| Thu 10 Sep 2009, 7:05 | | GMB - Glenrand MIB Limited - Audited Summarised Results for the Year Ended 30 |
|
GMB
GMB
GMB - Glenrand MIB Limited - Audited Summarised Results for the Year Ended 30
June 2009
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
AUDITED SUMMARISED RESULTS FOR THE YEAR ENDED 30 JUNE 2009
HIGHLIGHTS:
- Profit R48,7 million
(2008: R80 million loss)
- EPS 20,5 cents (2008: 36,2 cents loss)
- HEPS 11,5 cents (2008: 38,9 cents loss)
OVERVIEW
The group increased broking revenue by 7,9% to R502,8 million during the period
under review despite a difficult last six months. Investment income increased
by 10,7% to R54 million following increased premium flows and improved treasury
management activities. The group posted a profit of 20,5 cents per share (2008:
loss of 36,2 cents) and headline earnings per share of 11,5 cents (2008: loss
of 38,9 cents). The business is now focused on short-term insurance broking and
risk advisory services.
CONTINUING OPERATIONS
Risk Services (Business to Business)
In our corporate property and casualty division the financial year end saw
marginal revenue growth against last year. This is a reflection of the current
economic downturn with a number of our corporate clients reducing the size of
their operations or otherwise shelving expansion projects. Our client retention
record remains excellent in this area, but fees have come under severe pressure
as we respond to our clients` need to contain expenditure.
We experienced marginal organic growth in the commercial division of the Risk
Services cluster, where there was a decline in premiums and associated
commissions due to prevailing economic conditions. The commercial insurance
market remains soft and this had a negative impact on commission earned in this
division.
Our specialist teams performed well, but the construction projects division was
the most impacted by the current economic situation. There has been a dramatic
decline in construction and contracting activity where many expansion contracts
have either been postponed indefinitely or cancelled outright. Despite these
difficult conditions we achieved a similar revenue contribution as the previous
financial year in this division.
Individual Insurance Solutions (Business to Consumer)
We also recorded marginal revenue growth in the Individual Insurance cluster.
Individual clients are looking for ways to reduce their insurance expenditure
and this resulted in a reduction in the premium base. Our personal lines
division produced a profitable result for insurers which removed the necessity
for above inflation annual increases in premium, which in turn enabled us to
remain competitive in this segment. We have increased policy sales and achieved
good client retention.
Also in this cluster is Finrite, which was purchased in February 2008. This was
the first full year contribution from this unit. The business operates as a
high volume insurance product administrator that primarily services retailers
that provide and sell insurance products into their client base.
Operational efficiencies
The cost base remains high and the anticipated cost reduction benefits have not
yet fully materialised. We continue to address the fixed cost base of the group
and are restructuring many of our property leases. We invested in client facing
channels, the main one being the implementation of a new contact centre during
March 2009 to reduce the cost to serve clients.
DISCONTINUING OPERATIONS
The assets and liabilities of the Benefit Services business unit, which
includes Ten-50-Six Life Limited, were previously disclosed as held-for-sale in
terms of IFRS 5.
Benefit Services
Glenrand MIB Benefit Services (Pty) Limited ("Benefit Services") was placed in
provisional liquidation with effect from 31 March 2009 with a final winding up
order being granted on 2 June 2009. In our Interim Reporting announcement
released on 23 March 2009, we advised stakeholders that Glenrand MIB could no
longer support the insolvent subsidiary in the face of rapidly escalating
provisions and severe strain on our cash resources. At the time of liquidation,
Benefit Services owed Glenrand MIB a cumulative amount of R166,3 million.
During the past two years, the operating assets of Benefit Services were sold
to various parties, each as a going concern, but none of the proceeds of these
disposals were utilised to repay the loan to Glenrand MIB.
Ten-50-Six Life
The life company no longer has any policies in issue. All linked policy
holders` assets and liabilities that were previously reflected as held for sale
have now been matched and settled to policyholders.
CHANGE IN YEAR END
The group will change its financial reporting date to 30 September, with effect
from 2010. The current reporting date coincides with that time of the year
where we encounter the most policy renewal and new business activity. In line
with the realignment of our business strategy, it was decided to arrange our
affairs in a manner that allows the appropriate focus on our growth targets. We
will therefore, in addition to our normal Interim Results, release Reviewed
Summarised Results for the twelve months ending 30 June 2010 and Audited Annual
Financial Statements for the fifteen months ending 30 September 2010.
PROSPECTS
The operating model implemented in 2007 was reviewed as we assessed our
achievements against the intended outcomes identified at the time. Our
continuing operations were streamlined from three business units to two, namely:
- Risk Services: catering for all of our non personal lines clients (Business
to Business);
and
- Individual Insurance Solutions: catering for all of our personal lines
clients and associated administration functions (Business to Consumer).
The realignment will increase customer focus into our delivery model to unlock
increased revenue earning opportunities.
We will continue to explore suitable acquisition opportunities in our targeted
segments.
Last year we advised that we were targeting a profit margin before taxation of
20% by the end of the 2010 financial year. This target contained assumptions
regarding the economic climate that have now been shown to be too optimistic.
This remains our target margin.
Despite continuing uncertainty in the South African economy, we will strive to
show another improvement in profit in the 2010 financial year.
DIRECTORATE
Dr I Abedian was appointed an independent non-executive director on 3 November
2008 and Mr P Cooper and Mr AP du Preez were appointed as non-executive
directors on 19 November 2008 and 25 February 2009 respectively. Mr GT
Ferreira, Mr AW Mansfield and Mr DJ Harpur retired from the Board at the
group`s annual general meeting on 19 November 2008. Mr P Cooper resigned as a
director on 25 February 2009. Ms TH Nyasulu resigned on 2 April 2009 and Ms TN
Mgoduso (previously an alternate director) was appointed a full director to
replace her on that date. Mr BA Chelius and Ms TT Khobane were appointed
alternate directors on 2 April 2009 and 27 May 2009 respectively.
Subsequent to the year-end, Ms HH Hickey was appointed as a director on 1 July
2009.
DIVIDEND
No dividend has been declared. It remains our intention to resume dividend
payments when prudent to do so.
On behalf of the Board of Directors
Dr MF Kunene AJ Chislett
Chairman Chief Executive Officer
9 September 2009
Consolidated Income Statement
for the year ended 30 June
2009 2008
Notes R`000 R`000
Continuing operations
Revenue 502 867 466 049
Employment expenses 2 (307 121) (268 734)
Rent and IT expenses (48 824) (49 042)
Amortisation and depreciation (22 934) (18 522)
Other expenses (107 992) (117 196)
Finance costs 3 (26 850) (26 219)
Disposals and impairments (5 490) (27 953)
Investment income 3 72 457 66 987
Share of profit of equity accounted
investees 980 1 374
Profit before taxation 57 093 26 744
Taxation (19 016) (23 997)
Profit from continuing operations 38 077 2 747
Discontinuing operations
Profit (loss) from discontinuing
operations
(net of taxation) including the effect
of the deconsolidation 4 10 581 (82 740)
Profit (loss) for the year 48 658 (79 993)
Profit (loss) attributable to:
Minority interest 2 111 2 057
Shareholders of Glenrand MIB 46 547 (82 050)
48 658 (79 993)
Earnings per share
Basic earnings (loss) per share (cents) 20,5 (36,2)
Diluted earnings (loss) per share (cents) 20,5 (36,2)
Continuing operations
Basic earnings per share (cents) 15,9 0,3
Diluted earnings per share (cents) 15,9 0,3
Headline earnings (loss) per share (cents) 6 11,5 (38,9)
Diluted headline earnings (loss) per
share (cents) 6 11,5 (38,9)
Number of shares (net of treasury shares)
- Weighted average (000`s) 226 784 226 526
- Diluted weighted average (000`s) 226 784 226 612
Consolidated Balance Sheet
as at 30 June
2009 2008
R`000 R`000
Assets
Non-current assets
Property, plant and equipment 21 994 20 335
Goodwill 36 710 44 530
Intangible assets 70 002 74 772
Deferred taxation asset 25 894 36 697
Investments 2 357 3 123
Long-term accounts receivable - 1 260
Non-current assets 156 957 180 717
Current assets 430 399 511 537
Assets classified as held-for-sale - 2 918 219
Total assets 587 356 3 610 473
Equity and liabilities
Equity
Shareholders` equity 157 255 112 674
Minority interest 3 757 4 042
Total equity 161 012 116 716
Liabilities
Non-current liabilities
Long-term liabilities 46 640 48 064
Deferred taxation 9 163 8 579
Non-current liabilities 55 803 56 643
Current liabilities 370 541 534 347
Liabilities classified as held-for-sale - 2 902 767
Total liabilities 426 344 3 493 757
Total equity and liabilities 587 356 3 610 473
Consolidated Cash Flow Statement
for the year ended 30 June
2009 2008
R`000 R`000
Cash generated (utilised) by operations 22 628 (48 819)
- Continuing 44 637 42 111
- Discontinuing (22 009) (90 930)
Working capital changes (84 363) 56 181
Investment income received 60 405 55 851
Interest paid (6 673) (20 009)
Taxation paid (25 222) (13 318)
Dividends paid (1 740) (1 768)
Cash (outflow) inflow from operating activities (34 965) 28 118
Cash outflow from investing activities (14 771) (19 673)
Cash (outflow) inflow from financing activities (11 876) 3 262
Net (decrease) increase in cash and cash
equivalents (61 612) 11 707
Cash and cash equivalents at
beginning of year 268 819 256 653
Cash effect of deconsolidation of subsidiary (39 660) -
Effect of exchange rate fluctuations
on cash held (1 135) 459
Cash and cash equivalents at end of year 7 166 412 268 819
Consolidated Statement of Recognised Income and Expenses
for the year ended 30 June
2009 2008
R`000 R`000
Actuarial loss on post-retirement benefits (3 161) (6 767)
Deferred taxation on post-retirement
benefits actuarial loss 773 1 767
Translation of foreign subsidiaries (5 061) 2 404
Income and expenses recognised directly in equity (7 449) (2 596)
Profit (loss) for the year 48 658 (79 993)
Total recognised income and expenses for the year 41 209 (82 589)
Attributable to:
Minority interest 2 111 2 057
Shareholders of Glenrand MIB 39 098 (84 646)
Total recognised income and expenses for the year 41 209 (82 589)
Business Segment Analysis
for the year ended 30 June
2009 2008
Notes R`000 R`000
Segmental revenues
Risk Advisory Services 502 867 466 049
Benefit Services 2 976 39 800
Total segmental revenues 505 843 505 849
Segmental results
Risk Advisory Services 15 996 3 944
Benefit Services (23 178) (102 321)
Total segmental losses 8 (7 182) (98 377)
Notes to the Financial Statements
1. Basis of accounting
These consolidated preliminary results are prepared in accordance with the
recognition and measurement requirements of International Financial Reporting
Standards (IFRS), the disclosure requirements of IAS 34 - Interim Financial
Reporting and the South African Companies Act of 1973, as amended. The
accounting policies are consistent with those applied for the year ended 30
June 2008.
2. Employment expenses
Included in employment expenses are Finrite employment costs for a full year,
retrenchment costs of R6,9 million and IFRS 2 charges of R3,7 million.
3. Finance costs and investment income
Included in finance costs is a charge for post-retirement benefits of R18,5
million (2008: R17,6 million).Investment income includes an expected return on
the defined benefit plan assets amounting to R18,4 million (2008: R18,2
million).
4. Discontinuing operations
The final liquidation order of Glenrand MIB Benefit Services (Pty) Limited was
issued on 2 June 2009, with effect from 31 March 2009. The assets and
liabilities of the Benefit Services business unit, which includes Ten-50-Six
Life Limited, were previously disclosed as held-for-sale. As a consequence of
the liquidation order, the insolvent subsidiary and its subsidiaries are no
longer consolidated at 30 June 2009, but the results of the discontinued
operations until 31 March 2009 were included.
Analysis of the accounting effects of the deconsolidation of the insolvent
subsidiary and discontinued operations
June
2009
R`000
Reversal of the negative net asset value attributable to
Benefit Services Group at 31 March 2009 190 482
Less: Loans owing by the Benefit Services Group to
Glenrand MIB Limited (166 347)
Less: Loss on shares held in Glenrand MIB Limited
previously treated as Treasury shares (999)
Effect of deconsolidation 23 136
Profit on disposal of other discontinuing operations 2 861
Loss for the period from discontinuing operations (15 641)
Profit before taxation 10 356
Taxation 225
Profit after taxation 10 581
The cash and cash equivalents deconsolidated at 31 March 2009 amounted to R39,7
million and were left in the insolvent estate.
5. Business combination
On 13 November 2008 the group acquired 10% of the ordinary shares in Glenrand
MIB Credit and Political Risk Consultants (Pty) Limited for a consideration of
R2,5 million. Previously the group owned 70% of the share capital and acquired
the additional shareholding in terms of a shareholders` agreement when the
previous shareholder passed away.
The acquisition had the following effect:
June
2009
R`000
Decrease in minority interest 656
Increase in goodwill 638
Pre-acquisition dividend 660
Imputed interest 593
Total consideration 2 547
2009 2008
R`000 R`000
6. Calculation of headline earnings (loss)
Earnings (loss) attributable to ordinary
shareholders 46 547 (82 050)
Adjusted for
Impairment and disposals of assets 5 490 22 276
Profit on disposal of investments and subsidiary
companies (2 861) (18 497)
Effect of deconsolidation (23 136) -
Fair value adjustment for subsidiary company
held-for-sale - (9 824)
Minority interest (5) (69)
Headline earnings (loss) 26 035 (88 164)
7. Cash and cash equivalents
Cash and cash equivalents includes own
cash resources of 80 226 102 410
8. Business segment analysis
Reconciliation of statutory to segmental loss
Statutory profit (loss) before taxation 67 449 (55 833)
Continuing 57 093 26 744
Discontinuing 10 356 (82 577)
Adjusted for
Investment income (79 994) (74 011)
Finance costs 26 850 38 886
Share of profits of equity accounted investees (980) (1 374)
Headline adjusting items (20 507) (6 045)
Total segmental losses (7 182) (98 377)
9. Audit report
KPMG Inc.`s unmodified auditors` report on the summarised financial statements
contained in this preliminary report is available for inspection at the
company`s registered office.
10. Reconciliation of movement in capital and reserves for the year ended
30 June
Share Treasury shares
capital and share-based Non-
and share payment distributable
R`000 premium reserve reserves
Balance at 30 June 2007 52 425 (12 786) 29 949
Changes in equity for 2008
Total recognised income and
expense for the year - - 2 404
Share-based payment reserve - 4 915 -
Acquisition of shares in
subsidiary - - -
Trade mark amortisation
reserve transfer - - (4 435)
Share of profits of equity
accounted investees - - 374
Dividends paid - - -
Balance at 30 June 2008 52 425 (7 871) 28 292
Changes in equity for 2009
Total recognised income and
expense for the year - - (5 061)
Share-based payment reserve - 3 655 -
Acquisition of shares in
subsidiary - - -
Trade mark amortisation
reserve transfer - - (2 957)
Disposal of treasury shares - 1 828 -
Share of profits of equity
accounted investees - - (520)
Dividends paid - - -
Balance at 30 June 2009 52 425 (2 388) 19 754
Share-
Retained holders` Minority Total
R`000 earnings equity interest equity
Balance at 30 June 2007 122 817 192 405 4 037 196 442
Changes in equity for 2008
Total recognised income and
expense for the year (87 050) (84 646) 2 057 (82 589)
Share-based payment reserve - 4 915 - 4 915
Acquisition of shares in
subsidiary - - (284) (284)
Trade mark amortisation
reserve transfer 4 435 - - -
Share of profits of equity
accounted investees (374) - - -
Dividends paid - - (1 768) (1 768)
Balance at 30 June 2008 39 828 112 674 4 042 116 716
Changes in equity for 2009
Total recognised income and
expense for the year 44 159 39 098 2 111 41 209
Share-based payment reserve - 3 655 - 3 655
Acquisition of shares in
subsidiary - - (656) (656)
Trade mark amortisation
reserve transfer 2 957 - - -
Disposal of treasury shares - 1 828 - 1 828
Share of profits of equity
accounted investees 520 - - -
Dividends paid - - (1 740) (1 740)
Balance at 30 June 2009 87 464 157 255 3 757 161 012
DIRECTORATE: Dr MF Kunene (Chairman), *AJ Chislett (Chief Executive Officer),
Dr I Abedian, BA Chelius (Alt), RG Cottrell, AP du Preez, HH Hickey,
TT Khobane (Alt) MR Mashishi, TN Mgoduso, NG Payne, *G Whitcher.
Company Secretary: E Price *Executive
REGISTERED OFFICE: 288 Kent Avenue
PO Box 2544
Randburg 2125
Tel (011) 329 1111
Fax (011) 329 1333
email info@glenrandmib.co.za
website www.glenrandmib.co.za
Licenced Financial Services Provider Number: 11228
TRANSFER SECRETARIES: Computershare Investor Services (Pty) Limited
70 Marshall Street
Johannesburg 2001
PO Box 61051
Marshalltown 2107
South Africa
Tel (011) 370 5000
Fax (011) 688 7715
INVESTMENT BANK AND SPONSOR: Nedbank Capital
Date: 10/09/2009 07:05:02 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
