| Wed 7 Sep 2005, 15:50 | | Glenrand M I B - Company Press Release |
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Glenrand M I B - Company Press Release
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` or `the Company`)
Glenrand M.I.B reports lower profits, modest growth in revenue
Insurance broking and benefit consulting group Glenrand M.I.B reported a 61%
drop in headline earnings per share to 11,8 cents (2004: 30,3 cents) for the
year to 30 June 2005. Group after-tax profit declined to R23,2 million (2004:
42,9 million).
The group`s results were impacted by the unusual concurrence of declining
interest rates and softening insurance rates. Typically, insurance rates harden
when interest rates fall, but the South African insurance sector is in the
unusual position of seeing both weaken simultaneously.
The decline was also due to sharply higher expenses in Benefit Services, and
balance sheet impairments and write-offs of R20,8 million.
CEO Steve von Roretz says while the domestic economy is reasonably buoyant, and
demand for insurance products is improving, competition for this business is
intensifying as established market participants fight to retain market share
against new entrants.
Revenue from continuing operations grew 5% to R617,5 million (2004: R585,8
million), helped by a 32% revenue gain in Benefit Services, though overall
revenue growth was impacted by a 21% decline in the Reinsurance Consultants
division. Benefit Services` 55% increase in expenses resulted in the loss from
this division increasing to R31,5 million. This increase in expenses was
required to rectify the shortcomings in the performance and management of the
administration business.
Von Roretz says there were some positive features in the results: `Most
divisions did well to contain operating expenses, our core Risk Advisory
business managed to maintain its revenue base in the face of intense competition
and declining interest rates and, despite the increased loss in Benefit
Services, we now have the systems, skills and market presence to build this into
a sound business going forward.`
Von Roretz says Benefit Services should return to at least break-even in the
forthcoming year, which will have a very positive impact on the bottom line.
`We remain committed to Benefit Services despite its poor financial performance
during the period under review, as we are firm in our view that this will
develop into a substantial contributor to the bottom line in the medium term,`
he says.
A new CEO, Greg Morris, has been appointed to head up Benefit Services, which
now has arguably one of the most advanced IT systems in the industry with the
capability of offering clients individual investment choice.
The Underwriting division had an excellent year, though Reinsurance Consultants
reported a decrease in income due to the weaker trading environment, aggravated
by increased local competition.
Risk advisory expenses were well contained despite the increased costs of
regulatory compliance associated with new legislation such as the Financial
Advisory and Intermediaries (FAIS) Act and the Financial Intelligence Centre Act
(FICA).
A thorough review of the carrying value of all assets in the group was
undertaken during the year, resulting in impairments to investments totaling R21
million and a write-off of R6,3 million on unutilised software. This was
partially offset by a profit of R6,5 million on the disposal of an investment,
bringing the total impairments and write-offs for the year to R20,8 million.
The group paid an effective tax rate of 46,7% after adjusting for headline
items, which was higher than the previous year due to the deferred tax asset on
losses from Benefit Services not being raised.
The balance sheet shows gearing unchanged at 3%, and an increase in fixed assets
and R3,3 billion in policyholder funds arising from the acquisition of Ten-50-
Six Life Limited, which provides policy-linked investments for retirement funds
through the use a life licence, which does not assume risk, but is used for the
pooling of funds to be invested.
A dividend of 15 (fifteen) cents has been declared for the year.
Von Roretz says a much improved performance from Benefit Services is expected in
the coming financial year, while Risk Advisory Services is poised to resume its
growth path. `We now have a very solid platform for growth going forward, and
expect to show improved performance in the year ahead.`
Ends
ISSUED FOR: GLENRAND M.I.B LIMITED
CONTACT : Steve von Roretz, CEO: 011 329 1427 / 083 326 6319
FAX NO : 011 293 2755
E-MAIL : svonroretz@glenrandmib.co.za
WEBSITE : www.glenrandmib.co.za
ISSUED BY : TISH STEWART PR ASSOCIATES
CONTACT : Tish Stewart: 011 325 4195 / 082 443 6399
FAX NO : 011 325 4199
E-MAIL : tish@tspr.co.za
DATE : 08 September 2005
Date: 07/09/2005 03:30:34 PM\
Produced by the JSE SENS Department
