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GLENRAND M.I.B LIMITED - REVIEWED YEAR-END RESULTS FOR THE YEAR ENDED 30 JUNE
2003
A risk advisory and financial services group
GLENRAND M.I.B
Glenrand M.I.B Limited
(Registration number 1997/008001/06)
(`Glenrand M.I.B" or `the company" or `the group")
JSE Share Code GMB
ISIN Code ZAE000018529
Service Beyond Expectation
REVIEWED YEAR-END RESULTS for the YEAR ended 30 JUNE 2003
Income Statement
for the year ended 30 June 2003
Reviewed Audited
Year ended Year ended
30 June 30 June
2003 % 2002
Note R"000 Change R"000
Operating revenue 4 917 021 10 832 333
- continuing 535 354 454 488
- discontinued/discontinuing 3 381 667 377 845
Operating expenses (783 483) 11 (699 061)
- continuing (420 284) (365 560)
- discontinued/discontinuing 3 (363 199) (333 501)
Trading profit 133 538 133 272
Interest paid (12 192) (8 243)
Operating profit 121 346 125 029
Income from associates 9 346 5 464
Profit before non-trading items 130 692 130 493
Non-operating income 5 822 3 330
Headline adjusting items 5 5 075 4 961
Profit before taxation 141 589 138 784
- continuing 124 389 33 93 797
- discontinued/discontinuing 3 17 200 44 987
Taxation 6 (35 751) (38 852)
Profit after taxation 105 838 99 932
Minority interest (19 884) (21 496)
- continuing (8 383) (3 709)
- discontinued/discontinuing 3 (11 501) (17 787)
Profit for the year 85 954 78 436
-
Headline earnings per share,
fully diluted (cents) 33,2 1 32,8
Earnings per share,
fully diluted (cents) 36,1 34,9
Number of shares
- issued (000"s) 238 546 236 546
- weighted average,
fully diluted (000"s) 238 335 224 538
Balance Sheet
as at 30 June 2003
Reviewed Audited
Year ended Year ended
30 June 30 June
2003 2002
Note R"000 R"000
Assets
Fixed assets 184 805 196 742
Goodwill and other intangibles 22 706 32 957
Deferred taxation 42 879 41 970
Investments 60 570 23 927
Current assets 783 923 1 348 908
Total assets 1 094 883 1 644 504
Equity and liabilities
Ordinary shareholders" funds 226 570 174 276
Cost of shares held by subsidiary (2 084) (2 084)
Minority interest 41 940 52 676
Deferred taxation 7 169 7 991
Long-term liabilities 7 67 976 78 390
Current liabilities 753 312 1 333 255
Total equity and liabilities 1 094 883 1 644 504
Cash Flow Statement
for the year ended 30 June 2003
Reviewed Audited
Year ended Year ended
30 June 30 June
2003 2002
R"000 R"000
Cash generated from operations 151 023 151 669
- continuing 146 531 111 193
- discontinued/discontinuing 4 492 40 476
Movement in working capital 29 747 (66 984)
Taxation paid (50 948) (22 037)
Dividends paid (50 040) (42 083)
Cash available from (utilised by)
operating activities 79 782 20 565
Cash utilised by investing activities (128 135) (47 252)
Cash (utilised) generated by financing
activities (39 628) 15 196
Net decrease in cash and cash equivalents (87 981) (11 491)
Cash and cash equivalents at beginning
of year 418 100 429 591
Cash and cash equivalents at end of year 330 119 418 100
Statement of Changes in Equity
for the year ended 30 June 2003
Non-
distribut-
Share Share able Retained
R"000 capital premium reserves earnings Total
Balance as at
30 June 2001 4 428 - 33 878 74 399 112 705
Ordinary shares
issued 305 32 136 - - 32 441
Preference shares
redeemed (1) - - - (1)
Translation of
foreign subsidiaries - - (7 222) - (7 222)
Shared earnings
of associates - - 3 884 (3 884) -
Profit for
the year - - - 78 436 78 436
Dividends - - - (42 083) (42 083)
Balance as at
30 June 2002 4 732 32 136 30 540 106 868 174 276
Ordinary shares
issued 40 3 418 - - 3 458
Preference shares
redeemed (1) - - - (1)
Transfer to
capital
redemption fund - - 1 (1) -
Translation of
foreign subsidiaries - - 12 923 - 12 923
Shared earnings
of associates - - 7 820 (7 820) -
Profit for the
year - - - 85 954 85 954
Dividends - - - (50 040) (50 040)
Balance as at
30 June 2003 4 771 35 554 51 284 134 961 226 570
Segmental Analysis
for the year ended 30 June 2003
Reviewed Audited
Year ended Year ended
30 June 30 June
2003 2002
R"000 R"000
Segmental revenues
Risk advisory services 640 063 536 690
Africa 467 708 376 372
United Kingdom 167 206 156 740
International - other 5 149 3 578
Risk management and technology 44 556 79 864
Africa 43 951 78 447
International - other 605 1 417
Benefit consulting, healthcare and
medical services 232 402 215 779
Africa 232 402 215 779
Total segmental revenues 917 021 832 333
Segmental profits
Risk advisory services 130 767 92 512
Africa 121 145 79 992
United Kingdom 8 895 12 496
International - other 727 24
Risk management and technology 3 040 3 555
Africa 3 154 3 691
International - other (114) (136)
Benefit consulting, healthcare and
medical services (269) 37 205
Africa (269) 37 205
Total segmental profits 133 538 133 272
Notes
1. Basis of accounting
The accounting policies as set out in the 2002 Annual Report comply with South
African Statements of Generally Accepted Accounting Practice and have been
consistently applied in producing the results, except for adoption of AC133:
Financial Instruments: Recognition and Measurement, which has had no material
impact on the financial statements.
2. REVIEW OPINION
The group results have been reviewed by KPMG Inc. who have substantially
completed their audit and intend issuing an unqualified opinion on the annual
report due for publication in the near future.
Their unqualified review report is available for inspection at the company"s
registered office.
3. DISCONTINUED/discontinuing OPERATIONS
During the year under review Glenrand McIcB International Limited, a subsidiary
of our international investment company Glensure Limted, was disposed of
effective 27 February 2003.
Effective 31 December 2002, we disposed of our subsidiary investment in IRCA
(Pty) Limited (a Risk Management Consulting company).
The results of Protector Group are recorded as a discontinuing operation in line
with our commentary under Strategic Developments.
4. Operating revenue
Reviewed Audited
Year ended Year ended
30 June 30 June
2003 2002
R"000 R"000
Includes:
Investment income 53 542 37 301
5. CALCULATION OF HEADLINE EARNINGS
Profit for the period 85 954 78 436
Less: Profit on disposal of investments (14 187) (6 110)
Less: Goodwill amortisation (3 389) (4 456)
Add: Provision for impairment of investment 3 788 2 593
Add: Provision for impairment of asset 3 852 -
Add: Post-retirement medical aid liability
relating to prior year 4 861 -
Add: Administration fee relating to
prior year - 3 012
Less: Taxation effect (1 983) (904)
Add: Minority shareholders effect 210 1 107
Headline earnings 79 106 73 678
6. TAXATION
Reviewed Audited
Year ended Year ended
30 June 30 June
2003 2002
R"000 R"000
The group"s tax charge comprises
the following:
SA normal taxation 23 762 22 865
SA deferred taxation (1 937) (2 056)
STC 5 940 4 647
Foreign taxation 1 368 740
Discontinued/discontinuing 5 365 10 969
Associates" taxation 1 253 1 687
35 751 38 852
7. LONG-TERM LIABILITIES
Interest bearing 43 596 64 097
Non-interest bearing 24 380 14 293
67 976 78 390
Operational Review
Business review
Our business
Glenrand M.I.B is a leading financial services group focused on providing risk
advisory services and solutions, employee benefits, investment advisory
services, selected financial products and full healthcare maintenance
organisation services and products.
Financial review
Overview
In line with the trading update that was released earlier this year, we are
reporting headline earnings of 33,2 cents at 30 June 2003, an increase of 1%
from the prior year of 32,8 cents.
Income statement
Total operating revenue growth was 10% due to the strong revenue growth of the
Africa Risk Advisory Services division, which increased by 24% to R468 million
(2002: R376 million). A further factor in the operating revenue growth was the
44% increase in investment income over the prior year from R37 million to R54
million.
The Africa Risk Advisory Services division delivered an excellent trading profit
of R121 million, representing a 51% increase over last year"s R80 million.
The Benefit consulting, healthcare and medical services divisions delivered a
disappointing trading loss of R0,3 million against their 2002 trading profit of
R37 million.
Our Benefit Consulting division incurred a trading loss of R2 million against a
prior year trading profit of R8 million. This was mainly due to the decrease in
the healthcare revenue as a result of the change in legislation (effective 1
January 2003) whereby healthcare brokers no longer receive the renewal
commissions annually upfront, but rather monthly in arrears. Although just a
timing issue, it will result in a reduction in revenue in the first year of the
new legislation being in place.
Protector Group"s result was impacted this year by a significant number of
restructuring, reorganisation and development costs.
Earnings from associate companies increased by 71% from R5 million to R9
million. This was almost exclusively as a result of organic growth in certain
associate companies that performed well.
There was a slight benefit from the improved effective taxation rate of 25% in
the current year as compared to the 28% in the prior year.
Minority interest charges have decreased marginally to R20 million (2002: R21
million), due to the lower profits from the Protector Group and the sale of
Glenrand M.I.B International Limited and IRCA (Pty) Limited, which both occurred
prior to year-end.
Balance sheet and cash flow
The interest bearing long-term debt to equity ratio of 16% for 2003 has reduced
from the 2002 ratio of 29%. Proceeds from the sale of our UK operations were
used to retire certain foreign debt held by Glensure Limited (our UK investment
company).
The cash generation ratio of 1,07 at 30 June 2003 demonstrates that our cash
generated from operations exceeds our reported profits before tax. The cash
outflow from investing activities is as a result of the sale of our UK
operations, whereby the cash received was exceeded by the value of cash disposed
of. The decrease in cash resources from R418 million in 2002 to R330 million in
2003 is as a result of the abovementioned sale and the increase in the Protector
Group overdraft balance. The current ratio improved, however, with a R15 million
increase over last year in the net current asset position.
STRATEGIC DEVELOPMENTS
Risk Advisory Services
Our continued strategy is to consider selective acquisitions, as we believe the
local broker market will experience consolidation in line with international
trends and the influence resulting from the consolidation of local insurance and
reinsurance companies.
Employee Benefits
We expect to see a far better operating performance delivered by our Employee
Benefits operation. This should be achieved as our successful new business
efforts during 2003 translate into revenue during 2004, the impact of the
changed healthcare legislation is now behind us and as a result of our
continuing focus on cost control.
Protector Group
Protector Group has positioned itself uniquely as an integrated health funding
and healthcare provider in the emerging healthcare market sector. The
significant investment incurred by Protector over the last two-year period has
been necessary in increasing its capacity and ability to grow its market share
aggresively going forward.
Notwithstanding the future prospects to which Protector are well geared, the
group, in assessing its future strategic direction, has determined that
Protector is not considered part of our core focus.
Furthermore, it is felt that Protector would benefit significantly by having a
direct Black Empowerment shareholder. The group is, therefore, in negotiations
regarding our equity interest in Protector as communicated in our cautionary
announcement dated 3 September 2003.
Prospects
We expect to see growth in headline earnings form the continuing operations for
the year ahead.
Declaration of final dividend
Notice is hereby given that a final dividend (No. 8) of 13 cents per share
(2002: 11 cents) has been declared. The following are the salient dates:
Last day to trade in order to
participate in the final dividend Friday, 26 September 2003
Trading on or after this date
will be ex the final dividend Monday, 29 September 2003
Record date Friday, 3 October 2003
Payment date Monday, 6 October 2003
On payment date, if so mandated, dividends due to holders of certificated
securities will either be transferred electronically to bank accounts or,
alternatively, cheques will be posted to their registered addresses.
Dividends in respect of dematerialised shareholdings will be credited to
shareholders" accounts with their Central Securities Depository Participant
(CSDP) or broker.
Shareholders may not dematerialise or rematerialise their holdings
of ordinary shares between Monday, 29 September 2003 and Friday, 3 October 2003,
both dates inclusive.
On behalf of the board of directors
A W Mansfield
(Chairman - Non-executive)
D J Harpur
(Chief Executive Officer)
3 September 2003
DIRECTORATE
AWMansfield (Chairman), D JHarpur (Chief Executive Officer), ESGvon Roretz
(Chief Operating Officer) GCBeaver, RGCottrell, GTFerreira, GRGeorge, MPHutton,
CWKeey, JHHenderson, Dr MFKunene, MDWRyan, MBMartin (Alt), BHSeach, GMunro
(Alt). Group secretary: EPrice.
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 Limited, 70 Marshall Street, Johannesburg 2001. PO Box 61051,
Marshalltown 2107. Tel (011) 370-7700. Fax (011) 688-7715
Date: 03/09/2003 01:06:12 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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