| Tue 2 Mar 2010, 14:50 | | GMB - Glenrand M I B Limited - Unaudited Interim Results for the six months |
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GMB
GMB
GMB - Glenrand M I B Limited - Unaudited Interim Results for the six months
ended 31 December 2009
Glenrand M I B Limited
Incorporated in the Republic of South Africa
(Registration number 1997/008001/06)
("Glenrand M I B" or "the group")
JSE share code: GMB ISIN: ZAE 000078010
Unaudited Interim Results for the six months ended 31 December 2009
SUMMARY
- Revenue R258,2 million(2008: R251,9 million)
- Profit R9,7 million (2008: R21,7 million)
- HEPS 5,0 cents (2008: 9,6 cents)
- Distribution per share of 3,0 cents
OVERVIEW
The group increased broking revenue by 2,5% to R258,2 million during tough
economic times. However investment income decreased by 44% due to lower interest
rates.
The group posted headline earnings per share of 5,0 cents (2008: 9,6 cents) and
a profit of 3,9 cents per share (2008: 9,1 cents). The continuing operations
achieved a profit of 3,3 cents per share compared to 8,8 cents in 2008. The
decrease in investment income amounted to 2,9 cents per share and an impairment
of goodwill of R2,2 million (note 6) reduced earnings by a further 1,0 cent per
share.
Management initiatives resulted in a pleasing decrease in non-employment related
expenditure despite a significant investment in IT and marketing, in line with
our strategic plans. The employment costs were distorted due to incentives
awarded in respect of the prior year, excluding which the average increase in
payroll costs was 6,3%.
SEGMENTAL RESULTS
With the discontinuation of the employee benefits operations, we have elected to
track the costs previously absorbed by the discontinued businesses separately
and to target them for reduction resulting in the segmental analysis reflecting
unallocated central costs.
Risk Services
Risk Services is our business to business segment, which includes our
commercial, corporate property and casualty teams, specialty teams as well as
our African operations.
Notwithstanding the general economic environment and competitive pressures
impacting the Commercial, Specialist and Corporate Divisions, growth in revenue
of 3,0% was achieved. Cost savings of 14,1% were achieved within the business
unit on controllable expense items, excluding remuneration costs. We maintained
our high client retention rate, however, the segmental operating margin was 2,8%
(2008: 3,2%), which is reflective of the downward pressure on margins.
Subsequent to the reporting date there have been good new business wins.
Individual Insurance Solutions
Individual Insurance Solutions is our business to consumer segment which
includes Personal Product Solutions, Finrite and Claims Fulfilment Company.
Results for the six months were satisfactory with a pleasing year on year growth
in broking profit of 24,7%.
New business relating to Personal Product Solutions is tracking on target and
client retention remains excellent. The current economic climate is having an
impact on premium growth as clients endeavour to reduce insurance expenditure by
shopping around for cheaper premiums or reduced coverage.
Finrite`s revenue was flat for the period, however, new client administration
contracts have been secured that are expected to boost revenue in the future.
Although Claims Fulfilment Company revenue was slightly down, the contribution
of this division was buoyed by employment cost savings.
Client satisfaction, revenue growth and cost reductions remain key focus areas
for this segment.
DISCONTINUED OPERATIONS
Premium Finance Solutions
With effect from 1 February 2010, Glenrand M?I?B Limited disposed of its
shareholding in Glenrand M?I?B Premium Finance Solutions (Pty) Limited ("Premium
Finance Solutions") to Lomvest (Pty) Limited (part of the Lombard Insurance
Group). At 31 December 2009 the assets and liabilities of the business are
disclosed as held for sale in terms of IFRS 5 (Non-current Assets Held for
Sale and Discontinued Operations). The transaction will release a funding
facility of R74,3 million (2008: R61 million).
EFFECTIVE TAX RATE
The effective tax rate is distorted due to permanent differences arising from
the impairment of goodwill (R2,2 million), share based payments (R2,1 million),
the amortisation of the customer relationship intangible assets (R1,9 million)
and STC timing differences (R0,6 million).
CHANGE IN YEAR END
The group has changed its financial reporting date to 30 September. We will
therefore be releasing 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
Risk Services and Individual Insurance Solutions have both secured pleasing new
business wins, the benefits of which will flow in the next reporting period.
We are making progress with our efforts to reduce the cost base of the business.
Our planned investments in IT, marketing and process related improvement
initiatives are progressing well.
CAPITALISATION AWARD WITH A CASH DIVIDEND ALTERNATIVE
Notice is hereby given that the Directors of the company have resolved to issue
fully paid ordinary shares in the company as a capitalisation award to ordinary
shareholders. Ordinary shareholders will be entitled, in respect of all or part
of their shareholding, to elect to receive new fully paid ordinary shares, which
will be issued only to those ordinary shareholders who elect in respect of all
or part of their shareholding, on or before 12:00 on Friday, 7 May 2010, to
receive the capitalisation award shares. Shareholders not electing to receive
new fully paid ordinary shares in respect of all or part of their shareholding
will be entitled to receive a cash dividend alternative of 3,0 cents per
ordinary share ("the cash dividend alternative").
In accordance with the provisions of Strate, the electronic settlement and
custody system used by JSE Limited, the relevant dates for the capitalisation
award election and the cash dividend alternative are as follows:
2010
Last day to trade to be eligible to participate in Friday, 30 April
the capitalisation award or the cash dividend
alternative
Shares commence trading ex the capitalisation award Monday, 3 May
election and the cash dividend alternative on
Listing of the maximum number of new ordinary Monday, 3 May
shares that could be taken up in terms of the
capitalisation award on
Last day to elect to receive capitalisation award Friday, 7 May
shares by 12:00, failing which the cash dividend
alternative will be received
Record date to participate in the capitalisation Friday, 7 May
award or to receive the cash dividend alternative
Payment of the cash dividend alternative to Monday, 10 May
shareholders who have not elected to participate in
the capitalisation award or have participated in
the capitalisation award in respect of only part of
their shareholding on
New shares issued and posted or participant or Monday, 10 May
broker accounts credited regarding the shares to be
issued to shareholders participating in the
capitalisation award in respect of all or part of
their shareholding on
The maximum number of new shares listed in terms of Friday, 14 May
the capitalisation award, adjusted to reflect the
actual number of shares issued in terms of the
capitalisation award, on or about
Shares may not be dematerialised or rematerialised between Monday, 3 May 2010
and Friday, 7 May 2010, both days inclusive.
The above dates and times are subject to change. Any changes will be released on
the Securities Exchange News Service (SENS) and published in the press.
The number of capitalisation shares to which shareholders are entitled will be
determined in the ratio that 3,0 cents per ordinary share bears to the 30 day
volume-weighted average price for the company`s share, to be determined no later
than Wednesday, 21 April 2010. Details of the ratio will be published on SENS no
later than Thursday, 22 April 2010, by 11:00 and in the financial press the
following business day. Trading in the Strate environment does not permit
fractions and fractional entitlements. Accordingly, where a shareholder`s
entitlement to new ordinary shares calculated in accordance with the above
formula gives rise to a fraction of a new ordinary share, such fraction will be
rounded up to the nearest whole number, where the fraction is greater than or
equal to 0,5, and rounded down to the nearest whole number, where the fraction
is smaller than 0,5.
A circular relating to the capitalisation award and the cash dividend
alternative will be posted to shareholders on or about Wednesday, 14 April 2010.
Notes:
1. Dematerialised shareholders are required to notify their duly appointed
participant or broker of their election in terms of the capitalisation award in
the manner and at the time stipulated in the agreement governing the
relationship between shareholders and their participant or broker.
2. The right to elect capitalisation award shares in jurisdictions other than
the Republic of South Africa may be restricted by law and a failure to comply
with any of these restrictions may constitute a violation of the securities laws
of any such jurisdictions.
On behalf of the Board of Directors
Dr M F Kunene A J Chislett
Chairman Chief Executive Officer
1 March 2010
Consolidated Income Statement
for the six months ended 31 December 2009
Audited
Unaudited Reviewed summarised
6 months 6 months year
ended ended ended
31 December 31 December 30 June
2009 2008 2009
Note R`000 R`000 R`000
Continuing operations
Revenue 258 159 251 854 502 804
Employment expenses 2 (161 398) (145 321) (305 601)
Amortisation and depreciation (11 407) (11 371) (22 934)
Other expenses (77 786) (82 250) (156 908)
Finance costs (2 509) (4 757) (21 619)
Disposals and impairments (2 497) (1 035) (5 490)
Investment income 11 542 20 742 58 024
Share of profit of equity 490 332 980
accounted investees
Profit before taxation 14 594 28 194 49 256
Taxation (6 323) (7 251) (17 478)
Profit from continuing 8 271 20 943 31 778
operations
Discontinuing operations
Profit from discontinuing 4 1 430 759 16 880
operations (net of taxation)
including the effect of the
deconsolidation
Profit for the period 9 701 21 702 48 658
Profit attributable to:
Non-controlling interest 870 1 094 2 111
Shareholders of Glenrand 8 831 20 608 46 547
M?I?B
Profit for the period 9 701 21 702 48 658
Earnings per share
Basic earnings per share 3,9 9,1 20,5
(cents)
Diluted earnings per share 3,9 9,1 20,5
(cents)
Continuing operations
Basic earnings per share 3,3 8,8 13,1
(cents)
Diluted earnings per share 3,2 8,8 13,1
(cents)
Headline earnings per share 6 5,0 9,6 11,5
(cents)
Diluted headline earnings per 6 5,0 9,6 11,5
share (cents)
Number of shares (net of
treasury shares)
- Weighted average (000`s) 227 561 226 526 226 784
- Diluted weighted average 227 834 226 526 226 784
(000`s)
Consolidated Statement of Comprehensive Income
for the six months ended 31 December 2009
Profit for the period 9 701 21 702 48 658
Other comprehensive income, net of (2 606) (4 276) (7 449)
tax
Actuarial loss on post-retirement (695) (1 422) (2 388)
benefits
Translation of foreign (1 911) (2 854) (5 061)
subsidiaries
Total comprehensive income for the 7 095 17 426 41 209
period
Total comprehensive income
attributable to:
Non-controlling interest 870 1 094 2 111
Shareholders of Glenrand M?I?B 6 225 16 332 39 098
Total comprehensive income for the 7 095 17 426 41 209
period
Consolidated Statement of Financial Position
as at 31 December 2009
ASSETS
Non-current assets
Property, plant and equipment 26 890 19 576 21 994
Goodwill 35 544 38 696 36 710
Intangible assets 71 553 68 526 70 002
Deferred taxation asset 23 887 33 197 25 894
Investments 2 346 1 708 2 357
Long-term accounts receivable - 869 -
Non-current assets 160 220 162 572 156 957
Current assets 306 548 500 505 430 399
Assets classified as held for sale 86 326 2 287 078 -
Total assets 553 094 2 950 155 587 356
EQUITY AND LIABILITIES
Equity
Shareholders` equity 165 598 131 772 157 255
Non-controlling interest 1 750 2 740 3 757
Total equity 167 348 134 512 161 012
Liabilities
Non-current liabilities
Long-term liabilities 52 419 47 724 46 640
Deferred taxation 9 163 8 307 9 163
Non-current liabilities 61 582 56 031 55 803
Current liabilities 249 883 491 269 370 541
Liabilities classified as held for 74 281 2 268 343 -
sale
Total liabilities 385 746 2 815 643 426 344
Total equity and liabilities 553 094 2 950 155 587 356
Consolidated Cash Flow Statement
for the six months ended 31 December 2009
Cash generated by operations 19 041 16 945 22 628
- Continuing 20 827 23 183 46 001
- Discontinuing (1 786) (6 238) (23 373)
Working capital changes (47 114) (80 170) (84 363)
Investment income received 17 918 34 568 60 405
Interest paid (1 995) (4 709) (6 673)
Taxation refunded (paid) 13 014 (10 947) (25 222)
Dividends paid (2 740) (1 740) (1 740)
Cash outflow from operating (1 876) (46 053) (34 965)
activities
Cash outflow from investing (13 804) (7 897) (14 771)
activities
Cash (outflow) inflow from (1 325) 1 302 (11 876)
financing activities
Net decrease in cash and cash (17 005) (52 648) (61 612)
equivalents
Cash and cash equivalents at 166 412 268 819 268 819
beginning of period
Cash effect of - - (39 660)
deconsolidation of subsidiary
Effect of exchange rate (1 394) (833) (1 135)
fluctuations on cash held
Cash and cash equivalents at 7 148 013 215 338 166 412
end of period
Business Segment Analysis
for the six months ended 31 December 2009
Audited
Unaudited Reviewed summarised
6 months 6 months year
ended ended ended
31 December 31 December 30 June
2009 2008 2009
Note R`000 R`000 R`000
Segmental revenues
Risk Services 170 069 164 987 339 560
Individual Insurance 88 090 86 867 163 307
Solutions
Benefit Services - 12 595 2 976
(discontinued)
Total segmental revenues 258 159 264 449 505 843
Segmental results
Risk Services 4 824 5 325 28 975
Individual Insurance 11 568 9 275 24 218
Solutions
Benefit Services - (7 512) (23 178)
(discontinued)
Unallocated central costs (10 623) (1 195) (37 197)
Total segmental profits 8 5 769 5 893 (7 182)
(losses)
Notes to the Financial Statements
1. Basis of accounting
These consolidated interim 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 applicable at 30 June 2009, with
the exception of the implementation of IFRS 8: Operating Segments and the
amendments to IAS 1 (revised): Presentation of Financial Statements. Segmental
reporting is applied for Risk Services and Individual Insurance Solutions.
2. Employment expenses
Included in employment expenses are IFRS 2 charges of R2,1 million. The company
issued a further 1,9 million share options on 10 September 2009 at a strike
price of 104 cents per share option.
3. Property, plant and equipment and intangible assets
Included in property, plant and equipment are additions to computer equipment of
R8,5 million. Additions to intangible assets, mainly software applications,
amounted to R8,1 million.
4. Discontinuing operations
The final liquidation order of Glenrand M?I?B Benefit Services (Pty) Limited was
issued on 2 June 2009, with effect from 31 March 2009. As a consequence of the
liquidation order, the insolvent subsidiary and its subsidiaries are no longer
consolidated. At 31 December 2009, the assets and liabilities of Glenrand M?I?B
Premium Finance Solutions (Pty) Limited are disclosed as held-for-sale in terms
of IFRS 5.
Audited
Unaudited Reviewed summarised
6 months 6 months year
ended ended ended
31 December 31 December 30 June
2009 2008 2009
R`000 R`000 R`000
Effect of deconsolidation of the - - 23 136
Benefit Services Group
Profit on disposal of other - - 2 861
discontinuing operations
Profit (loss) for the period from 2 760 2 232 (7 803)
discontinuing operations
Profit before taxation 2 760 2 232 18 194
Taxation (1 330) (1 473) (1 314)
Profit after taxation 1 430 759 16 880
5. Acquisition of non-controlling
interest
On 21 December 2009 the group
acquired 5% of the ordinary
shares in Glenrand M?I?B Credit
and Political Risk Consultants
(Pty) Limited for a consideration
of R1,3 million. Previously the
group owned 80% of the share
capital.
The acquisition had the following
effect:
Decrease in non-controlling 137 656 656
interest
Increase in goodwill 1 146 638 638
Pre-acquisition dividend - 660 660
Imputed interest - 593 593
Total consideration 1 283 2 547 2 547
6. Calculation of headline
earnings
Earnings attributable to ordinary 8 831 20 608 46 547
shareholders
Adjusted for:
Impairment and disposals of 2 245 1 035 5 490
assets
Loss (profit) on disposal of 252 - (2 861)
investments and subsidiary
companies
Effect of deconsolidation - - (23 136)
Non-controlling interest - - (5)
Headline earnings 11 328 21 643 26 035
7. Cash and cash equivalents
Cash and cash equivalents 94 261 89 037 80 226
includes own cash resources of
8. Business segment analysis
Reconciliation of profit
tosegmental profit (loss):
Profit before taxation 17 354 30 425 67 449
Continuing 14 594 28 193 49 255
Discontinuing 2 760 2 232 18 194
Adjusted for:
Investment income (17 938) (33 405) (79 994)
Finance costs 4 346 8 170 26 850
Share of profits of equity (490) (332) (980)
accounted investees
Headline adjusting items 2 497 1 035 (20 507)
Total segmental profits (losses) 5 769 5 893 (7 182)
Consolidated Statement of Changes in Equity
for the six months ended 31 December 2009
Treasury
Share shares and
capital share-based Non-
and share payment distributable Retained
R`000 premium reserve reserves earnings
Balance as at 30 June 52 425 (7 871) 28 292 39 828
2008
Total comprehensive - - (5 061) 44 159
income for the year
Share-based payment - 3 655 - -
reserve
Acquisition of shares - - - -
in subsidiary
Trade mark - - (2 957) 2 957
amortisation reserve
transfer
Disposal of treasury - 1 828 - -
shares
Share of profits of - - (520) 520
equity accounted
investees
Dividends paid - - - -
Balance as at 30 June 52 425 (2 388) 19 754 87 464
2009
Total comprehensive - - (1 911) 8 136
income for the period
Share-based payment - 2 118 - -
reserve
Acquisition of shares - - - -
in subsidiary
Trade mark - - (986) 986
amortisation reserve
transfer
Share of profits of - - (10) 10
equity accounted
investees
Dividends paid - - - -
Balance as at 31 52 425 (270) 16 847 96 596
December 2009
Non-
Shareholders` controlling Total
R`000 equity interest equity
Balance as at 30 June 112 674 4 042 116 716
2008
Total comprehensive 39 098 2 111 41 209
income for the year
Share-based payment 3 655 - 3 655
reserve
Acquisition of shares - (656) (656)
in subsidiary
Trade mark - - -
amortisation reserve
transfer
Disposal of treasury 1 828 - 1 828
shares
Share of profits of - - -
equity accounted
investees
Dividends paid - (1 740) (1 740)
Balance as at 30 June 157 255 3 757 161 012
2009
Total comprehensive 6 225 870 7 095
income for the period
Share-based payment 2 118 - 2 118
reserve
Acquisition of shares - (137) (137)
in subsidiary
Trade mark - - -
amortisation reserve
transfer
Share of profits of - - -
equity accounted
investees
Dividends paid - (2 740) (2 740)
Balance as at 31 165 598 1 750 167 348
December 2009
DIRECTORATE:
Dr M F Kunene (Chairman), *A J Chislett (Chief Executive Officer)
+Dr I Abedian, B A Chelius (Alt), +R G Cottrell, A P du Preez
+H H Hickey, T T Khobane (Alt), M R Mashishi, T N Mgoduso
+N G Payne, *G Whitcher.
Company Secretary: E Price
*Executive +Independent Non-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
SPONSOR: Nedbank Capital
Date: 02/03/2010 14:50:02 Produced by the JSE SENS Department.
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