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Glenrand MIB - Unaudited Interim Results For The Six Months Ended 31 December
2004
Glenrand MIB Limited
Incorporated in the Republic of South Africa
(Registration number 1997/008001/06)
JSE share code GMB ISIN ZAE000018529
(`Glenrand MIB` or `the group`)
Service beyond expectation
11 cents interim dividend declared
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 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
Continuing revenues increased by 5% to R292 million for the six months to 31
December 2004, while the trading profit declined by 6% to R50 million for the
same period. In accordance with the trading update recently issued, headline
earnings per share decreased to 9,7 cents as at 31 December 2004, from 11,6
cents in the prior period.
Income statement
Trading profit has been impacted as follows:
The Africa Risk Advisory Services segment showed a decline in revenues of 3% for
the six month period to 31 December 2004. This shortfall was predominantly as a
result of lower organic growth, as well as a 17% decrease in interest earnings
for the period. Lost business and one-off income not repeated in the current
period also had an impact, particularly in the Reinsurance area of the business.
General cost containment continued to remain a focus. Investments in
underwriting management services continued to deliver strong revenues and
trading profits.
The Benefit Services segment produced a pleasing result with the continuing
revenues increasing by 49% to R49 million for the period ended 31 December 2004.
The segmental loss decreased to R1,6 million from R3,9 million. The additional
revenues have predominantly been as a result of new business gains as well as
better collections on existing business.
Income from associates was down from the prior period due to the negative
results of Websoft, an IT company, and Swicon, the payroll administration
company.
Headline adjusting items included the impairment of certain IT development
costs, approximating R6 million, and impairment on the carrying value of Websoft
of R3 million, which negatively impacted attributable earnings. As referred to
in Note 1 Basis of accounting, the adoption of AC 140: Business Combinations
resulted in the previous goodwill amortisation charge being replaced by an
impairment of the goodwill in the current period.
Continuing minority interest charges increased as a result of the above-
mentioned improved performances in certain of the underwriting management
services companies.
Balance sheet and cash flow
The 31 December 2003 balance sheet includes the Protector Group.
The interest bearing long-term debt to equity ratio maintained a level of 3%
from 30 June 2004. The group remains in a cash positive position and continues
to be cash generative.
STRATEGIC DEVELOPMENTS
Empowerment
The target of at least 25% Empowerment shareholding by June 2005 remains a
priority. A BEE strategy document has been developed with the Financial Sector
Charter.
Risk Advisory Services
In recognition of market positioning and strategic requirements and following
recent market developments in the USA, it is intended to operationally separate
Underwriting Management Services and Reinsurance from the core short-term
broking and consulting business. International linkages and empowerment remain
key strategic imperatives. Subject to the identification of appropriate broking
businesses or books of business, acquisition as a growth strategy continues to
be a commitment.
Benefit Services
This business continues to show significant positive turnaround signs. New
personnel and products, as well as enhanced systems, are making an impact. The
recent suspension of the CEO of this business is being managed.
Prospects
As announced in our trading update, it is not anticipated that real growth will
be achieved in the year ending June 2005 given the income performance at half
year.
Declaration of INTERIM dividend
Notice is hereby given that an interim dividend (No. 11) of 11 cents per share
(2004: 11 cents) has been declared. The following are the salient dates:
Last day to trade in order to participate in the interim dividend
Friday, 11 March 2005
Trading on or after this date will be ex the interim dividend
Monday, 14 March 2005
Record date Friday, 18 March 2005
Payment date Tuesday, 22 March 2005
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, 14 March 2005 and Friday, 18 March 2005, both dates
inclusive.
On behalf of the board of directors
A W Mansfield D J Harpur
(Chairman - Non-executive) (Chief Executive Officer)
25 February 2005
Income Statement
for the six months ended 31 December 2004
Unaudited Audited
6 months ended Year ended
31 December 30 June
2004 2003 2004
Note R`000 R`000 R`000
Operating revenue 3 291 872 357 656 671 150
- continuing 291 872 278 820 585 847
- discontinued 2 - 78 836 85 303
Operating expenses (241 888) (304 314) (541 409)
- continuing (241 888 (226 325) (458 515)
- discontinued 2 - (77 989) (82 894)
Trading profit 49 984 53 342 129 741
- continuing 49 984 52 495 127 332
- discontinued 2 - 847 2 409
Interest paid (4 774) (6 776) (8 832)
Operating profit 45 210 46 566 120 909
Income from associates 1 476 2 858 6 856
Profit before non-trading
items 46 686 49 424 127 765
Non-operating income 2 315 2 388 5 361
Headline adjusting items 4 (8 834) 1 201 (41 037)
Profit before taxation 40 167 53 013 92 089
- continuing 40 167 53 090 91 029
- discontinued 2 - (77) 1 060
Taxation 5 (20 858) (20 656) (44 855)
Profit after taxation 19 309 32 357 47 234
Minority interest (4 116) (3 115) (10 835)
- continuing (4 116) (2 479) (9 852)
- discontinued 2 - (636) (983)
Profit attributable
to shareholders 15 193 29 242 36 399
Headline earnings per
share,fully diluted
(cents) 9,7 11,6 32,0
Earnings per share, fully
diluted (cents) 6,3 12,1 15,2
Number of shares
- issued (000`s) 243 096 240 046 242 046
- weighted average,
fully diluted (000`s) 242 993 241 491 240 237
Balance Sheet
as at 31 December 2004
Unaudited Audited
31 December 30 June
2004 2003 2004
Note R`000 R`000 R`000
Assets
Fixed assets 55 166 185 550 46 143
Goodwill and other
intangibles 55 267 68 315 33 748
Deferred taxation 23 593 45 802 24 458
Investments 16 774 75 840 51 464
Current assets 577 277 603 104 706 183
Total assets 728 077 978 611 861 996
Equity and liabilities
Ordinary shareholders`
funds 192 703 224 498 205 370
Cost of shares held by
subsidiary (2 084) (2 084) (2 084)
Minority interest 14 671 44 292 21 959
Deferred taxation 256 7 169 260
Long-term liabilities 6 33 518 90 675 34 792
Current liabilities 489 013 614 061 601 699
Total equity and
liabilities 728 077 978 611 861 996
Statement of Changes in Equity
for the six months ended 31 December 2004
Non-
distribut-
Share Share able Retained
R`000 capital premium reserves earnings Total
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)
Cash flow hedge - - - (640) (640)
Translation of
foreign
subsidiaries - - (4 665) - (4 665)
Shared earnings
of associates - - (6 112) 6 112 -
Profit attributable
to shareholders - - - 36 399 36 399
Dividends - - - (57 288) (57 288)
Balance as at
30 June 2004
- As previously
reported 4 825 40 198 40 507 119 840 205 370
- Adoption of
AC140 - - - 5 706 5 706
Balance as at
1 July 2004 4 825 40 198 40 507 125 546 211 076
Ordinary shares
issued 11 1 063 - - 1 074
Consolidation
of share option
trust 12 1 094 - - 1 106
Cash flow hedge - - - 640 640
Translation of
foreign
subsidiaries - - (2 585) - (2 585)
Shared earnings
of associates - - (322) 322 -
Profit
attributable to
shareholders - - - 15 193 15 193
Dividends - - - (33 801) (33 801)
Balance as at
31 December 2004 4 848 42 355 37 600 107 900 192 703
Cash Flow Statement
for the six months ended 31 December 2004
Unaudited Audited
6 months ended Year ended
31 December 30 June
2004 2003 2004
R`000 R`000 R`000
Cash generated from operations 55 514 61 056 152 779
- continuing 55 514 58 747 149 388
- discontinued - 2 309 3 391
Movement in working capital (53 340) (65 810) (19 853)
Taxation paid (15 416) (12 442) (36 773)
Dividends paid (33 801) (31 011) (57 288)
Cash (utilised by) available from
operating activities (47 043) (48 207) 38 865
Cash (utilised) generated by
investing activities (16 021) (33 264) 25 225
Cash generated from financing
activities 879 11 759 15 726
Net (decrease) increase in cash
and cash equivalents (62 185) (69 712) 79 816
Cash and cash equivalents at
beginning of year 378 714 330 119 298 898
Cash and cash equivalents at
end of year 316 529 260 407 378 714
Segmental Analysis
for the six months ended 31 December 2004
Unaudited Audited
6 months ended Year ended
31 December 30 June
2004 2003 2004
R`000 R`000 R`000
Segmental revenues
Risk advisory services 242 700 250 735 520 445
Africa 241 645 249 807 518 458
United Kingdom 1 055 928 1 987
International - other - - -
Benefit services
(2003: Benefit services,
healthcare and medical services) 49 172 106 921 150 705
Africa 49 172 106 921 150 705
Total segmental revenues 291 872 357 656 671 150
Segmental profits
Risk advisory services 51 553 56 919 137 541
Africa 51 881 57 457 138 369
United Kingdom (328) (538) (828)
International - other - - -
Benefit services
(2003: Benefit services,
healthcare and medical services) (1 569) (3 577) (7 800)
Africa (1 569) (3 577) (7 800)
Total segmental profits 49 984 53 342 129 741
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 used in preparing the financial information are
consistent with those of the previous year except for the adoption of AC140:
Business Combinations.
In respect of acquisitions prior to 31 March 2004, the group has ceased the
amortisation of goodwill from 1 July 2004. Goodwill at this date is now included
on the basis of its deemed cost, which represents the cost of goodwill less
accumulated amortisation at 30 June 2004.
In respect of acquisitions post 31 March 2004, goodwill is stated at cost less
any accumulated impairment losses. Goodwill is allocated to cash-generating
units and is no longer amortised but is tested annually for impairment. In
respect of associates, the carrying amount of goodwill is included in the
carrying amount of the investment in the associate.
Negative goodwill arising on an acquisition is recognised directly in profit or
loss. Previously recognised negative goodwill has been derecognised resulting in
an increase of R5,7 million in retained earnings as at 1 July 2004.
Certain comparative figures have been restated in accordance with current year
classifications.
2. DISCONTINUED OPERATIONS
Effective 1 December 2003, the group disposed of its 65% held investment in
Protector Group.
3. OPERATING REVENUE
Unaudited Audited
6 months ended Year ended
31 December 30 June
2004 2003 2004
R`000 R`000 R`000
Includes:
Investment income 21 525 26 046 55 100
4. CALCULATION OF HEADLINE
EARNINGS
2004 2003 2004
R`000 R`000 R`000
Profit attributable to
shareholders 15 193 29 242 36 399
Add: Profit)/loss on disposal
of investments (5 813) (1 417) 9 478
Add: Goodwill amortisation - 216 10 884
Add: Provision for impairment
of assets 14 647 - 20 675
Add:Taxation effect - - 145
Less:Minority shareholders`
effect (433) (35) (689)
23 594 28 006 76 892
5. TAXATION
Unaudited Audited
6 months ended Year ended
31 December 30 June
2004 2003 2004
R`000 R`000 R`000
The group`s tax charge comprises
the following:
SA normal taxation 13 279 14 603 43 468
SA deferred taxation 865 1 200 (10 102)
STC 4 381 3 318 6 552
Foreign taxation 752 922 1 223
Discontinued - (201) 232
Associates` taxation 1 581 814 3 482
20 858 20 656 44 855
6. LONG-TERM LIABILITIES
Interest bearing 5 434 66 944 5 896
Non-interest bearing 28 084 23 731 28 896
33 518 90 675 34 792
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 +British
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 Marshall Street
Johannesburg 2001 PO Box 61051 Marshalltown 2107 South Africa
Tel (011) 370-5000 Fax (011) 688-7715
SPONSOR: Nedbank Capital
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