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GMB - Glenrand MIB Limited - Audited Summarised Results for the fifteen
months ended 30 September 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: ZAE000078010
Audited Summarised Results
for the fifteen months ended 30 September 2010
Summary
- Broking profit from continuing operations R36,0 million (twelve months
2009: R20,9 million)
- Revenue R652,6 million (twelve months 2009: R502,8 million)
- HEPS 18,3 cents (twelve months 2009: 11,5 cents)
- Own cash increased from R80,2 million to R129,9 million after capital
expenditure of R42,1 million
CHANGE IN YEAR END
The group has changed its financial reporting date to 30 September and we
are now reporting on a fifteen month period. On 10 September 2010 we
released Reviewed Condensed Results for the twelve months ended 30 June
2010.
OVERVIEW
During the fifteen month period to 30 September 2010 the group improved its
broking margin from 4,2% in the 2009 financial year to 5,5%. The group
increased broking profit by 45,1% to R30,3 million during the twelve months
to 30 June 2010 and posted a further R8,3 million profit after tax from
continuing operations in the last quarter. Broking revenue increased by 2,6%
to R516,0 million in the first twelve months during tough trading
conditions. During the next three months to 30 September 2010 the group
achieved further revenue of R136,6 million, bringing it to a total of R652,6
million earned during the entire reporting period. It should be noted that
revenue generation is cyclical in the Risk Services segment of the business,
which was the primary driver for changing the reporting date to fall outside
of the traditional April to August renewal period. Investment income
decreased mainly due to lower interest rates.
The group posted headline earnings per share of 18,3 cents for the fifteen
months (twelve months 2009: 11,5 cents) and a profit of 19,9 cents per share
for the period under review (twelve months 2009: 20,5 cents). The continuing
operations achieved a profit of 17,0 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 income statement headings and subtotals that were used in our
most recent Audited Annual Financial Statements.
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. Broking profit before central charges increased
by 9,7% during the twelve months to 30 June 2010 and a further R31,6 million
before central charges was earned in the next three months. Revenues were
up 2,4% in the first twelve months at R347,3 million. The segment posted
further revenues of R96,4 million during the next three months. The
reductions in controllable costs, excluding employment expenses costs,
reported on for the twelve month period ending 30 June 2010 were maintained
for the last quarter.
Individual Insurance Solutions
Individual Insurance Solutions is our business to consumer segment which
includes Personal Product Solutions, Finrite and Claims Fulfilment Company.
Broking profit before central charges increased by 18,2% during the twelve
months to 30 June 2010 due to growth in revenues of 3,1% and a reduction of
17,1% in controllable costs excluding employment expenses. Revenue growth in
our Finrite division was a pleasing 14,6% over the same period. During the
next three months to 30 September 2010 the segment achieved further revenue
of R40,2 million bringing it to a total of R208,9 million earned during the
fifteen months. 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.
PROSPECTS
During the period we incurred increased expenditure on planned 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. Shareholders are reminded that the company
continues to trade under a cautionary.
DIVIDEND
A capitalisation award with a cash dividend alternative of 3 cents per
ordinary share was declared as payable on 10 May 2010. The decision on the
declaration of a final dividend has been postponed in view of the cautionary
announcement of 17 November 2010 on SENS.
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.
On behalf of the Board of Directors
R G Cottrell A J Chislett
Lead Independent Director Chief Executive Officer
6 December 2010
Consolidated Income Statement
for the fifteen months ended 30 September
Audited Audited
summarised summarised
fifteen months twelve months
September June
2010 2009
Note R`000 R`000
Continuing operations
Revenue 652 573 502 804
Other income 1 343 1 160
Employment expenses 2 (393 657) (305 601)
Rent and IT expenses (69 680) (49 891)
Depreciation (14 895) (8 296)
Amortisation of computer software (9 713) (7 965)
Other expenses (128 636) (108 177)
Finance costs (1 319) (3 131)
Broking profit 36 016 20 903
Finance costs relating to (25 069) (18 488)
retirement benefits
Amortisation of other intangible (7 007) (6 673)
assets other than software
Profit (loss) on disposals 13 (2 286)
Impairments (1 638) (3 204)
Investment income excluding 35 588 39 640
expected return on plan assets
Expected return on defined benefit 19 695 18 384
retirement plan assets
Share of profit of equity 2 387 980
accounted investees
Profit before taxation 59 985 49 256
Taxation (18 659) (17 478)
Profit from continuing operations 41 326 31 778
Discontinued operations 4 6 715 16 880
Profit from discontinued 8 395 18 193
operations including the effect of
the deconsolidation
Taxation (1 680) (1 313)
Profit for the period 48 041 48 658
Profit attributable to:
Non-controlling interest 2 370 2 111
Shareholders of Glenrand MIB 45 671 46 547
Profit for the period 48 041 48 658
Earnings per share
Basic earnings per share (cents) 19,9 20,5
Diluted earnings per share (cents) 19,9 20,5
Continuing operations
Basic earnings per share (cents) 17,0 13,1
Diluted earnings per share (cents) 17,0 13,1
Headline earnings per share 6 18,3 11,5
(cents)
Diluted headline earnings per 6 18,2 11,5
share (cents)
Number of shares (net of treasury
shares)
- Weighted average (000`s) 229 194 226 784
- Diluted weighted average 229 661 226 784
(000`s)
Consolidated Statement of Comprehensive Income
for the fifteen months ended 30 September
Audited Audited
summarised summarised
fifteen months twelve months
September June
2010 2009
Note R`000 R`000
Profit for the period 48 041 48 658
Other comprehensive income, net of (9 422) (7 449)
tax
Actuarial loss on post- (5 828) (2 388)
retirement benefits
Translation of foreign (3 594) (5 061)
subsidiaries
Total comprehensive income for the 38 619 41 209
period
Total comprehensive income
attributable to:
Non-controlling interest 2 370 2 111
Shareholders of Glenrand MIB 36 249 39 098
Total comprehensive income for the 38 619 41 209
period
Consolidated Statement of Financial Position
as at 30 September
ASSETS
Non-current assets
Property, plant and equipment 3 24 538 21 994
Goodwill 34 090 36 710
Intangible assets 3 87 469 70 002
Deferred taxation asset 29 970 25 894
Investments 3 403 2 357
Non-current assets 179 470 156 957
Current assets 384 497 430 399
Total assets 563 967 587 356
EQUITY AND LIABILITIES
Equity
Shareholders` equity 192 243 157 255
Non-controlling interest 2 500 3 757
Total equity 194 743 161 012
Liabilities
Non-current liabilities
Long-term liabilities 62 641 46 640
Deferred taxation 8 723 9 163
Non-current liabilities 71 364 55 803
Current liabilities 297 860 370 541
Total liabilities 369 224 426 344
Total equity and liabilities 563 967 587 356
Consolidated Cash Flow Statement
for the fifteen months ended 30 September
Cash generated by operations 68 895 22 628
- Continuing 65 008 46 001
- Discontinued 3 887 (23 373)
Working capital changes 20 309 (84 363)
Investment income received 42 626 60 405
Interest paid (3 358) (6 673)
Taxation paid (4 675) (25 222)
Dividends paid (6 070) (1 740)
Cash inflow (outflow) from 117 727 (34 965)
operating activities
Cash outflow from investing (44 582) (14 771)
activities
Cash outflow from financing (9 079) (11 876)
activities
Net increase (decrease) in cash 64 066 (61 612)
and cash equivalents
Cash and cash equivalents at 166 412 268 819
beginning 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 (3 920) (1 135)
fluctuations on cash held
Cash and cash equivalents at end 8 279 615 166 412
of the period
Operating Segments Analysis
for the fifteen months ended 30 September
Segmental revenues
Risk Services 443 710 339 216
Individual Insurance Solutions 208 863 163 588
Benefit Services (discontinued) - 2 976
Total segmental revenues 652 573 505 780
Segmental results
Risk Services 16 617 5 404
Individual Insurance Solutions 14 133 11 957
Benefit Services (discontinued) - (23 178)
Premium Finance Solutions (2 014) (1 365)
(discontinued)
Other (discontinued) (324) -
Total segmental profits (losses) 9 28 412 (7 182)
Consolidated Statement of Changes in Equity
for the fifteen months ended 30 September
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 - - (3 594) 39 843
income for the period
Share-based payment - 2 465 - -
reserve
Issue of treasury - (489) - -
shares
Acquisition of shares - - - (1 146)
in subsidiary
Trade mark - - (2 464) 2 464
amortisation reserve
transfer
Share of profits of - - 1 887 (1 887)
equity accounted
investees
Dividends 6 193 - - (8 284)
paid/capitalisation
shares awarded
Balance as at 30 58 618 (412) 15 583 118 454
September 2010
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 36 249 2 370 38 619
income for the period
Share-based payment 2 465 - 2 465
reserve
Issue of treasury (489) - (489)
shares
Acquisition of shares (1 146) (137) (1 283)
in subsidiary
Trade mark - - -
amortisation reserve
transfer
Share of profits of - - -
equity accounted
investees
Dividends (2 091) (3 490) (5 581)
paid/capitalisation
shares awarded
Balance as at 30 192 243 2 500 194 743
September 2010
Notes to the Financial Statements
1. Basis of accounting
These summarised consolidated preliminary results are prepared in accordance
with the recognition and measurement requirements of the International
Financial Reporting Standards presentation 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 and the amendments to IAS 27 (revised): Consolidated and Separate
Financial Statements. Segmental reporting is applied for Risk Services and
Individual Insurance Solutions.
2. Employment expenses
Included in employment expenses are IFRS 2: Share-based Payments charges of
R2,5 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 and office equipment of R14,5 million. Additions to intangible
assets, mainly software applications, amounted to R34,5 million.
4. Discontinued 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).
During 2009 Glenrand MIB Benefit Services (Pty) Limited was placed in
liquidation. The effect of the deconsolidation of the subsidiary is
disclosed below.
Audited Audited
summarised summarised
fifteen months twelve months
September June
2010 2009
R`000 R`000
Effect of deconsolidation of the Benefit - 23 136
Services Group
Profit on disposal of other discontinued 1 864 2 861
operations
Profit (loss) for the period from 2 539 (7 804)
discontinued operations
Recovery from discontinued operations 3 992 -
Profit before taxation 8 395 18 193
Taxation (1 680) (1 313)
Profit after taxation 6 715 16 880
5. Taxation % %
Effective taxation rate reconciliation
Statutory rate 28,0 28,0
Disallowable expenditure (exempt income) 2,9 6,9
Secondary taxation on companies 2,2 0,5
Unrecognised deferred taxation asset on - (0,3)
losses
Prior year over provision (4,6) (8,3)
Capital gains tax 0,4 -
Foreign withholding taxes 0,8 1,0
Other - 0,1
Total effective rate 29,7 27,9
Discontinued operations 1,4 7,6
Continuing operations effective tax rate 31,1 35,5
6. Calculation of headline earnings
Earnings attributable to ordinary 45 671 46 547
shareholders
Adjusted for:
Impairments and disposals of property, 3 676 5 490
plant and equipment
Profit on disposal of investments, (1 864) (2 861)
subsidiary companies and divisions
Effect of deconsolidation - (23 136)
Reversal of impairment (2 051) -
Amounts written off 422 -
Recovery from discontinued operations (3 992) -
Non-controlling interest (15) (5)
Headline earnings 41 847 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 129 938 80 226
cash resources of
9. Operating segments analysis
Reconciliation of profits to segmental
profit (loss)
Continuing profit before taxation 59 985 49 256
Discontinued profit before taxation 8 395 18 193
68 380 67 449
Adjusted for:
Investment income - continuing operations (55 283) (58 024)
Investment income - discontinued (7 098) (21 970)
operations
Finance costs - continuing operations 26 388 21 619
Finance costs - discontinued operations 2 221 5 231
Share of profits of equity accounted (2 387) (980)
investees
Headline adjusting items (3 809) (20 507)
Total segmental profits (losses) 28 412 (7 182)
10. Audit report
The unmodified audit report of KPMG Inc., the independent auditors, on the
consolidated annual financial statements and the summarised consolidated
financial statements contained herein for the fifteen months ended 30
September 2010, dated 6 December 2010, is available for inspection at the
registered office of the company.
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
Licensed 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: 08/12/2010 17:00:05 Produced by the JSE SENS Department.
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