| Fri 2 Mar 2001, 0:00 | | Glenrand M.i.b. - Interim Results |
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Glenrand M I B Limited
(Registration number 1997/008001/06)
('Glenrand M I B' or 'the company' or 'the group')
UNAUDITED INTERIM REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2000
An international risk advisory and financial services group
Service Beyond Expectation
Income statement for the six months ended 31 December 2000
Unaudited Audited
6 months ended Year ended
31 December 30 June
2000 1999 % 2000
Note R'000 R'000 change R'000
Broking and related
income 208 747 195 951 +6 417 902
continuing 208 747 195 785 417 385
discontinuing 3 - 166 517
Investment income 15 849 16 894 -6 32 109
Expenses (203 967) (180 711) +13 (363 912)
continuing (200 499) (179 699) (360 832)
discontinuing 3 (3 468) (1 012) (3 080)
Net operating income 20 629 32 134 -36 86 099
Loss on discontinuing
operations 3 (2 110) - -
Non-operating income 330 1 046 943
Income before associate's
earnings and taxation 18 849 33 180 87 042
Income from associates 1 545 1 493 1 063
Net income before
taxation 20 394 34 673 88 105
Taxation 4 (7 054) (8 382) (28 416)
Net income after taxation 13 340 26 291 59 689
Outside shareholders'
interest (927) (773) (3 414)
Income attributable to
ordinary shareholders 12 413 25 518 56 275
Headline earnings
per share, fully
diluted (cents) 5 6,6 11,9 26,3
Earnings per
share, fully
diluted (cents) 5,6 11,4 25,2
Dividends per
share (cents) 8,0 8,0 18,0
Number of shares
- issued (000's) 221 294 221 274 221 294
- weighted average,
fully diluted (000's) 223 326 223 489 223 489
Balance sheet as at 31 December 2000
Unaudited Audited
31 December 30 June
2000 1999 2000
R'000 R'000 R'000
Assets
Fixed assets 36 315 25 479 29 201
Goodwill and trademarks 20 254 3 209 9 524
Deferred taxation 16 158 30 533 20 597
Investments 15 648 11 612 12 880
Current assets 891 298 774 345 674 177
Total assets 979 673 845 178 746 379
Equity and liabilities
Ordinary shareholders' funds 66 842 60 818 69 789
Outside shareholders' interests 6 199 12 356 15 469
Deferred taxation 4 460 3 807 4 977
Long-term liabilities 28 715 15 246 10 174
Current liabilities 873 457 752 951 645 970
Total equity and liabilities 979 673 845 178 746 379
Statement of changes in equity for the six months ended 31
December 2000
Non-
Share distri- Retained
capital butable earnings
R'000 reserves Total
Balance as at 31 December 1999
- As previously reported 4 425 5 334 24 554 34 313
- prior year adjustments:
goodwill amortisation (102) (102)
deferred tax 28 000 4 274 32 274
- Adjustments relating to change
in accounting policy for:
goodwill amortisation (63) (63)
deferred tax (5 604) (5 604)
Balance as at 31 December 1999
(restated) 4 425 33 334 23 059 60 818
Balance as at 30 June 2000 4 426 32 998 32 365 69 789
- as previously reported 4 426 32 998 32 811 70 235
- prior year adjustments:
goodwill amortisation (446) (446)
Attributable earnings for
the period 12 413 12 413
Dividends declared (17 703) (17 703)
Translation differences on
foreign subsidiaries 2 343 2 343
Increase in retained income
of associates 1 008 (1 008) -
Balance as at 31 December 2000 4 426 36 349 26 067 66 842
Cash flow statement for the six months ended 31 December 2000
Unaudited Audited
6 months ended Year ended
31 December 30 June
2000 1999 2000
R'000 R'000 R'000
Cash generated from (utilised by)
operating activities 24 702 38 593 94 263
continuing 30 280 39 438 96 825
discontinuing (5 578) (845) (2 562)
Movement in working capital 3 443 (30 131) 3 564
continuing (230) (30 131) 3 564
discontinuing 3 673 - -
Taxation paid (5 123) (1 408) (4 697)
Dividends paid (22 129) - (17 702)
Cash available from operating
activities 893 7 054 75 428
Cash utilised by investing activities (18 797) (9 175) (21 722)
Cash generated (utilised) by
financing activities 195 (15) 294
Net (decrease) increase in cash
and cash equivalents (17 709) (2 136) 54 000
Cash and cash equivalents
at beginning of year 324 803 270 803 270 803
Cash and cash equivalents
at end of period 307 094 268 667 324 803
Segmental analysis for the six months ended 31 December 2000
Unaudited Audited
6 months ended Year ended
31 December 30 June
2000 1999 2000
Revenue from operations % % %
Business activity
Risk Advisory Services 87 86 85
Employee Benefits and Investment
Advisory Services 13 14 15
Geographic
Africa (mainly South Africa) 85 85 85
International 15 15 15
Notes
1. Basis of accounting
These consolidated condensed interim financial statements are prepared in
accordance with AC 127 and scheduled for the South African Companies Act (Act
61 of 1973 as amended).
2. Accounting policies
The accounting policies as set out in the 2000 Annual Report have been
consistently applied in producing the results, except that goodwill arising
after 1 July 2000 is accounted for as an asset in the balance sheet and
amortised over a maximum period of 20 years. Previously goodwill was written
off to the extent of available share premium.
Certain comparative figures have been restated in order to achieve a more
meaningful presentation.
3. Discontinuing operations
During the period under review it was decided to discontinue the following
divisions of Glenrand Limited, our UK operating subsidiary:
Reinsurance Australia - 1 July 2000
London Market Fee Collections Services - 1 September 2000
Reinsurance Brazil - 1 November 2000
During the same period under review it was decided to discontinue the following
subsidiary of Glensure Limited, our international investment company;
Glenrand Marsh Australia (Pty)Ltd - 31 August 2000
Unaudited Audited
6 months ended Year ended
31 December 30 June
2000 1999 2000
R'000 R'000 R'000
Net operating income
Broking and related income - 166 517
Expenses (3 468) (1 012) (3 080)
Gross loss (3 468) (846) (2 563)
Taxation 572 254 769
Outside shareholders'
interest 69 177 538
Net loss (2 827) (415) (1 256)
Loss on discontinuing
operations
Gross (2 110) - -
Taxation 164 - -
Outside shareholders' interest 20 - -
Net loss (1 926) - -
4. Taxation
As noted in our 2000 Annual Report, the group adopted the updated accounting
statement on Income Taxes, AC102. The implementation was, however, only applied
to the full year results as at 30 June 2000. Accordingly, the taxation charge
for the six-month period ended 31 December 1999 has been restated, to reflect
this change in accounting policy, as follows:
6 months ended 12 months ended
31 December 1999 30 June 2000
Restated Previously
R'000 R'000 R'000
Taxation 8 382 2 228 28 416
5. Calculation of headline earnings per share
Unaudited Audited
6 months ended Year ended
31 December 30 June
2000 1999 2000
R'000 R'000 R'000
Income attributable to
ordinary shareholders 12 413 25 518 56 275
Less: Profit on disposal
of investment (78) - -
Add: Goodwill amortisation 370 63 281
Add: Restructuring costs - 1 000 2 250
Add: Loss on discontinuing
operations 1 926 - -
Headline earnings 14 631 26 581 58 806
6. Contingencies
Glenrand M.I.B Limited is currently in dispute with SARS over the tax
deductibility of trademarks and copyrights which were independently valued at
an amount of R168,8 million at the time of the merger between Glenrand and
M.I.B.
Based on extensive professional advice from our legal, accounting and merchant
bank advisors, taken at the time of the merger and following this query from
SARS, the directors are confident of a successful outcome in this regard.
Financial impact
Income statement
In the event that Glenrand M.I.B is not successful in defending its position,
there will be no impact on prior or current year total taxation charges, other
than a switch from deferred tax to current tax. Furthermore there would be no
impact on our expected future taxation rate.
Balance sheet
In the event that Glenrand M.I.B is not successful in defending its position,
the group would be required to write-down its deferred tax asset which it
carries against the non-distributable reserve account. The effect of this would
be to reduce the NAV of the group by R28 million.
Operational review
Our business
Glenrand M.I.B is focused on providing risk, employee benefits and investment
advisory services and solutions. These services and solutions are provided
across a broad spectrum of clients ranging from large multinational
corporations, professions, small and medium-sized businesses and individuals.
While the group's major activities are currently conducted in South Africa, we
have an established international operation in the United Kingdom which is
increasingly growing its presence in other international territories.
Results
The group recorded a disappointing 36% drop in net operating income for the
six-month period ended 31 December 2000.
The main reasons for the drop in net operating income for the period under
review are as follows:
For the current financial year, a greater percentage of group revenue is
expected in the second six-month period than that of the same period during the
previous financial year.
The main reasons for this change include changes in the renewal dates of
existing client insurance portfolios and a larger portion of expected new
business revenues have been budgeted to be received during the second six-month
period ending 30 June 2001.
A significant increase in the operating expenses of our U.K. subsidiary,
Glenrand Limited, as a direct result of new teams of specialists having joined
the company. This form of expansion is associated with up front costs which
cannot be capitalised, whilst revenue is only expected to flow after a period
of six to nine months, from the start-up phase.
The full due diligence costs incurred which relate to our investment in the
Protector Group, a medical-aid administrator and medical facilities management
company, have been expensed in the six-month period under review.
A R3,5 million loss incurred and expensed on a new venture in Australia,
Glenrand Marsh Australia (Pty) Limited, which has been discontinued.
Prospects
The group recently announced its acquisition of a 65% equity stake in the
Protector Group, a medical-aid administration and medical facilities management
company. Our U.K. subsidiary, Glenrand Limited, has continued to attract new
teams of specialists. Both these initiatives are expected to enhance earnings
growth for the final six-month period ending 30 June 2001, with significant
earnings enhancement expectations thereafter.
Following significant restructuring and refocusing of our risk management
subsidiary IRCA (Pty) Limited, profitability has been restored and the group
expects this operation to contribute towards our future growth.
Management is confident of the group achieving similar headline earnings for
the twelve-month period ending 30 June 2001 as were achieved for the previous
financial year.
The interim dividend remains unaffected in support of this view.
General
Declaration of interim dividend
An interim dividend no. 3 of 8 cents per share (2000: 8 cents per share) has
been declared, payable on or about Friday, 30 March 2001 to shareholders
registered on Friday, 16 March 2001.
On behalf of the board of directors
A W Mansfield D J Harpur
(Chairman - Non-executive) (Chief Executive Officer)
23 February 2001
Registered office
Surrey Place
291 Surrey Avenue
Randburg 2194
PO Box 2544
Randburg 2125
Tel (011) 329-1111
Fax (011) 329-1333
e-mail info@glenrandmib.co.za
website www.glenrandmib.co.za
Transfer secretaries
Computershare Services Limited
Edura
41 Fox Street
Johannesburg 2001
PO Box 61051
Marshalltown 2107
Tel (011) 370-7700
Fax (011) 836-0792
PRESS RELEASE
GLENRAND M.I.B REPORTS TEMPORARY DIP IN OPERATING PROFIT
International risk advisory and financial services group Glenrand M.I.B
(Glenmib) reported a 31% drop in net operating income to R20,6 million (1999:
R32,1 million) for the six months to 31 December 2000.
However, chief executive officer David Harpur says the group remains on track
to deliver earnings at a similar level to that of last year.
Revenues should register a noticeable improvement for the full financial year,
as the greater part of Glenmib's income is earned in the second half of the
year due to seasonal renewal dates of insurance portfolios and receipt of
investment income.
This view is supported by the fact that the interim dividend of 8 cents per
share (2000: 8 cents per share) has been maintained.
Chief executive officer David Harpur explains the drop in net operating income
for the six-month period to be due to several factors. "The period bore the
impact of changes in renewal dates of existing client insurance portfolios. In
addition, a larger portion of new business revenues is budgeted for the second
half of the year, resulting in a greater percentage of group revenue being
expected then than in the same period of the previous financial year.
"There was a significant increase in operating expenses incurred by our UK
subsidiary, Glenrand Limited, as a result of new teams of specialists having
joined that company," says Harpur. "Then the group also expensed the full due
diligence costs incurred relating to our investment in the Protector Group, a
medical aid administration and medical facility management company.
"A further contributor was a loss of R3,5m incurred on a new venture in
Australia which has now been discontinued," says Harpur.
The employment of specialist teams in the UK operation and the investment in
Protector Group are initiatives that are expected to generate positive returns
in the second half of the year, and substantially better returns thereafter.
The international operations of the group will continue to diversify the
earnings base of Glenrand M.I.B.
The income statement for the interim period reflects a 13% increase in expenses
to R204 million (1999: R180,7 million) against a 6% gain in broking and related
income to R208,7 million (1999: R196 million) and a 6% decline in investment
income to R15,8 million (1999: R16,9 million).
Headline earnings per share declined to 6.6c from 11,9c for the comparable
period in 1999.
There was a 7% drop in the taxation charge to R7 million (1999: R8,4 million).
Protector was formed after the purchase of two medical aid administration and
medical facility management companies - Kopano Healthcare and Vaalmed. These
schemes and their administrations have been merged and rebranded Protector,
while their various medical facilities such as hospitals, clinics and
pharmacies have been separated and housed in one operation as part of a new
strategy to offer affordable, new generation healthcare services to employees.
The thrust into healthcare signals a new strategic direction for Glenrand MIB,
which has expanded its Benefit Services Company into a niche Financial Services
Company. Glenrand MIB owns 65% of Protector which it purchased with effect from
1st January 2001 and for which it paid R30 million in one tranche.
Risk management subsidiary IRCA was restored to profitability following a major
restructuring and refocusing of operations.
Looking to the future, Harpur says the group expects to achieve headline
earnings for the full financial year at a similar level to last year. This will
be supported by a hardening of some insurance rates which is following a global
trend, as well as the expected contributions from the Protector Group and our
international expansion.
Ends.
ISSUED FOR : Glenrand M.I.B Limited
CONTACT : David Harpur (011) 293 2800 / 082 441 4486
FAX NO : (011) 293 2755
E-MAIL : Dharpur@glenrandmib.co.za
ISSUED BY : TISH STEWART PR ASSOCIATES
CONTACT : Tish Stewart (011) 325 4195 / 082 443 6399
FAX NO : (011) 325-4199
E-MAIL : Tish@tspr.co.za
DATE : 01 March 2001
