| Fri 7 Sep 2001, 0:00 | | Glenrand M.i.b - Audited Financial Report For The |
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Glenrand M.I.B
An international risk advisory and financial services group
Glenrand M.I.B Limited
(Registration number 1997/008001/06)
(`Glenrand M.I.B' or `the company' or `the group')
ISIN number ZAE 000018529
Share code: GMB
Service Beyond Expectation
* Operating revenue up 33% * Trading profit up 16% * Earnings per share up
15% * Full year's dividend per share 18 cents
INCOME STATEMENT
for the year ended 30 June 2001
Audited Audited
2001 % 2000
Note R'000 change R'000
Operating revenue 2 594 045 +33 446 526
continuing 594 045 446 009
discontinuing - 517
Operating expenses (494 312) +37 (360 764)
continuing (490 844) (357 684)
discontinuing (3 468) (3 080)
Trading profit 99 733 +16 85 762
Interest paid (6 619) (1 031)
Operating profit 93 114 +10 84 731
Income from associates 1 438 1 063
Profit before non-trading items 94 552 85 794
Non-operating income 2 308 4 841
Headline adjusting items 2 049 (4 772)
Profit before taxation 98 909 +15 85 863
Taxation 3 (33 946) (28 416)
Profit after taxation 64 963 57 447
Minority interest (3 522) (3 413)
Profit for the year 61 441 54 034
Headline earnings per share,
fully diluted (cents) 4 26,9 26,3
Earnings per share, fully
diluted (cents) 27,9 +15 24,2
Dividends per share (cents) 18,0 18,0
Number of shares
- issued (000's) 219 833 221 294
- weighted average, fully
diluted (000's) 220 601 223 489
BALANCE SHEET
as at 30 June 2001
Audited Audited
2001 2000
Note R'000 R'000
Assets
Fixed assets 140 540 29 201
Goodwill and trademarks 21 328 5 766
Deferred taxation 30 831 20 597
Investments 20 318 12 880
Current assets 771 481 674 178
Total assets 984 498 742 622
Equity and liabilities
Ordinary shareholders' funds 88 561 66 031
Cost of shares held by subsidiary (2 578) -
Minority interest 24 068 15 469
Deferred taxation 10 452 4 977
Long-term liabilities 5 99 001 10 174
Current liabilities 764 994 645 971
Total equity and liabilities 984 498 742 622
STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2001
Non-
Share distributable Retained
R'000 capital reserves earnings Total
Balance as at
30 June 2000 4 426 32 998 28 607 66 031
- as previously
reported 4 426 32 998 32 811 70 235
- prior year
adjustments:
goodwill amortisation (4 204) (4 204)
Profit for the year 61 441 61 441
Dividends (39 833) (39 833)
Translation differences
on foreign subsidiaries 920 920
Preference shares issued 2 2
Decrease in retained
income of associates (40) 40
Balance as at
30 June 2001 4 428 33 878 50 255 88 561
CASH FLOW STATEMENT
for the year ended 30 June 2001
Audited Audited
2001 2000
R'000 R'000
Cash generated from (utilised by)
operating activities 105 467 94 263
continuing 111 045 96 825
discontinuing (5 578) (2 562)
Movement in working capital 82 381 6 051
Taxation paid (15 310) (4 627)
Dividends paid (39 833) (17 702)
Cash available from operating activities 132 705 77 985
Cash utilised by investing activities (88 336) (21 325)
Cash generated by financing activities 28 571 (2 660)
Net increase in cash and cash equivalents 72 940 54 000
Cash and cash equivalents at
beginning of year 324 803 270 803
Cash and cash equivalents at
end of period 397 743 324 803
SEGMENTAL ANALYSIS
for the year ended 30 June 2001
Audited Audited
2001 % 2000
R'000 change R'000
Geographic - revenue from operations
Africa (principally South Africa) 506 550 +32 382 965
International - United Kingdom 87 951 +38 63 937
International - other 3 146 +220 981
597 647 447 883
Unallocated group treasury costs (3 602) (1 357)
Operating revenue per income statement 594 045 +33 526
Geographic - segment profits
Africa (principally South Africa) 97 171 +37 70 972
International - United Kingdom 10 116 -43 17 878
International - other (3 952) -128 (1 731)
103 335 87 119
Unallocated group treasury costs (3 602) (1 357)
Trading profit per income statement 99 733 +16 85 762
Business grouping - revenue
from operations
Risk Advisory Services 460 045 +21 378 953
Employee Benefits, HMO and
Investment Advisory 137 602 +100 68 930
597 647 447 883
Unallocated group treasury costs (3 602) (1 357)
Operating revenue per income statement 594 045 +33 446 526
Business grouping - segment profits
Risk Advisory Services 76 934 +6 72 438
Employee Benefits, HMO and
Investment Advisory 26 401 +80 14 681
103 335 87 119
Unallocated group treasury costs (3 602) (1 357)
Trading profit per income statement 99 733 +16 85 762
NOTES
1. Basis of accounting
The accounting policies as set out in the 2000 annual report have been
consistently applied in producing the results, except for goodwill, which
was previously written off against available share premium, with the balance
carried at cost, is now amortised over a maximum period of 20 years.
Certain comparative figures have been restated in order to achieve a more
meaningful presentation.
2. Operating revenue
Audited Audited
2001 2000
R'000 R'000
Includes:
Investment income 34 032 32 109
3. Taxation
The group's tax charge comprises the following:
Audited Audited
2001 2000
R'000 R'000
SA normal taxation 13 929 3 784
SA deferred taxation 10 241 16 624
STC 4 864 3 082
Foreign taxation 4 226 4 448
Associates' taxation 686 478
33 946 28 416
4. Calculation of headline earnings per share
Audited Audited
2001 2000
R'000 R'000
Profit for the year 61 441 54 034
Less: Profit on disposal of investment (589) -
Less: Profit on dilution of investment (3 798) -
Add: Goodwill amortisation 412 2 522
Add: Restructuring costs - 2 250
Add: Closure costs on discontinued
operations 1 926 -
Headline earnings 59 392 58 806
5. Long-term liabilities
Audited Audited
2001 2000
R'000 R'000
Interest bearing 76 518 5 543
Non-interest bearing 22 483 4 631
99 001 10 174
6. Contingency
Glenrand M.I.B and SARS are in dispute concerning the tax deductibility of
certain trademarks and copyrights. Although the matter has not yet been
finalised, it is expected to be resolved in the very near future.
Based upon extensive advice from our legal, accounting and merchant banking
advisors, the directors remain confident of a successful outcome in this
regard.
Should Glenrand M.I.B not be successful in defending its position, there
will be no impact on the group's headline earnings per share in the
accounting period in which the matter is resolved.
Operational review
Our business
Glenrand MzIzB is a leading financial services group focused on providing
risk advisory services and solutions, employee benefits and investment
advisory services and solutions and selected financial products and full
healthcare management organisation (HMO) services and products.
Results overview
The directors are pleased to announce that the group has delivered full
years results in line with its forecast at the interim stage.
Glenrand MzIzB achieved its third consecutive year of growth as a listed
company. Headline earnings per share of 26,9 cents (2000: 26,3 cents)
translates to a three-year compound growth rate of 19%, since reporting
notional headline earnings per share of 15,9 cents for the year ended 30
June 1998.
The growth strategy undertaken by our UK subsidiary, Glenrand Limited, saw
their operating revenues advance by 38% and 6 months revenues from first
time contributor Protector Health helped the group achieve top-line revenue
of R594 million (2000: R447 million), an increase of 33%.
Glenrand Limited (UK) started two new divisions during the financial year
resulting in a substantial increase in their cost base, however it is
expected that these new divisions will contribute significantly to the
future profitability of the company. As a result the group's trading margin
decreased to 17% (2000: 19%) while trading profit increased by 16% to R100
million (2000: R86 million).
Long-term interest bearing debt was utilised by both Protector Holdings to
acquire its assets, and by Glensure Limited to increase the group's equity
stake in our UK subsidiary, Glenrand Limited. The utilisation of debt
finance to fund the group's expansion is considered appropriate given the
current state of equity markets locally and abroad. This did result in an
interest expense of R6,6 million (2000: R1,0 million) during the financial
year ended 30 June 2001.
The group's overall tax rate increased to 34,3%, which is directly
attributable to the non-deductibility of the losses incurred during the year
ended 30 June 2001 by our discontinued operation in Australia.
After the effect of non-operating items and headline adjusting items, the
group achieved earnings per share of 27,9 cents
(2000: 24,2 cents) growth of 15%.
Balance sheet and cash flow
The most significant change to the group's balance sheet is the respective
increases in our fixed assets and long-term liabilities. The increases are
directly attributable to the Protector Health investment.
The group generated strong operating cash flows, supporting the underlying
quality of our earnings. These strong cash flows provided the group with
gearing capacity. Operating cash flow of R112m before interest paid of R6,6m
translates to an interest cover of 17 times.
Strategic development
* Africa (principally South Africa)
The group succeeded in making a substantial investment into a specific area
of employee benefits being Protector Health. This acquisition is in line
with the group's stated strategy of significantly enhancing our profile in
the broader employee benefits market. The group intends to continue
targeting opportunities for growth in this particular market.
* International (principally UK)
Our UK subsidiary, Glenrand Limited, continued their strategy of growth by
attracting teams of specialist brokers in the London market versus the
acquisition of businesses. This method of growth, as well as organic growth
opportunities that exist in respect of our current niche broking divisions,
is considered to be the most appropriate growth strategy to achieve suitable
critical mass in the London operation. Thereafter, Glenrand Limited will
pursue selective acquisitions that will contribute positively to its
strategic vision and earnings.
Prospects
Glenrand MzIzB expects to benefit from our recent acquisition of Protector
Health and our UK subsidiary, Glenrand Limited. In addition to these two
operations contributing positively to our current and future growth, firmer
insurance rates worldwide and locally should have a positive effect on the
groups bottom-line for the year-ended 30 June 2002. The board expects to
achieve satisfactory growth in headline earnings per share for the year-
ended 30 June 2002.
General
Share buy-back
In terms of a general authority granted at the company's annual general
meeting held on 13 November 2000, the shareholders approved that the company
be allowed to repurchase up to a maximum of 20% of the company's issued
ordinary shares.
During the period 20 June 2001 to 29 June 2001 the company acquired a total
number of 1 461 000 shares at an average price (excluding dealing costs) of
176 cents per share. These shares were purchased by a wholly-owned
subsidiary and accordingly have not been cancelled.
STRATE
Glenrand MzIzB moved to the STRATE system during August 2001.
Dematerialisation started on 6 August 2001 with electronic trading having
commenced on 27 August 2001 and the first electronic settlement took place
on 3 September 2001.
Declaration of final dividend
A final dividend No. 4 of 10 cents per share (2000: 10 cents per share) has
been declared, payable on 8 October 2001. The last
day to trade "Cum" the dividend is Friday, 28 September 2001. "Ex" dividend
trading commences on Monday, 1 October 2001 and the record date is Friday, 5
October 2001.
Annual Report
The annual financial statements for the year ended 30 June 2001 will be
posted to shareholders towards the middle of October 2001.
On behalf of the board of directors
A W Mansfield D J Harpur
(Chairman) (Chief Executive Officer)
7 September 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
Registrars Computershare Services Limited Edura
41 Fox Street Johannesburg 2001
PO Box 61051 Marshalltown 2107
Tel (011) 370-7700 Fax (011) 836-0792
