| Thu 11 Sep 2008, 7:06 | | GMB - Glenrand MIB Limited - Glenrand MIB Focusing on profitable operations |
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GMB
GMB
GMB - Glenrand MIB Limited - Glenrand MIB Focusing on profitable operations
providing platform for growth
Glenrand MIB Limited
Incorporated in the Republic of South Africa
(Registration number 1997/008001/06)
("Glenrand MIB" or "the group")
JSE share code: GMB ISIN: ZAE000078010
Glenrand MIB
Focusing on profitable operations providing platform for growth
Highlights
Exit from loss making Benefit Services substantially complete
Renewed focus on profitable operations providing platform for growth
Andrew Chislett, CEO, said:
"We are making steady progress to return Glenrand MIB to sustained
profitability. Our core Risk Services business performed well with total
income up 14% to R515 million. Following the disposal of our loss-making
Benefit Services business we have re-organised the company so that our
broking, risk advisory, claims and policy administration services are more
closely aligned to our customers needs."
Glenrand MIB today reported its annual results to 30th June. Continuing
operations reported an increase in broking revenues of 11% over last year,
which is an admirable result given the soft market conditions experienced
over the period. The client retention record remains excellent and new
business flows were on target. Investment income increased 57% over the
period and this was a function of increased premium volumes, higher interest
rates and more efficient cash management practices.
The soft insurance market continues to impact the commission related
components of revenue although the hardening of personal lines rates
(particularly motor) has had a favourable impact in the high volume area.
HEPS from continuing operations was 8.8 cents, excluding the impairments of
intangible software assets.
The decrease in group profitability arose due to the operating losses
incurred in Benefit Services until the effective date of the disposal on 5th
February 2008, as well as the estimated ongoing obligations to wind down that
business unit. In addition, as reported at 31 December 2007, management
assessed the carrying value of software intangible assets in the continuing
business and certain impairments were required.
The company remains fully dedicated to cost cutting initiatives. In the last
year, the targeted annual savings of R10 million was exceeded although some
once-off costs were incurred to achieve that. There will be further cost
cutting to achieve greater and sustained profit targets.
From July 2007 to June 2008 Glenrand MIB implemented a redesign of its
operating model. This exercise focused on aligning more appropriately the
various service offerings and taking advantage of shared services
opportunities that exist.
The company now comprises three national units that differentiate between
insurance and risk consultancy services (Broking Services), insurance product
services for commoditised and high volume short term insurance products
(Product Solutions) and shared business services that are deployed both
internally to the broking units and externally directly to clients and
underwriters (Business Solutions).
The company`s growth strategy takes cognisance of the market share per
segment with the acquisition strategy being focussed on areas where there are
opportunities for profit growth and where there is a low market share. Market
share is estimated at approximately 30% of the corporate insurance market
which includes specialist offerings such as specialist liabilities and
construction insurance placements. It is anticipated that most of the future
growth in this area will be organic. Broking Services currently contributes
over 50% of revenues.
The high volume offerings are housed in the Business Solutions and Product
Solutions units. It is estimated that total market share in these segments is
less than 5%. The strategy is to grow these two units aggressively with the
aim of reducing the company`s dependency on large corporate and commercial
accounts. Last year the company successfully concluded the acquisition of
Finrite as part of that strategy.
The group has sufficient cash facilities to settle obligations and support
our growth strategy.
The structure and composition of the board is currently under review.
Andrew Chislett concluded:
"We are now focused on profitable continuing operations and have a created a
platform for sustained profits from next year onwards. We will look to return
to dividend paying ways as soon as it is deemed prudent to do so. Our medium
term goal is to reach a 20% gross margin on revenue from our continuing
operations before tax by the financial year ending in 2010."
11th September 2008
Enquiries
Glenrand MIB Tel: 011 329 1111
Andrew Chislett, Chief Executive Officer Tel: 011 329 1302
Gordon Whitcher, Chief Financial Officer Tel: 011 329 1312
College Hill Tel:011 447 3030
Nicholas Williams Tel: 082 600 2192
Date: 11/09/2008 07:06:01 Produced by the JSE SENS Department.
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