| Wed 31 May 2006, 15:06 | | Glenrand M.I.B Limited - Trading Statement And Ren |
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GMB
GMB
Glenrand M.I.B Limited - Trading Statement And Renewal Of Cautionary
Announcement
Glenrand M.I.B Limited
(a Licensed Financial Services Provider)
(Incorporated in the Republic of South Africa)
(Registration number 1997/008001/06)
Share Code: GMB & ISIN: ZAE000078010
("Glenrand M.I.B") ("the Company") or ("the Group")
TRADING STATEMENT AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
Trading statement
In terms of the JSE Limited Listings Requirements, companies are required to
publish a trading statement as soon as they are reasonably certain that the
financial results for the current reporting period will be more than 20%
different than that of the previous corresponding period.
In our Reviewed Interim Condensed Results for the six months ended 31 December
2005, dated 1 March 2006, we indicated that headline earnings per share (before
the effect of the BEE transaction) would reflect a significant improvement
compared to the 7.5 cents reported in the prior year.
We advise that the effect of the BEE transaction share based payments in terms
of IFRS2, revalued at transaction date 18 April 2006, has a headline earnings
impact of R20 million. The charge has no economic cost or dilutionary effect to
existing shareholders, or any impact on operating performance, net asset value
or the cash position of Glenrand M.I.B.
Headline earnings per share for the year ending 30 June 2006, including the
charge of R20 million for share based payments relating to the BEE transaction
referred to above, are expected to result in a headline loss of between 15,5 and
17 cents compared to the reported 7,5 cents in the prior year and earnings per
share are expected to be a profit of between 4,3 and 5,5 cents compared to the
reported 5,8 cents loss per share in the prior year.
Headline earnings per share for the year ending 30 June 2006, excluding the
charge of R20 million for share based payments referred to above, are expected
to result in a headline loss of between 7,7 and 9,2 cents and earnings per share
are expected to be a profit of between 12,1 and 13,3 cents.
This expected result is impacted by the combination of the underachievement of
new business, lost business and reduction in revenue on existing business, in
both the Risk Services and Benefit Services operations. In addition, increased
costs have been incurred relating to continuing legacy administration issues in
Benefit Services. As a result of the Benefit Services trading position, the
deferred tax asset balance of R4 million which arose in prior years has been
impaired.
The Board has reviewed all practices relating to bulking. The review has
established that our practices were transparent and clients were made aware of
our revenue gains, save in certain cases where administration follow-through had
not been fully documented. Other matters apart from the bulking issues have also
been reviewed, including commission levels and interest earnings relating to
bank account administration. The FSB has been kept fully informed. The Board has
decided to provide for all amounts potentially re-payable to clients as a result
of these activities, including interest. The expected result accordingly
includes a provision amounting to R18 million. It is expected that the
uncertainty regarding our approach and the position of the FSB will be settled
by 30 June 2006.
The expected result also accounts for an exposure of R8 million relating to
recently discovered fraudulent actions of a middle management employee within
the Risk Services division. No client, insurer or third party funds are at risk.
The Group is insured for such circumstances but is exposed in relation to risk
retentions that directly affect the profit and loss account. This incident is
currently being investigated by forensic auditors.
The significant difference between the expected headline earnings and expected
earnings results for the year ending 30 June 2006, is due to the profit on sale
of the Reinsurance business as announced on 7 October 2005.
These forecast results for the year ending 30 June 2006 have not been reviewed
or reported on by the Company"s auditors. The Company"s results for the year
ending 30 June 2006 are expected to be published on or about 5 September 2006.
Renewal of cautionary
Shareholders are referred to the cautionary announcement dated 24 April 2006 and
are advised that the company is still in discussions which, if successfully
concluded, could have an impact on the price at which the company"s ordinary
shares trade on the JSE Limited. Accordingly, shareholders are advised to
continue to exercise caution when dealing in the company"s securities until a
further announcement is made.
Randburg
31 May 2006
Sponsor
Nedbank Capital
Date: 31/05/2006 03:06:08 PM Produced by the JSE SENS Department
