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Glenrand MIB - Reviewed Year-End Results For The Year Ended 30 June 2004
GLENRAND M.I.B LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 1997/008001/06)
SHARE CODE: GMB ISIN: ZAE000018529
(`GLENRAND M.I.B`)
- 12% INCREASE IN TRADING PROFIT FROM CONTINUING OPERATIONS TO R129 MILLION
- 14 CENTS ANNUAL DIVIDEND DECLARED
REVIEWED YEAR-END RESULTS FOR THE YEAR ENDED 30 JUNE 2004
OPERATIONAL REVIEW
BUSINESS REVIEW
Our business
Glenrand MIB is a leading provider of insurance broking and benefit consulting
services to a range of South African and international clients.
FINANCIAL REVIEW
Overview
The results for the year at the operational level reflect continued growth. Our
continuing operating revenue has increased by 11% to R597 million and the
trading profit from continuing operations has improved by 12% to R129 million.
In accordance with the trading update issued recently, headline earnings are
marginally down from 33,3 cents as at 30 June 2003 to 32,0 cents.
Income statement
The Africa Risk Advisory Services Division has continued to deliver a solid
performance for the current year with revenues growing by 11% to R518 million
and trading profits by 14% to R138 million. All strategic business units within
Risk Services contributed to this growth.
Benefit Services has produced a trading loss of R9 million from a revenue base
of R76 million. A significant amount of one-off costs relating to the
recruitment and retrenchment of staff, as a result of the restructuring within
the company, have been incurred. The employment of additional highly qualified
staff has increased the cost base, and it is anticipated that the benefits from
this investment will only be achieved in the 2005 financial year. Further
additional costs have been incurred in the establishment of new products and
services within the company to generate additional revenue streams.
The decrease in the associate earnings by 27% to R6,8 million has been impacted
mainly by the poor performance of Swicon (Pty) Limited, the payroll management
company.
The group has incurred significant non-headline expenses, which have decreased
the earnings per share to 15,2 cents for the current year. In line with our
decision to exit non-core investments, we disposed of our investment in the
Protector Group, and this resulted in a capital loss. The associate investment
in Swicon has been impaired to reflect the value expected to be achieved on its
disposal. Increased goodwill write-offs have occurred to reflect certain
investments at their correct carrying value. A further write-down was required
as a result of the prior year sale of IRCA.
The effective taxation rate, in respect of headline earnings, is 34%.
The improved performances by certain of the underwriting management companies in
which we have investments have resulted in the increased minority interest
charge.
AC139: Share-based payments is relevant for the group for the June 2006
financial year. This accounting statement requires the cost of share options to
be recognised in the income statement. We have decided to disclose the cost of
these share options in our 2004 financials. To this end the cost for the current
and prior year is R0,5 million and R0,3 million respectively and the impact on
headline earnings, had these costs been accounted for, would not be material.
Balance sheet and cash flow
The sale of the Protector Group has had a significant impact on the group
balance sheet.
The gearing of the company has reduced to 3% with the decrease of R38 million in
interest-bearing long-term liabilities. The liquidity position of the group has
improved over the prior year.
The trading results continue to generate strong cash flows as demonstrated by
our cash generated from operations. Proceeds from the sale of the Protector
Group have enhanced cash resources for the year.Own cash increased by R110
million to R241 million at 30 June 2004. As a result, the final dividend has
been declared at 14 cents, giving a total increased dividend of 25 cents for the
year.
STRATEGIC DEVELOPMENT
Empowerment
Discussions to extend the empowerment investors who will bring value continue.
Certain parties have been identified to enhance present arrangements. It is
expected that this development will be achieved by June 2005.
Risk Advisory Services
This comprises short-term and reinsurance broking and underwriting management
services and this area of activity has performed well. Appropriate empowerment
and strong international linkages are strategic imperatives for sustainability.
Overall prospects in this business are positive.
Benefit Services
Although no turnaround was expected in the year to June 2004, the costs in
laying a foundation for the future were higher than anticipated, impacting on
the June 2004 results. Prospects of a positive contribution to June 2005 and
beyond are good.
Focus
The group as a whole has refocused its energies on core insurance broking and
underwriting management services. This focus will underpin future strategic
development.
PROSPECTS
The group is expected to achieve real growth in headline earnings per share for
June 2005.
DECLARATION OF FINAL DIVIDEND
Notice is hereby given that a final dividend (No. 10) of 14 cents per share
(2003: 13 cents) has been declared. The following are the salient dates:
Last day to trade in order to participate
in the final dividend Friday, 1 October 2004
Trading on or after this date will be ex
the final dividend Monday, 4 October 2004
Record date Friday, 8 October 2004
Payment date Monday, 11 October 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, 4 October 2004 and Friday, 8 October 2004, both dates
inclusive.
On behalf of the board of directors
A W Mansfield D J Harpur
(Chairman - Non-executive) (Chief Executive Officer)
8 September 2004
INCOME STATEMENT
for the year ended 30 June 2004
Reviewed Audited
Year ended Year ended
30 June 30 June
2004 % 2003
Note R`000 Change R`000
Operating revenue 4 671 150 917 021
- continuing 596 747 11 535 354
- discontinued 3 74 403 381 667
Operating expenses (541 409) (783 483)
- continuing (467 905) 11 (420 284)
- discontinued 3 (73 504) (363 199)
Trading profit 129 741 133 538
- continuing 128 842 12 115 070
- discontinued 3 899 18 468
Interest paid (8 832) (12 192)
Operating profit 120 909 121 346
Income from associates 6 856 9 346
Profit before
non-trading items 127 765 130 692
Non-operating income 5 361 5 822
Headline adjusting items 5 (41 037) 5 075
Profit before taxation 92 089 141 589
- continuing 92 532 (26) 124 389
- discontinued 3 (443) 17 200
Taxation 6 (44 855) (35 751)
Profit after taxation 47 234 105 838
Minority interest (10 835) (19 884)
- continuing (10 478) (8 383)
- discontinued 3 (357) (11 501)
Profit attributable
to shareholders 36 399 85 954
Headline earnings per share,
fully diluted (cents) 32,0 (4) 33,3
Earnings per share,
fully diluted (cents) 15,2 (58) 36,2
Number of shares
- issued (000`s) 242 046 238 546
- weighted average,
fully diluted (000`s) 240 237 237 274
BALANCE SHEET
as at 30 June 2004
Reviewed Audited
Year ended Year ended
30 June 30 June
2004 2003
Note R`000 R`000
Assets
Fixed assets 46 143 184 805
Goodwill and other intangibles 33 748 22 706
Deferred taxation 24 458 35 803
Investments 51 464 60 570
Current assets 706 183 752 702
Total assets 861 996 1 056 586
Equity and liabilities
Ordinary shareholders` funds 205 370 226 570
Cost of shares held by subsidiary (2 084) (2 084)
Minority interest 21 959 41 940
Deferred taxation 260 93
Long-term liabilities 7 34 792 67 976
Current liabilities 601 699 722 091
Total equity and liabilities 861 996 1 056 586
STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2004
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 reserve
fund - - 1 (1) -
Translation of
foreign subsidiaries - - 12 923 - 12 923
Shared earnings of
associates - - 7 820 (7 820) -
Profit attributable
to shareholders - - - 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 70 6 157 - - 6 227
Consolidation of
share option trust (16) (1 513) - 296 (1 233)
Translation of
foreign subsidiaries - - (4 665) - (4 665)
Shared earnings of
associates - - (6 112) 6 112 -
Cash flow hedge (640) (640)
Profit attributable
to shareholders - - - 36 399 36 399
Dividends - - - (57 288) (57 288)
Balance as at
30 June 2004 4 825 40 198 40 507 119 840 205 370
CASH FLOW STATEMENT
for the year ended 30 June 2004
Reviewed Audited
Year ended Year ended
30 June 30 June
2004 2003
R`000 R`000
Cash generated from operations 152 779 151 023
- continuing 151 089 146 531
- discontinued 1 690 4 492
Movement in working capital (19 853) (1 474)
Taxation paid (36 773) (50 948)
Dividends paid (57 288) (50 040)
Cash available from operating activities 38 865 48 561
Cash generated (utilised) by investing
activities 25 225 (128 135)
Cash generated (utilised) by financing
activities 15 726 (39 628)
Net increase (decrease) in cash and
cash equivalents 79 816 (119 202)
Cash and cash equivalents at beginning
of year 298 898 418 100
Cash and cash equivalents at end of year 378 714 298 898
SEGMENTAL ANALYSIS
for the year ended 30 June 2004
Reviewed Audited
Year ended Year ended
30 June 30 June
2004 2003
R`000 R`000
Segmental revenues
Risk advisory services 520 445 640 063
Africa 518 458 467 708
United Kingdom 1 987 167 206
International - other - 5 149
Risk management and technology - 44 556
Africa - 43 951
International - other - 605
Benefit services, healthcare and
medical services 150 705 232 402
Africa 150 705 232 402
Total segmental revenues 671 150 917 021
Segmental profits
Risk advisory services 137 541 130 767
Africa 138 369 121 145
United Kingdom (828) 8 895
International - other - 727
Risk management and technology - 3 040
Africa - 3 154
International - other - (114)
Benefit services, healthcare and
medical services (7 800) (269)
Africa (7 800) (269)
Total segmental profits 129 741 133 538
Notes
1. Basis of accounting
The accounting policies as set out in the 2003 annual report comply with South
African Statements of Generally Accepted Accounting Practice and have been
consistently applied in producing the results, except to comply with AC132:
Consolidated Financial Statements. The Glenmib Employee Scheme Trust, which
holds Glenrand MIB shares, is now consolidated. The prior year balance sheet has
not been restated as the financial effect is immaterial. Earnings per share in
the prior year have, however, been restated due to the decrease in the weighted
number of shares in issue. This change has no material effect on earnings in the
prior or current year.
Certain comparative figures have been restated in accordance with current year
classifications.
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 operations
Effective 1 December 2003, we disposed of our 65% held investment in Protector
Group.
4. Operating revenue
Reviewed Audited
Year ended Year ended
30 June 30 June
2004 2003
R`000 R`000
Includes: Investment income 55 100 53 542
5. Calculation of headline earnings
Profit attributable to shareholders 36 399 85 954
Add: Loss (Profit) on disposal
of investments 9 478 (14 187)
Add: Goodwill amortisation 10 884 (3 389)
Add: Provision for impairment of assets 20 675 7 640
Add: Post-retirement medical aid liability
relating to prior year - 4 861
Add: Taxation effect 145 (1 983)
Less: Minority shareholders` effect (689) 210
Headline earnings 76 892 79 106
6. Taxation
Reviewed Audited
Year ended Year ended
30 June 30 June
2004 2003
R`000 R`000
The group`s tax charge comprises
the following:
SA normal taxation 43 917 23 762
SA deferred taxation (10 102) (1 937)
STC 6 684 5 940
Foreign taxation 1 223 1 368
Discontinued (349) 5 365
Associates` taxation 3 482 1 253
44 855 35 751
7. Long-term liabilities
Interest bearing 5 896 43 596
Non-interest bearing 28 896 24 380
34 792 67 976
DIRECTORATE
A W Mansfield(Chairman), D J Harpur*(Chief Executive Officer), E S G von
Roretz*(Chief Operating Officer), T Boesch*, R G Cottrell, G T Ferreira, Dr M F
Kunene*, M J Leeming, Y Z Simelane
Group secretary: E Price.
*Executive
Registered office
288 Kent Avenue - 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 Investor Services 2004 (Pty) Limited - 70 MarshallStreet -
Johannesburg 2001 - PO Box 61051 - Marshalltown 2107 - South Africa -
Tel(011)370-5000 - Fax(011)688-7715
Date: 08/09/2004 04:09:22 PM Produced by the JSE SENS Department
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