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GMB - Glenrand MIB Limited - Reviewed Condensed Results for the twelve months
ended 30 June 2010
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: ZAE 000078010
Reviewed Condensed Results for the twelve months ended 30 June 2010
SUMMARY
- Broking profit from continuing operations R30,3 million (2009: R20,9
million)
- Revenue R515,9 million (2009: R502,8 million)
- Profit from continuing operations R33,1 million (2009: R31,8 million)
- HEPS 14,9 cents (2009: 11,5 cents)
OVERVIEW
The group increased broking profit by 45,1% to R30,3 million and broking
revenue by 2,6% to R515,9 million during tough trading conditions. Investment
income decreased due to lower interest rates.
The group posted headline earnings per share of 14,9 cents (2009: 11,5 cents)
and a profit of 15,1 cents per share (2009: 20,5 cents). The continuing
operations achieved a profit of 14,5 cents per share compared to 13,1 cents
in 2009.
A Forfeitable Share Plan was approved by shareholders on 21 July 2010. To
enable tracking against the performance hurdles contained in the incentive
plan and to provide stakeholders with more meaningful disclosure, we have
amended the headings and subtotals that were used in our most recent Audited
Annual Financial Statements and Unaudited Interim Report.
SEGMENTAL RESULTS
Risk Services
Risk Services is our business to business segment, which includes our
commercial, corporate property and casualty teams, speciality teams, as well
as our African operations.
Growth in revenues of 3,85% was achieved in this unit and controllable costs,
excluding staff remuneration costs, were reduced by 8,6%. Revenue growth on
existing annuity business continues to be impacted by the lag in economic
recovery, the competitive environment and continuing soft insurance market
conditions.
This unit continues to experience good new business momentum and client
retention remains excellent.
Individual Insurance Solutions
Individual Insurance Solutions is our business to consumer segment which
includes Personal Product Solutions, Finrite and Claims Fulfilment Company.
Growth in revenues of 4,5% was achieved in this unit and controllable costs
excluding staff remuneration costs were reduced by 17,1%. The ongoing
pressure on individual clients` disposable income combined with the
competitive environment and continuing soft market conditions has hindered
organic growth of our existing book, however client churn remains low and new
business flows continue to be positive.
Revenue growth in our Finrite division was a pleasing 14,6%.
PROSPECTS
We incurred deliberate increased expenditure this period in terms of IT and
brand marketing spend with good progress having been made in cutting costs
previously absorbed by our discontinued businesses. Accordingly, we expect
our broking margin to improve.
CHANGE IN YEAR END
The group has changed its financial reporting date to 30 September. We are
therefore releasing Reviewed Condensed Results for the twelve months ended 30
June 2010 and Audited Annual Financial Statements for the fifteen months
ending 30 September 2010.
DIRECTORATE
Ms H H Hickey was appointed as an independent non-executive director on 1
July 2009. Dr I Abedian resigned as an independent non-executive director on
10 May 2010.
DIVIDEND
A capitalisation award with cash dividend alternative of 3 cents per ordinary
share was declared as payable on 10 May 2010.
The board will consider the quantum of the final dividend for the fifteen
month period ending 30 September 2010 once the audited results are available.
On behalf of the Board of Directors
Dr M F Kunene A J Chislett
Chairman Chief Executive Officer
10 September 2010
Consolidated Income Statement
for the twelve months ended 30 June
Reviewed Audited
condensed summarised
2010 2009
Note R`000 R`000
Continuing operations
Revenue 515 962 502 804
Other income 1 190 1 160
Employment expenses 2 (317 108) (305 601)
Rent and IT expenses (52 232) (49 891)
Depreciation (11 503) (8 296)
Amortisaton of computer software (7 361) (7 965)
intangible assets
Other expenses (97 807) (108 177)
Finance costs (808) (3 131)
Broking profit 30 333 20 903
Finance costs relating to retirement (17 112) (18 488)
benefits
Amortisation of other intangible assets (5 623) (6 673)
other than software
Disposals and impairments (1 222) (5 490)
Investment income excluding expected 28 514 39 640
return on plan assets
Expected growth on defined benefit 12 853 18 384
retirement plan assets
Share of profit of equity accounted 1 821 980
investees
Profit before taxation 49 564 49 256
Taxation (16 502) (17 478)
Profit from continuing operations 33 062 31 778
Discontinuing operations 4 3 205 16 880
Profit from discontinuing operations 4 606 18 194
including the effect of the
deconsolidation
Taxation 5 (1 401) (1 314)
Profit for the period 36 267 48 658
Profit attributable to:
Non-controlling interest 1 778 2 111
Shareholders of Glenrand MIB 34 489 46 547
Profit for the period 36 267 48 658
Earnings per share
Basic earnings per share (cents) 15,1 20,5
Diluted earnings per share (cents) 15,1 20,5
Continuing operations
Basic earnings per share (cents) 14,5 13,1
Diluted earnings per share (cents) 14,5 13,1
Headline earnings per share (cents) 6 14,9 11,5
Diluted headline earnings per share 6 14,9 11,5
(cents)
Number of shares (net of treasury
shares)
- Weighted average (000`s) 228 172 226 784
- Diluted weighted average (000`s) 228 407 226 784
Consolidated Statement of Comprehensive Income
for the twelve months ended 30 June
Reviewed Audited
condensed summarised
2010 2009
Note R`000 R`000
Profit for the period 36 267 48 658
Other comprehensive income, net of tax 3 143 (7 449)
Actuarial gain (loss) on post-retirement 5 650 (2 388)
benefits
Translation of foreign subsidiaries (2 507) (5 061)
Total comprehensive income for the 39 410 41 209
period
Total comprehensive income attributable
to:
Non-controlling interest 1 778 2 111
Shareholders of Glenrand MIB 37 632 39 098
Total comprehensive income for the 39 410 41 209
period
Consolidated Statement of Financial Position
as at 30 June
ASSETS
Non-current assets
Property, plant and equipment 3 26 434 21 994
Goodwill 34 347 36 710
Intangible assets 3 83 251 70 002
Deferred taxation asset 25 069 25 894
Investments 2 985 2 357
Non-current assets 172 086 156 957
Current assets 409 505 430 399
Total assets 581 591 587 356
EQUITY AND LIABILITIES
Equity
Shareholders` equity 193 161 157 255
Non-controlling interest 1 908 3 757
Total equity 195 069 161 012
Liabilities
Non-current liabilities
Long-term liabilities 48 567 46 640
Deferred taxation 9 795 9 163
Non-current liabilities 58 362 55 803
Current liabilities 328 160 370 541
Total liabilities 386 522 426 344
Total equity and liabilities 581 591 587 356
Consolidated Cash Flow Statement
for the twelve months ended 30 June
52 028 22 628
Cash generated by operations
- Continuing 54 024 46 001
- Discontinuing (1 996) (23 373)
Working capital changes 31 907 (84 363)
Investment income received 35 588 60 405
Interest paid (2 848) (6 673)
Taxation refunded (paid) 788 (25 222)
Dividends paid (5 320) (1 740)
Cash inflow (outflow) from operating 112 143 (34 965)
activities
Cash outflow from investing activities (34 336) (14 771)
Cash outflow from financing activities (8 265) (11 876)
Net increase (decrease) in cash and cash 69 542 (61 612)
equivalents
Cash and cash equivalents at beginning 166 412 268 819
of the period
Cash effect of deconsolidation of - (39 660)
subsidiary
Cash effect of disposal of Premium 53 057 -
Finance Solutions
Effect of exchange rate fluctuations on (2 958) (1 135)
cash held
Cash and cash equivalents at end of the 8 286 053 166 412
period
Business Segment Analysis
for the twelve months ended 30 June
Segmental revenues
Risk Services 347 251 339 216
Individual Insurance Solutions 168 711 163 588
Benefit Services (discontinued) - 2 976
Total segmental revenues 515 962 505 780
Segmental results
Risk Services 11 396 5 404
Individual Insurance Solutions 14 122 11 957
Benefit Services (discontinued) - (23 178)
Premium Finance Solutions (discontinued) (2 014) (1 365)
Total segmental profits (losses) 23 504 (7 182)
Consolidated Statement of Changes in Equity
for the twelve months ended 30 June
R`000 Share Treasury Non- Retained
capital and shares and distributab earnings
share share-based le reserves
premium payment
reserve
Balance as at 30 52 425 (7 871) 28 292 39 828
June 2008
Total - - (5 061) 44 159
comprehensive
income for the
year
Share-based - 3 655 - -
payment reserve
Acquisition of - - - -
shares in
subsidiary
Trade mark - - (2 957) 2 957
amortisation
reserve transfer
Disposal of - 1 828 - -
treasury shares
Share of profits - - (520) 520
of equity
accounted
investees
Dividends paid - - - -
Balance as at 30 52 425 (2 388) 19 754 87 464
June 2009
Total - - (2 507) 40 139
comprehensive
income for the
period
Share-based - 2 001 - -
payment reserve
Acquisition of - - - (1 146)
shares in
subsidiary
Trade mark - - (1 971) 1 971
amortisation
reserve transfer
Share of profits - - 1 321 (1 321)
of equity
accounted
investees
Dividends paid/ 6 192 (489) - (8 284)
capitalisation
shares awarded
Balance as at 30 58 617 (876) 16 597 118 823
June 2010
R`000 Shareholders Non- Total equity
` equity controlling
interest
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 37 632 1 778 39 410
income for the period
Share-based payment 2 001 - 2 001
reserve
Acquisition of shares (1 146) (137) (1 283)
in subsidiary
Trade mark amortisation - - -
reserve transfer
Share of profits of - - -
equity accounted
investees
Dividends paid/ (2 581) (3 490) (6 071)
capitalisation shares
awarded
Balance as at 30 June 193 161 1 908 195 069
2010
Notes to the Financial Statements
1. Basis of accounting
These consolidated interim results are prepared in accordance with the
recognition, measurement and disclosure requirements of IAS 34 - Interim
Financial Reporting and South African Statements and Interpretations of
Statements of Generally Accepted Accounting Practice (AC 500 series) and the
requirements of 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 R13,3 million. Additions to intangible assets, mainly software
applications, amounted to R26,5 million.
4. Discontinuing operations
With effect from 1 February 2010, Glenrand MIB Limited disposed of its
shareholding in Glenrand MIB Premium Finance Solutions (Pty) Limited
("Premium Finance Solutions") to Lomvest (Pty) Limited (part of the Lombard
Insurance Group).
Reviewed Audited
condensed summarised
2010 2009
R`000 R`000
Effect of deconsolidation of the Benefit - 23 136
Services Group
Profit on disposal of other discontinuing 1 743 2 861
operations
Profit (loss) for the period from discontinuing 2 863 (7 803)
operations
Profit before taxation 4 606 18 194
Taxation (1 401) (1 314)
Profit after taxation 3 205 16 880
5. Taxation
Effective taxation rate reconciliation % %
Statutory rate 28,0 28,0
Disallowable expenditure (exempt income) 6,4 6,9
Secondary taxation on companies 1,2 0,5
Unrecognised deferred taxation asset on losses 1,7 (0,3)
Prior year over provision (5,5) (8,3)
Foreign withholding taxes 1,2 1,0
Other 0,1 0,1
Total effective rate 33,1 27,9
Discontinuing operations 0,2 7,6
Continuing operations effective tax rate 33,3 35,5
6. Calculation of headline earnings
Earnings attributable to ordinary shareholders 34 489 46 547
Adjusted for:
Impairments and disposals of property, plant 3 273 5 490
and equipment
Profit on disposal of investments and (1 743) (2 861)
subsidiary companies
Effect of deconsolidation - (23 136)
Reversal of impairment (2 051) -
Non-controlling interest (16) (5)
Headline earnings 33 952 26 035
7. 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 interest 137 656
Increase in goodwill - 638
Pre-acquisition dividend - 660
Imputed interest - 593
Amount recognised directly in equity 1 146 -
Total consideration 1 283 2 547
8. Cash and cash equivalents
Cash and cash equivalents includes own cash 99 757 80 226
resources of
9. Business segment analysis
Reconciliation of profits to segmental profit
(loss)
Continuing profit before taxation 49 564 49 256
Discontinuing profit before taxation 4 606 18 194
54 170 67 450
Adjusted for:
Investment income - continuing operations (41 367) (58 024)
Investment income - discontinuing operations (7 098) (21 971)
Finance costs - continuing operations 17 920 21 619
Finance costs - discontinuing operations 2 221 5 231
Share of profits of equity accounted investees (1 821) (980)
Headline adjusting items (521) (20 507)
Total segmental profits (losses) 23 504 (7 182)
10. Independent review
These condensed results have been reviewed by KPMG Inc., whose unqualified
review report is available for inspection at the company`s registered office.
DIRECTORATE:
Dr M F Kunene (Chairman), *A J Chislett (Chief Executive Officer),
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: 10/09/2010 13:11:01 Produced by the JSE SENS Department.
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