R15,1 million (2014: R17,3 million) was achieved. Employees and financial advisers attended fraud awareness training. These sessions give participants the opportunity to discuss real cases and steps that can combat fraud and corruption, such as identifying actual fraudulent documents.

Fraud savings

group-wide2015

rm2014

rm2013

rm

Loss prevented 5,3 10,3 64,6Fraudulent claims paid but recovered 2,0 1,9Potential loss prevented 0,1 0,4Other fraud losses saved 7,7 6,6

Total savings 15,1 17,3 66,5

Investing responsiblyLiberty’s approach to responsible investing is based on incorporating ESG issues into investment decisions. External frameworks and principles provide guidance to the group. Liberty, as an insurance company, and STANLIB, as an asset manager, are both signatories to the CRISA and this serves as the overarching framework for responsible investment across the group. CRISA’s annual reporting requirements form the basis for accountability. Additionally, LibFin requires that its external asset managers are CRISA signatories.

LibFin Credit plays a significant role in the management of the balance sheet, on behalf of the group. This team is specifically responsible for management of the credit portfolio and invests across a wide spectrum of credit assets. The team continues to invest in accordance with Liberty’s responsible investment philosophy, which was approved by the fund control committee in 2011. The philosophy provides a high-level description of the key elements of responsible investing and how they apply to Liberty, including the pursuit of a balance between financial returns and ESG performance.

STANLIB, the group’s asset manager, is responsible for Liberty customer investments as well as those of STANLIB's customers. STANLIB applies a formal responsible investment policy, introduced in 2012, that outlines the business’s approach, governance and commitments to responsible investing. The policy serves as an internal framework and an indicator to external stakeholders of its commitment to responsible investment. Activities to implement the policy include incorporating ESG issues into research processes through the addition of a stewardship pillar that helps analysts and portfolio managers consider issues such as remuneration,

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social and environmental responsibility, board independence and transparency as part of the evaluation of an investment’s attractiveness.

Where LibFin is responsible for other asset manager mandates for Liberty customer and shareholder investments, the team ensures that thorough due diligence reviews of these managers occur, confirming ESG considerations are taken into account in investment decisions. In particular, LibFin monitors managers’ proxy voting and encourages engagement with boards and management, where appropriate.


Renewable energyLiberty believes that renewable energy provides an opportunity to assist communities by reducing stress from the national power grid. South Africa’s energy demand is expected to be twice the current levels by 2030, together with constraints in power infrastructure, electricity demand is rising significantly.

The portfolio of projects, part of the Renewable Energy Independent Power Producer Procurement (REIPPP) programme financed by LibFin, grew to R3,4 billion (2014: R2,1 billion).

We invested in 14 different projects (R1,7 billion in eight wind energy projects and R1,7 billion in six solar energy projects) in various regions in the Eastern, Western and Northern Cape.

Responsible investmentsLiberty has mandated STANLIB to provide two targeted socially responsible investing funds: the Liberty Shari’ah Equity Fund and Liberty Balanced Shari’ah Fund. These portfolios invest in line with the Shari’ah Standards of the Accounting and Auditing Organisation for Islamic Financial Institutions. They support economic and social justice as well as environmental stewardship. At the end of 2015, the Shari’ah funds held a total of R579 million in assets under management (2014: R797 million). Investors in these portfolios donate their non-permissible income to charity and in 2015, this amounted to R450 000 (2014: R1,03 million).

going forward, we will focus on:• Continuing open communication with regulators;• Complying with all legislative and regulatory requirements; and• Investing in renewable energy and infrastructure projects.

provide compliant and responsible financial services (continued)


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Build social and relationship capital

As a financial services organisation, we recognise that our ability to do business and remain commercially viable is dependent on our social licence to operate and the trust we build with our stakeholders.

creating value through relationships At Liberty, we understand that the long-term viability of our business is closely linked to the broader socio-economic prosperity of our key stakeholder groups. We understand that the sustainability of our business is not measured by profitability alone but also by the manner in which we achieve it.

We operate in a dynamic setting that is characterised by environmental, social and ethical developments that present both risks and opportunities for our business. We recognise that

our continued viability as a group depends, in part, on our ability to address these developments through the products and services we provide, as well as through our community engagements and investments. It also depends on our capacity to deliver our products and services with integrity, including complying with required regulation, upholding high ethical standards and minimising our environmental impact. Our response to these factors influences the inherent value of our brand, minimises the perceived riskiness of investing in the business, and, as a result, reduces costs while securing new revenue streams.

We build our social and relationship capital through:• Proactivestakeholderengagement;

• Enhancingourbrand;

• Investingintransformation;

• Investingincommunitydevelopment;and

• Minimisingourenvironmentalimpacts.

The year in review

Invested

R43,3 millionin corporate social investment (CsI) initiatives in sA

Achieved a

Level 2Bee rating, scoring 92.4 points out of 100

Invested more than

R100 millionin enterprise and supplier development

196participants attended diversity dialogues

28 617participants attended financial education training

Reduced total carbon footprint by

14%per full-time equivalent employee in south Africa


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Build social and relationship capital (continued)

managing our social capital One of the ways we grow our social and relationship capital is by investing in transformation and community development.

Through the use of our financial capital and human capital, we are able to grow and develop the communities in which we operate.

Not only does this positively impact the long-term sustainability of our business by reducing poverty and contributing to the building of a thriving economy, but it also translates into a good medium-term investment in the human, social and relationship capital of the group.

enhancing our brand presenceLiberty and its accompanying “flame” has been a trusted and growing brand in South Africa for nearly 60 years and has created a credible foundation for retaining customers, attracting new ones and launching new products.

Liberty’s reputation is directly correlated to the degree to which our actions embody our adopted brand values. We understand that consistency between our brand promises, practices and performance builds the trust placed in us by our stakeholders.

The Liberty group has chosen to maintain two brands, Liberty and STANLIB, to position its asset management offerings differently from the insurance and investment offerings.

BUILDInG tRUsteD BRAnDs


During the year, we continued with our brand health tracker research and measurement programme, measuring various brand metrics across different stakeholders. These include customers, advisers and non-customers. The group’s brand was positively perceived across most categories. The positive increase in campaign recognition and brand linkage is attributed to the consistency of the brand tone and personality across all the executions. We continue to protect and build our brand on a day-to-day basis through values-based actions with our stakeholders.

engaging with our stakeholdersLiberty’s stakeholder engagement department is responsible for facilitating a co-ordinated approach to stakeholder engagement activities across the group, which is aligned with Liberty’s strategy, organisational philosophy, brand ethos, values and material sustainability issues.

We rely on the contribution and support of various internal and external stakeholders for the continued success and sustainability of our business. A range of channels and mechanisms are employed to gather stakeholder feedback. The frequency of engagement varies according to each stakeholder group and the particular issues at hand. Liberty aims to identify and respond proactively to concerns and expectations of our stakeholders.

Our broad base of stakeholders includes those with whom we have a direct relationship and communicate with regularly. These include customers, employees, business associations and industry bodies, trade unions, regulators and government departments, communities and business partners.


Our stakeholder sentiment survey, conducted every other year aims to determine stakeholders’ perceptions of Liberty, its products and services and the overall manner in which it conducts its business. The results of the 2014 survey indicated an overall average score of 80% from stakeholders, an increase in positive sentiment from the previous survey.

Liberty commissioned an interim dipstick survey to understand and respond to our stakeholders’ concerns. The stakeholders that were surveyed included; trade unions, political parties, business associations, media, government departments and community representatives throughout the country.

In general, the survey found that Liberty is perceived to be a trusted and ethical brand. However, areas for improvement were identified and these will be prioritised and addressed in the year ahead.

Liberty continues to maintain its membership and active participation in the following business associations and industry bodies: ASISA, Business Leadership South Africa (BLSA), Business Unity South Africa (BUSA) and South African Chamber of Commerce and Industry (SACCI), to advance its business and social objectives.

In 2015, Liberty engaged with the following stakeholders, the FSB, Long-term Insurance Ombudsman, trade union federations, universities and civil society organisations about different issues of mutual interest.


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Summary of stakeholder survey

WHAt We ARe DOInG WeLL WHeRe We CAn IMPROve

Well-known brand, committed to transparency Change perception of exclusivity by advertising and communicating across all market segments

Well regarded and ethical leadership Simplify and personalise customer experiences

Committed to transformation Enhance stakeholders’ understanding of our CSI initiatives

Good corporate governance in place Strengthen consumer education programmes

Viewed as positively contributing to the financial services industry Invest in skills development to support Liberty’s growth strategies

Strong risk management practices

managing transformationOur vision is to be the trusted leader in insurance and investment in Africa and other chosen markets. We believe this requires us to be reflective, responsive and relevant to the communities in which we operate. Liberty’s transformation vision supports the group’s broad vision and purpose.

Our approach to purposeful transformation goes beyond compliance. Liberty has chosen to embrace transformation as best practice and not adopt a minimum compliance approach. It is through this commitment to transformation that we are able to embody change within Liberty and develop meaningful relationships with various stakeholder groups. We strive to build a corporate culture that supports and encourages transformation, where our similarities and differences are seen as sources of creativity and innovation. During the year, we continued to drive transformation through focus interventions in community development projects, financial literacy, enterprise and supplier development enhancing the understanding of diversity in the group, investing in skills development and implementing employment equity.


In 2015, we continued to align our transformation strategy to the group’s Strategy 2020. We met our internal transformation targets and maintained our level two rating against the Department of trade and industry (dti) Codes of Good Practice (CoGP), scoring 92.4 points out of 100, up from 89.1 points in 2014. STANLIB achieved level two status in 2015, scoring 89.51 points out of 100, up by four points from 2014.

Liberty was ranked fourth in the Empowerdex 2015 top 100 most empowered companies.

We continued to prepare for the implementation of the amended FSC broad-based black economic empowerment (B-BBEE) code, which comes into effect on the date of publication in the Government Gazette.

During 2015, we met our employment equity commitments for all staff levels and 82% of the R35 million training expenditure was directed to developing black employees.

Liberty remains committed to enterprise and supplier development and invested more than R100 million in enterprise development initiatives in 2015.

In partnership with ASISA, we successfully launched the Blue Skies Enterprise and Supplier Development Programme, aimed at having a more strategic approach to driving sustainable enterprise and supplier development to enhance our supply chain management processes.

During the year, we spent R671 million with accredited black suppliers and invested R200 million in a Land Bank deal to support agriculture financing of small-scale farmers.

During the year, we continued to roll out diversity dialogues, aimed at achieving mutual understanding and shared language across the group, while enhancing the understanding of the link between transformation and our strategy.

transformation visionWe are committed to increasing the pace and impact of our transformation journey for the benefit of our investors, clients, staff, suppliers and the society we serve. Our compass on this journey will be the south African constitution and we will actively build the society it seeks to create. Inclusivity and participation will be hallmarks of our progress. Relevant stakeholders will have a voice in charting our course and developing the process, as we make a difference in our country by providing relevant and socially-responsible products and services that add value to our customers and business.


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Liberty scorecard resultsFSC(1)

targets (%)2015

score (%)2014(2)

score (%)

Ownership 14,0 17,0 17,0Management control 8,0 4,8 4,8Employment equity 15,0 10,8 11.0Skills development 10,0 8,3 8,8Preferential procurement 16,0 16,0 16,0Enterprise development 5,0 5,0 3,3Socio-economic development 3,0 3,0 3,0Access to finance 14,0 12,5 11,1Empowerment financing 15,0 15,0 14,8

Total 100,0 92,4 89,1

BEE level 1 2 2

1 Financial Sector Code.2 The 2014 scores were restated to reflect the correct time period.

Investing in our communitiesOur purpose is to make a difference in people’s lives by making their financial freedom possible through education. Our CSI strategy is focused on education, which we consider fundamental to creating opportunities for future employment and contributing to the building of a thriving economy.

Liberty has a centralised approach to community involvement, with a series of flagship initiatives managed in partnership with like-minded organisations. Business units and regional operations are required to adhere to the education focus for CSI. Our strategy aims to address education needs from cradle to career. The projects undertaken include primary, secondary and tertiary education initiatives.

Our primary school programmes focus on learner development, teacher development and learning materials in 20 primary schools located in the Western Cape, Gauteng and KwaZulu-Natal. Our high school programmes focus on learner development and teacher development in mathematics and science, primarily in Gauteng and KwaZulu-Natal. In tertiary education, we support the UCT African Institute of Financial Markets and Risk Management, which aims to address the shortage of skills in the financial sector at postgraduate level, with a focus on increasing the number of black professionals in the industry.

We measure the social impact of our programmes through a monitoring-and-evaluation partnership with the University of Johannesburg.

Our employees are encouraged to take an active part in development initiatives within their communities through the Liberty employee volunteerism programme. In addition, the company has a programme to match the financial contributions of employees towards education initiatives within their communities.

To make financial freedom possible, Liberty invests in financial literacy programmes in communities and places of work.

In 2004 Liberty Holdings formed the Liberty Community Trust (LCT) as part of Liberty’s BEE transaction, undertaken under the FSC, and as an expression on Liberty’s commitment to empowerment.

The LCT is a shareholder of the Liberty group and is led by an independent board of trustees. The trust is mandated to implement innovative educational programmes and facilitates sustainable economic inclusion within communities. It is expected to begin operations during 2016.


During the year, the Liberty group invested R43,3 million in CSI programmes, which represents the combined social investment of Liberty (R36,6 million ) and STANLIB (R6,7 million ) in South Africa. In 2015, our flagship primary school programme, Future Thinking Foundation, provided educational content and resources to 19 476 learners and 519 teachers in 20 selected schools in the Western Cape, Gauteng and KwaZulu-Natal. In 2015, through our flagship high school programme, the Kutlwanong Centre for Maths, Science and Technology, we supported 788 grade 10-12 learners, of whom 193 were in matric. The matriculants received a 100% pass rate for mathematics and science with 95% receiving a Bachelor’s Degree exemption. Of these learners, 72 achieved distinctions in mathematics and 54 in science.

In 2015, our main volunteerism initiative was in support of Mandela Day. Liberty employees pledged, covered and delivered 6 700 books to 30 selected schools across South Africa, Botswana, Kenya, Namibia, Swaziland, Tanzania, Uganda and Zambia. Furthermore, during the year, we trained 28 617 people in financial literacy.


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Our monetary social investment in CSI initiatives during the year can be categorised as follows:

cSI investment2015

rm2014

rm2013

rm

Education (mathematics, science and social awareness campaigns) 20,9 20,6 23,5Health programmes 2,1 4,4 2,6Financial literacy 9,2 9,1 7,3Administrative costs, including employee matching programme 4,4 5,0 3,5

Liberty cSI investment 36,6 39,1 36,9

Education spend 4,1 1,4 4,7Financial literacy 2,2 3,1 2,8Administrative costs, including employee matching programme 0,4 1,1 0,5

STAnLIB cSI investment 6,7 5,6 8,0

Total SA cSI investment 43,3 44,7 44,9


protecting our natural capitalWhile Liberty is not a significant consumer of natural resources, we are committed to minimising our direct impact on the environment.

Liberty partnered with the National Business Initiative (NBI), through the Private Sector Energy Efficiency (PSEE) Programme to leverage best practice in energy efficiency through a donor-funded programme that assisted over 3 000 companies countrywide. Project Sekela was launched in 2015 with a primary focus on responding to electricity supply disruptions in South Africa and the identification of opportunities to mitigate the risks to the business. The project has since expanded to focus on water initiatives as well.

Furthermore, we remain committed to ensuring our investment criteria encourage the responsible and sustainable use of natural resources. Liberty and STANLIB are both signatories to CRISA and this serves as the overarching framework for responsible investment across the group. Additionally, LibFin requires that its external asset managers investing on behalf of Liberty are CRISA signatories. STANLIB is also a signatory to the United Nations Principles of Responsible Investment (UN PRI) and submits annual reports on its progress against the six responsible investment principles.


In 2015, Project Sekela developed a Liberty energy policy and strategy framework which identified both a resilience roadmap for the Braamfontein head office and opportunities to save and use energy more efficiently. In addition to this strategic work, there were a number of energy and water efficiency projects that included a rain and grey water system and numerous energy efficient lighting upgrades across the portfolio of occupied and owned premises.

We remain committed to investing in renewable energy infrastructure projects. We recognise the critical role our property portfolio plays on the environmental impact of tenants and other third parties. Liberty is committed to managing those areas of our business with a direct impact on the environment, including electricity, water consumption, waste and employee travel, in an environmentally friendly manner.


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The combined activities of Liberty resulted in reduced carbon emissions for 2015 as depicted in the table:

carbon footprint2015 2014(9) 2013

Scope 1 direct co2 emissions (tonnes)(1) 2 772 2 510 2 102

Fuel used in equipment owned or controlled e.g. generators 1 080 886 410Air-conditioning and refrigeration gas refills(2) 0,35 0 17Vehicle fleet fuel consumption 1 692 1 624 1 675Scope 2 indirect co2 emissions (tonnes)(3) (4) 32 875 40 224 40 314

Purchased electricity in Liberty-owned and occupied buildings 22 805 31 038 35 503Purchased electricity in leased and occupied buildings 10 069 9 186 4 812Scope 3 total indirect co2 emissions (tonnes)(8) 14 303 14 312 4 365

Business travel in commercial airlines(5) 5 375 4 350 2 256Business travel in rental cars 134 99 98Hotel accommodation(6) 167 176 217Travel claims by employees 1 301 1 759 1 289Paper consumption 220 239 505Waste to landfill 7 052 7 568Recycled waste 54 121

Total combined scope 1 and 2 emissions (tonnes) 35 646 42 735 42 416

Total combined scope 1, 2 and 3 emissions (tonnes) 49 949 57 046 46 781

Total scope 1 and 2 emissions per full-time equivalent employee (tonnes per employee)(7) 4 4,64 4,76

(1) Scope 1 emissions include all properties owned and occupied by Liberty, and STANLIB Melrose Arch but exclude other Liberty leased branches owned by third-party landlords, and properties owned but not occupied by Liberty. Vehicle fleet consumption applies to both Liberty and STANLIB.

(2) Emission from non-Kyoto protocol greenhouse gas (GHG) emissions of 436 tonnes (2014: 1 694 tonnes) of CO2e were excluded.(3) Electricity purchased by Liberty-owned and occupied buildings and STANLIB Melrose Arch in 2015 was assured by PwC. Electricity purchased by other properties leased and

occupied by Liberty (i.e. leased branches owned by third-party landlords) was included in the carbon footprint calculation but was not assured by PwC.(4) The Eskom conversion factor of 1.01 was used for the conversion of electricity in 2015. (5) The Department for Environment, Food and Rural Affairs, in the United Kingdom, has published guidelines for GHG conversion factors to help businesses convert existing data

sources into equivalent CO2e emissions. These conversion factors have been used as the basis to calculate Liberty’s 2011 – 2015 carbon emissions figures related to commercial air travel.

(6) A carbon factor of 19 was used for accommodation as per the World Meteorological Organisation.(7) For 2015, emissions per full-time equivalent employee are calculated based on the total number of full-time equivalent employees (permanent salaried employees and

commission-remunerated agents) at 31 December 2015 across Liberty’s operations in South Africa at owned and leased properties. The number of full-time equivalent employees used for this calculation was 8 902 in 2015, 9 205 in 2014: 8 915 in 2013.

(8) Total scope 3 was verified as 6 976 tonnes CO2e by PwC and total scope 1, 2 and 3 emissions 42 623 tonnes of CO2e with the exclusion of 7 106 tonnes of CO2e waste (recycle and landfill waste) and 220 tonnes of CO2e emissions from paper.

(9) 2014 carbon footprint value was restated to include waste emissions.


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Water consumptionKilolitres

2015Kilolitres

2014Kilolitres

2013

Water consumption at owned and occupied properties including STANLIB 134 296 174 347 157 309Water consumption across the full property portfolio 1 139 920 1 183 512 1 261 556

During 2015, Liberty implemented a number of water initiatives, such as grey water systems. We anticipate that these systems should save some of the water volume that Liberty extracts from the municipality. In light of the droughts and water shortages in South Africa, Liberty believes that even though our water use is not material we should reduce as much as possible to contribute to the country and its people.

recycling at Liberty-owned shopping centres

Type of waste 2015 (1) 2014(2) 2013(3)

percentage of total waste volume recycled 32% 35% 32%Total tonnage of recycling material recovered: 2 485 3 110 2 969

Paper 2 002 2 477 2 285Plastics 243 235 217Glass 200 44 53Metal 36 327 403Other 4 26 10,5

(1) 2015 recycling figures are based on the following malls: Umhlanga Ridge, Eastgate, Liberty Midlands Mall, Liberty Promenade and Sandton City.(2) 2014 recycling figures are based on the following malls: Century City, Umhlanga Ridge, Alberton City Mall, Eastgate, Greenacres (presale), Liberty Midlands Mall, Liberty

Promenade and Sandton City.(3) 2013 recycling figures are based on the following malls: Century City, Umhlanga Ridge, Alberton City Mall, Eastgate, Greenacres, Liberty Midlands Mall, Liberty Promenade and

Sandton City.

Liberty has partnered with reputable waste management companies who collect, sort and recycle waste. Currently, paper, plastic, glass, metal and other are recyclable materials that Liberty records.

going forward we will focus on:• Reviewing the current material issues to align with strategy 2020;• Continue investing in communities and education initiatives;• Conducting a stakeholder sentiment survey; and• Developing a sustainability management framework for the group.



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Scope and Subject Matter The following Selected Sustainability Information to be included in the Report was selected for an expression of limited assurance:

• Number of new fraud and corruption cases recorded for further investigation – South Africa (page S24)• Total number of complaints dealt with by Group Customer Relations (number of complaints elevated to a Group level) (page S17)• Workforceprofilestatisticsintermsof:

– Number of salaried employees – in South Africa and outside South Africa (page S19) – Number of commission remunerated agents – in South African and outside South Africa (page S19) – % total salaried employees by race and gender (page S18)

• Voluntary staff turnover rate for permanent salaried employees in terms of overall turnover percentage (South Africa) (%)(page S20)• Total training spend as a % of staff costs (%)(page S22)• Scope 1 direct emissions (tCO2e ) (page S32)• Scope 2 indirect emissions (tCO2e) (page S32)• Scope 3 emissions (tCO2e) – travel (airlines, rental cars, hotel accommodation, travel claims) (page S32)• Total CO2 emissions (tCO2e)–excludingpaper,wastetolandfillandrecycledwaste(page S32)• Total water consumption at Liberty owned and occupied properties, including Stanlib (Kl) (page S33)• Number of people trained in Liberty consumer education programmes (page S27) • Total CSI spend, including administration costs (R-value) (page S31)• Total credit life policies in force (million) – in South Africa and outside South Africa (page S13)• Total retail policies in force (million) (page S13)• Total number of emerging consumer market (ECM) policies in force (million) (page S13)

Independent Assurance Report to the Directors of Liberty Holdings Limited

We have been engaged by the directors of Liberty Holdings Limited (“Liberty”) to perform an independent limited assuranceengagement in respect of Selected Sustainability Information contained in the attached data sheet and which will be reported inLiberty’s 2015 online Integrated report and Sustainability Review for the year ended 31 December 2015 (the “Report”). This report isproduced in accordance with the terms of our contract with Liberty dated 27 November 2015.

Independence and ExpertiseWe have complied with the independence and other requirements of the Code of Professional Conduct for Registered Auditors issuedby the Independent Regulatory Board for Auditors, which is founded on fundamental principles of integrity, objectivity, professionalcompetence and due care, confidentiality and professional behaviour.

The firm applies International Standard on Quality Control 1 and, accordingly, maintains a comprehensive system of quality controlincluding documented policies and procedures regarding compliance with ethical requirements, professional standards and applicablelegal and regulatory requirements.

Our engagement was conducted by a multi-disciplinary team of health, safety, environmental and assurance specialists with extensiveexperience in sustainability reporting.

Scope and Subject MatterThe following Selected Sustainability Information to be included in the Report was selected for an expression of limited assurance:

Number of new fraud and corruption cases recorded for further investigation – South Africa Total number of complaints dealt with by Group Customer Relations (number of complaints elevated to a Group level) Workforce profile statistics in terms of:

- Number of salaried employees – in South Africa and outside South Africa

- Number of commission remunerated agents – in South African and outside South Africa

- % total salaried employees by race and gender Voluntary staff turnover rate for permanent salaried employees in terms of overall turnover percentage (South Africa) (%) Total training spend as a % of staff costs (%) Scope 1 direct emissions (tCO2e ) Scope 2 indirect emissions (tCO2e) Scope 3 emissions (tCO2e) – travel (airlines, rental cars, hotel accommodation, travel claims) Total CO2 emissions (tCO2e) – excluding paper, waste to landfill and recycled waste Total water consumption at Liberty owned and occupied properties, including Stanlib (Kl) Number of people trained in Liberty consumer education programmes Total CSI spend, including administration costs (R-value) Total credit life policies in force (million) – in South Africa and outside South Africa Total retail policies in force (million) Total number of emerging consumer market (ECM) policies in force (million)

We have not carried out any work on data reported for prior reporting periods except for data that was included in the prior year’sassurance scope, nor have we performed work in respect of future projections and targets. We have not conducted any work outside ofthe agreed scope and therefore restrict our opinion to the Selected Sustainability Information.

Respective responsibilities of the directors and PricewaterhouseCoopers Inc.The directors are responsible for selection, preparation and presentation of the Selected Sustainability Information in accordance withthe criteria set out in Liberty’s internally defined procedures set out in an attachment to this document and to be included in theDefinitions of key performance indicator measures and abbreviations in the online Sustainability review of the Integrated report andthe corporate website (Definitions). This criteria is referred to as the “Reporting Criteria”. The directors are also responsible fordesigning, implementing and maintaining of internal controls as the directors determine is necessary to enable the preparation of theSelected Sustainability Information that are free from material misstatements, whether due to fraud or error.

Our responsibility is to form an independent conclusion, based on our limited assurance procedures, on whether anything has come toour attention to indicate that the Selected Sustainability Information has not been prepared, in all material respects, in accordance withthe Reporting Criteria.

This report, including the conclusion, has been prepared solely for the directors of Liberty as a body, to assist the directors in reportingon Liberty’s Selected Sustainability Information performance and activities. We permit the disclosure of this report within the Reportfor the year ended 31 December 2015, to enable the directors to demonstrate they have discharged their governance responsibilities bycommissioning an independent assurance report in connection with the Report. To the fullest extent permitted by law, we do not acceptor assume responsibility to anyone other than the directors as a body and Liberty for our work or this report save where terms areexpressly agreed and with our prior consent in writing.

Assurance work performedWe conducted our limited assurance engagement in accordance with International Standard on Assurance Engagements 3000 (ISAE3000 – ‘Assurance Engagements other than Audits and Reviews of Historical Financial Information’) and in respect of the carbonemissions, the International Standard on Assurance Engagements 3410 (ISAE 3410 – ‘Assurance Engagements on Greenhouse GasStatements) issued by the International Auditing and Assurance Standards Board. These standards require that we comply with ethicalrequirements and that we plan and perform the assurance engagement to obtain limited assurance on the Selected SustainabilityInformation as per the terms of our engagement.
















Respective responsibilities of the directors and PricewaterhouseCoopers Inc.The directors are responsible for selection, preparation and presentation of the Selected Sustainability Information in accordance withthecriteriasetoutinLiberty’sinternallydefinedproceduressetoutinanattachmenttothisdocumentandtobeincludedintheDefinitions(page S37) of key performance indicator measures and abbreviations in the online Sustainability review of the Integrated report and the corporate website (www.libertyholdings.co.za). This criteria is referred to as the “Reporting Criteria”. The directors are also responsible for designing, implementing and maintaining of internal controls as the directors determine is necessary to enable the preparation of the Selected Sustainability Information that are free from material misstatements, whether due to fraud or error.

















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Our work included examination, on a test basis, of evidence relevant to the Selected Sustainability Information. It also included anassessment of the significant estimates and judgements made by the directors in the preparation of the Selected SustainabilityInformation. We planned and performed our work so as to obtain all the information and explanations that we considered necessary inorder to provide us with sufficient evidence on which to base our conclusion in respect of the Selected Sustainability Information.

Our limited assurance procedures primarily comprised: reviewing processes that Liberty have in place for determining the Selected Sustainability Information included in the Report; obtaining an understanding of the systems used to generate, aggregate and report the Selected Sustainability Information; conducting interviews with management at corporate head office; evaluating the data generation and reporting processes against the reporting criteria; testing the accuracy of data reported on a sample basis; and reviewing the consistency between the Selected Sustainability Information and related statements in Liberty’s Report.

A limited assurance engagement is substantially less in scope than a reasonable assurance engagement under ISAE 3000. Consequently,the nature, timing and extent of procedures for gathering sufficient appropriate evidence are deliberately limited relative to areasonable assurance engagement, and therefore less assurance is obtained with a limited assurance engagement than for a reasonableassurance engagement.

The procedures selected depend on our judgement, including the assessment of the risk of material misstatement of the SelectedSustainability Information, whether due to fraud or error. In making those risk assessments, we consider internal control relevant toLiberty’s preparation of the Selected Sustainability Information in order to design procedures that are appropriate in the circumstances.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion.

Inherent limitationsNon-financial performance information is subject to more inherent limitations than financial information, given the characteristics ofthe subject matter and the methods used for determining, calculating, sampling and estimating such information. The absence of asignificant body of established practice on which to draw allows for the selection of different but acceptable measurement techniqueswhich can result in materially different measurements and can impact comparability. Qualitative interpretations of relevance,materiality and the accuracy of data are subject to individual assumptions and judgements. The precision of different measurementtechniques may also vary. Furthermore, the nature and methods used to determine such information, as well as the measurementcriteria and the precision thereof, may change over time. It is important to read the Report in the context of the Reporting Criteria. Inparticular, where the information relies on factors derived by independent third parties, our assurance work has not includedexamination of the derivation of those factors and other third party information.

ConclusionBased on the results of our procedures nothing has come to our attention that causes us to believe that the Selected SustainabilityInformation for the year ended 31 December 2015, has not been prepared, in all material respects, in accordance with the ReportingCriteria.

Other Matters

The maintenance and integrity of Liberty’s website is the responsibility of Liberty’s directors. Our procedures did not involve

consideration of these matters and, accordingly we accept no responsibility for any changes to either the information in the Report or

our independent assurance report that may have occurred since the initial date of presentation on the Liberty website.

PricewaterhouseCoopers Inc.Director: Jayne MammattRegistered AuditorJohannesburg25 February 2016


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Abbreviations

AsIsA Association for Savings and Investment South Africa

B-BBee Broad-based black economic empowerment

BLsA Business Leadership South Africa

BUsA Business Unity South Africa

CAR Capital adequacy ratio

CCMA Commission for Conciliation, Mediation and Arbitration

CeO Chief executive officer

CFC Customer fairness committee

CFP Customer fairness principles

CFU Customer facing unit

CoGP Codes of Good Practice

CRIsA The Code for Responsible Investing in South Africa

CsI Corporate social investment

CvP Customer value proposition

dti Department of Trade and Industry

eCM Emerging consumer market

esG Environmental, social and governance

FsB Financial Services Board

FsC Financial Sector Code

GFs Group forensic services

GHG Greenhouse gas

GRI Global Reporting Initiative

IFRs International Financial Reporting Standards

InsetA Insurance sector education and training authority

Jse Johannesburg Stock Exchange

LCt Liberty Community Trust

LtIFR Lost time injury frequency rate

nPs Net promoter score

OCAR Ordinary capital adequacy requirement

OHs Occupational health and safety

ReIPPP Renewable Energy Independent Power Producer Procurement

sA South Africa

sACCI South Africa Chamber of Commerce and Industry

set Social, ethics and transformation committee

sIP Shareholder Investment Portfolio

sRI Socially responsible investment

tCAR Termination capital adequacy requirement

tCF Treating customers fairly


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definitions

KPI Definition

Total number of ECM in-force policies including Standard Bank funeral plan, Liberty funeral plans, Parents cover plan, Life cover plan, Savings plan, Fundisa

Total number of ECM in-force policies including Standard Bank funeral plan, Liberty funeral plans, Parents cover plan, Life cover plan, Savings plan, Fundisa and Vodacom Funeral (DFS). (S13)

Total credit life policies in force (million) Total Credit Life Policies in force.The policies in force in the following areas included:• Credit Policies at Standard Bank – reported in number of policies;• Credit Policies in Africa – reported in number of lives;• Credit policies at CfC – reported in number of schemes; and• Credit policies at Corporate level – reported in number of schemes.

A policy is regarded as in force if Liberty has a future obligation to pay claims, thus active policies. (S13)

Retail policies in force (million) Retail Policies – sold under 1 licence: Liberty LifeThere are different products sold under the license.A policy is regarded as in force if Liberty has a future obligation to pay claims, thus active policies. (S13)

Total number of complaints dealt with by Group Customer Relations (number of complaints elevated to a Group level)

The number of high level complaints received from clients, executives, External Dispute Resolution Bodies (e.g. The Long-Term Ombudsman Pension Fund Adjudicator and the FAIS ombudsman, the Media, Consumer Forums (Hello Peter and Get Closer) and the Financial Services Board, which are dealt with by the Group Customer Relations on the Mindkey system. (S17)

Workforce profile statistics in terms of:• Number of salaried employees

• Number of salaried employees (outside South Africa)

• Number of commission-remunerated employees

• % total salaried employees who are Black (Africans, Coloureds, Indians)

• % total salaried employees who are female

Salaried employees: Number of salaried employees (SA).This is the generally fixed compensation, which is received by an employee, on a weekly, bi-weekly, semi-monthly, monthly or yearly basis as opposed to an hourly pay scale that can produce a different total each pay period due to variable hours and overtime. Excludes temporary and permanent contractors. Commission-remunerated employees: Number of commission-remunerated employees (SA). Note: The definition excludes staff on IPP (Income protection plan). (S19)

Staff turnover (%) – percentage staff turnover in terms of Liberty’s new definition of Total Staff turnover i.e. All staff movement including retirement, retrenchments, dismissals, intergroup transfers (Standard Bank only), mutually agreed separations and voluntary turnover (early retirements and resignations)

Overall staff turnover – includes all termination types i.e. All staff movement including retirement, retrenchments, dismissals, intergroup transfers (Standard Bank only), mutually agreed separations and voluntary turnover (early retirements and resignations)The total number of terminations as a percentage that occurred during the reporting period (January – December 2015). The percentage is based on the average headcount and is calculated as follows:• Total turnover % = total staff turnover/average headcount;

The staff turnover is for South African and Africa salaried employees only. (S20)

Total training spend as a % of staff costs (ZAR)

All internal and external training interventions attended by salaried employees in South Africa only excluding bursary spend. All training spend listed on the General Ledger for Liberty, Stanlib, Properties, Health and DFS are included in the scope. (S22)

Number of new (fraud and corruption) cases recorded for further investigation

The source of cases include: KPMG Hotline, Internal Hotline and the clients who channel the cases directly to the forensic department. (S24)

Number of people trained in Liberty consumer education programmes

This is defined as the number of people that have attended consumer education awareness programmes during the reporting period 1 January 2015 – 31 December 2015.This training is currently outsourced to Vision Active and Prime stars for Liberty and Stanlib respectively. Excludes trainers and facilitators. (S27)


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KPI Definition

Total CSI spend, including administration costs (ZAR)

Corporate social investment spend (mainly education) including administration costs.This is exclusive of VAT. (S31)

Scope 1 emissions (tonnes of CO2) – petrol, diesel, refrigerant

Petrol:Fleet – LitresThis information is made up of the Stanlib and the Liberty Fleet. The information includes petrol allowances. (Note: Petrol allowances are treated as scope 3 for purposes of the carbon calculation).Diesel:Fleet, Generator – LitresThe Diesel from generators is made up of many different properties however it excludes properties managed by other organisations. Both Stanlib and Liberty have inputs for Diesel Generators. The Fleet Diesel only applies to Liberty and it is similar to how petrol is managed at Liberty.Air-conditioning only – Kilograms:The information was limited to R22 refrigerant and R410. (S32)

Scope 2 emissions (tonnes of CO2) – electricity consumption

Measured in kilowatt hours (KwH).Electricity consumption is measured through Municipal Invoices. The electricity consumption is then converted to CO2 Emissions by Carbon Calculator.The electricity consumption can be divided into two reporting categories being :• Liberty Owned Properties. (Being those properties which Liberty owns portions through

policies. This amount refers to the total consumption); or

• Liberty Owned and Occupied Properties. (These are the properties where Liberty occupies the property either wholly or a portion of. This would only be a portion of the total where Liberty actually occupies). (S32)

Scope 3 emissions (tonnes of CO2) – travel Scope 3 – Travel is made up of 4 different sectors being:• Flights – Km

• Accommodation – nights

• Car hire – km

• Travel Claims – km

All these parts of travel are reduced to km travelled or nights and then converted into Carbon Emissions by Carbon Calculator.Flights, accommodation and car hire are made up of both Travel Management Companies (TMCs) transactions. Flights – booked but not tracked excluded accommodation – only hotel nights included travel claims – car hire for Liberty included.Business related travel information is obtained from the TMCs and car hire vendors via their MIS systems.• Additionally travel related claim forms received for reimbursement via Accounts Payable

the copy documentation is supplied for emission factors to be applied to calculate the CO2e; and

• The travel claims information was received from the HR department and was a report drawn from payroll processing. (S32)

Total CO2 emissions (tonnes) Refer Scope 1,2,3. (S32)

Total water consumption (Kl) Liberty consumption includes:• the Liberty portion of owned and occupied based on the total percentage of the building

occupied; and

• Liberty’s consumption in leased property (Stanlib only). (S33)

definitions (continued)

2015 · responsible financial services S24 Build social and relationship capital S27 Additional...

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