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Glenrand M.i.b. Limited - Unaudited Interim Report For The Six Months Ended
Release Date: 18/02/2004 12:57:53 Code(s): GMB
GLENRAND M.I.B. LIMITED - UNAUDITED INTERIM REPORT FOR THE SIX MONTHS ENDED
31 DECEMBER 2003
Glenrand M.I.B Limited
Service beyond expectation
Incorporated in the Republic of South Africa
(Registration number 1997/008001/06)
(`Glenrand M.I.B" or `the group")
JSE Share Code: GMB
ISIN: ZAE000018529
UNAUDITED INTERIM REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2003
Headline earnings per share up 18%
Continuing trading profit up 33%
INCOME STATEMENT
for the six months ended 31 December 2003
Unaudited Audited
6 months ended Year ended
31 December 30 June
2003 2002 2003
Note R"000 R"000 R"000
Operating revenue 3 357 656 483 267 917 021
- continuing 283 829 253 018 535 354
- discontinued/discontinuing 2 73 827 230 249 381 667
Operating expenses (304 314) (431 870) (783 483)
- continuing (230 810) (213 074) (420 284)
- discontinued/discontinuing 2 (73 504) (218 796) (363 199)
Trading profit 53 342 51 397 133 538
- continuing 53 019 39 944 115 070
- discontinued/
discontinuing 2 323 11 453 18 468
Interest paid (6 776) (5 283) (12 192)
Operating profit 46 566 46 114 121 346
Income from associates 2 858 5 506 9 346
Profit before non-trading
items 49 424 51 620 130 692
Non-operating income 2 388 2 554 5 822
Headline adjusting items 4 1 201 1 299 5 075
Profit before taxation 53 013 55 473 141 589
- continuing 53 456 40 815 124 389
- discontinued/
discontinuing 2 (443) 14 658 17 200
Taxation 5 (20 656) (20 871) (35 751)
Profit after taxation 32 357 34 602 105 838
Minority interest (3 115) (10 392) (19 884)
- continuing (2 758) (1 693) (8 383)
- discontinued/discontinuing 2 (357) (8 699) (11 501)
Profit for the period 29 242 24 210 85 954
Headline earnings per share,
fully diluted (cents) 11,6 9,8 33,2
Earnings per share, fully
diluted (cents) 12,1 10,1 36,1
Number of shares
- issued (000"s) 240 046 238 546 238 546
- weighted average,
fully diluted (000"s) 241 491 238 794 238 335
BALANCE SHEET
as at 31 December 2003
Unaudited Audited
31 December 30 June
2003 2002 2003
Note R"000 R"000 R"000
Assets
Fixed assets 185 550 201 744 184 805
Goodwill and other intangibles 68 315 34 678 22 706
Deferred taxation 45 802 40 757 42 879
Investments 75 840 24 359 60 570
Current assets 603 104 1 131 123 783 923
Total assets 978 611 1 432 661 1 094 883
Equity and liabilities
Ordinary shareholders"
funds 224 498 171 545 226 570
Cost of shares held by
subsidiary (2 084) (2 084) (2 084)
Minority interest 44 292 63 831 41 940
Deferred taxation 7 169 7 986 7 169
Long-term liabilities 6 90 675 64 448 67 976
Current liabilities 614 061 1 126 935 753 312
Total equity and liabilities 978 611 1 432 661 1 094 883
CASH FLOW STATEMENT
for the six months ended 31 December 2003
Unaudited Audited
6 months ended Year ended
31 December 30 June
2003 2002 2003
R"000 R"000 R"000
Cash generated from operations 61 056 64 710 151 023
- continuing 59 366 44 191 146 531
- discontinued/discontinuing 1 690 20 519 4 492
Movement in working capital (65 810) 31 052 29 747
Taxation paid (12 442) (12 368) (50 948)
Dividends paid (31 011) (26 185) (50 040)
Cash (utilised by) available
from operating activities (48 207) 57 209 79 782
Cash utilised by investing
activities (33 264) (24 408) (128 135)
Cash generated (utilised)
by financing activities 11 759 (7 385) (39 628)
Net decrease in cash and
cash equivalents (69 712) 25 416 (87 981)
Cash and cash equivalents
at beginning of year 330 119 418 100 418 100
Cash and cash equivalents at
end of period 260 407 443 516 330 119
STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 December 2003
Non-
distribut-
Share Share able Retained
R"000 capital premium reserves earnings Total
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
Ordinary shares
issued 30 2 604 - - 2 634
Translation of
foreign
subsidiaries - - (2 937) - (2 937)
Shared earnings
of associates - - 1 573 (1 573) -
Profit for the
period - - - 29 242 29 242
Dividends - - - (31 011) (31 011)
Balance as at
31 December 2003 4 801 38 158 49 920 131 619 224 498
SEGMENTAL ANALYSIS
for the six months ended 31 December 2003
Unaudited Audited
6 months ended Year ended
31 December 30 June
2003 2002 2003
R"000 R"000 R"000
Segmental revenues
Risk advisory services 250 735 321 877 640 063
Africa 249 807 222 447 467 708
United Kingdom 928 95 530 167 206
International - other - 3 900 5 149
Risk management and technology - 42 936 44 556
Africa - 42 331 43 951
International - other - 605 605
Benefit consulting, healthcare and
medical services 106 921 118 454 232 402
Africa 106 921 118 454 232 402
Total segmental revenues 357 656 483 267 917 021
Segmental profits
Risk advisory services 56 919 45 854 130 767
Africa 57 457 42 819 121 145
United Kingdom (538) 2 435 8 895
International - other - 600 727
Risk management and technology - 3 999 3 040
Africa - 4 113 3 154
International - other - (114) (114)
Benefit consulting, healthcare and
medical services (3 577) 1 544 (269)
Africa (3 577) 1 544 (269)
Total segmental profits 53 342 51 397 133 538
Notes:
1. BASIS OF ACCOUNTING
These consolidated condensed interim financial statements are prepared in
accordance with AC127: Interim Financial Reporting and South African
Statements of Generally Accepted Accounting Practice. The accounting
policies applied are consistent with those of the prior reporting period.
Certain comparative figures have been restated in order to reflect the
Protector Group as a discontinuing operation.
2. DISCONTINUED/DISCONTINUING OPERATIONS
The results and balance sheet of Protector Group (Pty) Limited have been
consolidated until 1 December 2003, the effective date of the sale. Once
approval has been obtained from the Competition Commission, the sale will
be effected in the accounts.
The results of the Protector Group are recorded as a discontinuing
operation. The net asset value of the Protector Group included in the
balance sheet as at 31 December 2003 is R59 million.
3. OPERATING REVENUE
Unaudited Audited
6 months ended Year ended
31 December 30 June
2003 2002 2003
R"000 R"000 R"000
Includes:
Investment income 26 046 26 276 53 542
4. CALCULATION OF HEADLINE EARNINGS
Unaudited Audited
6 months ended Year ended
31 December 30 June
2003 2002 2003
R"000 R"000 R"000
Profit for the period 29 242 24 210 85 954
Less: Profit on disposal of
investments (1 417) (377) (14 187)
Add: Goodwill amortisation 216 (922) (3 389)
Add: Provision for impairment
of investment - - 3 788
Add: Provision for impairment
of asset - - 3 852
Add: Post-retirement medical aid
liability relating to prior year - - 4 861
Less: Taxation effect - - (1 983)
Less: Minority shareholders" effect (35) 509 210
Headline earnings 28 006 23 420 79 106
5. TAXATION
Unaudited Audited
6 months ended Year ended
31 December 30 June
2003 2002 2003
R"000 R"000 R"000
The group"s tax charge comprises:
SA normal taxation 14 759 11 532 23 762
SA deferred taxation 1 200 1 200 (1 937)
STC 3 449 2 773 5 940
Foreign taxation 922 520 1 368
Discontinued/discontinuing (488) 3 449 5 365
Associates" taxation 814 1 397 1 253
20 656 20 871 35 751
6. LONG-TERM LIABILITIES
Interest bearing 66 944 57 669 43 596
Non-interest bearing 23 731 6 779 24 380
90 675 64 448 67 976
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
and selected financial products.
FINANCIAL REVIEW
Overview
We are pleased to report an increase in headline earnings of 18% over the same
period last year. Our core continuing operations continue to generate profits
and strong cash flows.
Income Statement
The trading profit from continuing operations has increased by 33% over the same
period for the prior year. The improvement in the trading margin to 14,9% from
10,6% as at 31 December 2002 is as a result of revenue gains as well as focused
cost containment. The decrease in interest rates has not materially affected
revenue due to better management of cash resources over this period.
The Africa Risk advisory services division has delivered an increase in trading
profit of 35% to R57 million over the prior period, partly attributable to the
revenue increase of 12% to R249 million for the current period.
The Benefit consulting, healthcare and medical services division has delivered a
further trading loss of R4 million against the trading profit of R2 million for
the prior period.
The contribution from associate companies has decreased from that of the prior
year as a result of the disposal of certain associate companies.
The disposal of certain operations has positively impacted the minority interest
charge.
Balance Sheet And Cash Flow
The interest bearing long-term debt to equity ratio of 25% has increased from
16% as at 30 June 2003. This has been as a result of the increase in long-term
liabilities in the Protector Group, which have been utilised to reduce their
bank overdraft.
The cash generation ratio of 1,15 has improved against the ratio of 1,07 as at
30 June 2003.
STRATEGIC DEVELOPMENTS
Directorate
In line with our commentary in our 2003 annual report that we would be reducing
the number of executive directors on the board, and in order to comply with the
King Report on Corporate Governance for South Africa - 2002, Mr J H Henderson
(non-executive), Mr M P Hutton (executive), Mr C W Keey (non-executive), Mr M D
W Ryan (executive), Mr B H Seach (executive), Mr M B Martin (alternate) and Mr G
Munro (alternate) have all resigned as directors, and Mrs Y Z Simelane has been
appointed as an independent non-executive director, all with effect from
18 February 2004. Ms T Ross has been appointed as Group Financial Director, also
with effect from 18 February 2004. The executive directors will remain with the
group, with Mr B H Seach participating in the Group Executive Committee.
Risk Advisory Services
This comprises corporate, commercial, high-volume short-term insurance broking
and reinsurance broking. This area has undergone a realignment and will continue
to focus on improving its margins, considering selected acquisitions, upgrading
intellectual capital and seeking strong international linkages. The positive
performance is expected to continue to 30 June 2004.
Benefit Services
We are continuing the process of developing this area following an extended
period of underperformance. Long-term prospects are positive but the turnaround
is not expected by 30 June 2004.
Protector Group
We have reached agreement to sell Protector subject to final Competition
Commission approval. It is anticipated that this approval will be granted before
30 June 2004.
PROSPECTS
We expect to see growth in headline earnings from continuing operations for the
full year.
Declaration Of Interim Dividend
Notice is hereby given that an interim dividend (No. 9) of 11 cents per share
(2003: 10 cents) has been declared. The following are the salient dates:
Last day to trade in order to participate
in the interim dividend - Friday, 5 March 2004
Trading on or after this date will be
ex the interim dividend - Monday, 8 March 2004
Record date - Friday, 12 March 2004
Payment date - Monday, 15 March 2004
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, 8 March 2004 and Friday, 12 March 2004, both dates
inclusive.
On behalf of the board of directors
A W Mansfield
(Chairman - Non-executive)
D J Harpur
(Chief Executive Officer)
18 February 2004
Directorate:
AWMansfield (Chairman), D JHarpur (Chief Executive Officer), E S Gvon Roretz
(Chief Operating Officer), RGCottrell, GTFerreira, Dr M F Kunene, T Ross,
Y Z Simelane.
Group Secretary:
E. Price.
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 Limited,
70 Marshall Street,
Johannesburg 2001.
PO Box 61051, Marshalltown 2107
Tel: (011) 370-5000
Fax: (011) 688-7721
Sponsor:
Nedbank Corporate
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