| Tue 19 Sep 2006, 15:13 | | Glenrand M.I.B - Announces 2006 annual financial r |
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Glenrand M.I.B - Announces 2006 annual financial results
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")
GLENRAND M.I.B ANNOUNCES 2006 ANNUAL FINANCIAL RESULTS
Insurance broking and financial services group Glenrand M.I.B has posted
basic earnings per share of 19,5c (2005: -9,4c) for the year to 30 June
2006.
The profit for the year was R62,8 million, a substantial turnaround from
the restated loss of R9,8 million in 2005.
This includes a profit of R107,9 million from discontinued operations
(2005: 22,4 million), following the disposal of Reinsurance Consultants
and Intermediaries and Websoft (Pty) Ltd during the year.
The loss from continuing operations increased to R45 million (2005: 32,2
million)
Revenue for the year under review was static at R494 million.
Headline earnings per share reflected a loss of 11,3c (2005: -1,8c).
Acting chief executive officer Dr Dudu Kunene says the main difference
between the headline and basic earnings per share was the profit arising
from the sale for R81,7 million of the Reinsurance Consulting business.
"During the year we started implementing our strategic review of
operations, which includes a return to our core focus of insurance
broking and employee benefits. Our strategic intent is to exit the
remaining investments in underwriting in pursuit of this objective."
Risk Advisory Services
During the period, soft market conditions and lower interest earnings
adversely impacted Services South Africa and our Africa operations,
though this was partially offset by an excellent year for new business
gains, as well as strong client retention. It is anticipated that the
implementation of the integrated administration platform will be fully
functional at the end of the next financial year, and back office
functions are being realigned to provide cost effective and efficient
service to clients.
Risk Services South Africa intends increasing its market share by organic
growth, as well as acquisitions and remains a market leader in most of
its areas of operation.
Discussions with potential international partners for our corporate
business unit are continuing.
Benefit Services
Benefit Services failed to achieve the expected financial turnaround,
though the group remains committed to this business as a major source of
profit going forward. "Benefit Services recorded limited new business
gains, but this was insufficient to reach the critical mass required to
offset the substantial investment in systems and personnel. We remain
committed to further investment in this business despite the setbacks of
recent financial years, as we believe that legacy issues have now been
identified," says Kunene.
During the year, Benefit Services" assets under management increased to
R5,1 billion from R3,3 billion the previous year.
Benefit Services is in the process of converting legacy fund
administration on to a state-of-the-art integrated administration
platform that will enhance productivity and make it possible to handle
larger volumes of business at lower cost.
Kunene says that legacy issues have been identified and weaknesses are
being addressed. Internal reporting and audit controls are being
strengthened and dormant and terminated funds, which make up a
considerable proportion of current and prior year provisions, have been
ring-fenced. These are being project managed to bring about a speedy
conclusion. A new business team has been appointed and a strategic plan
aimed at achieving critical mass for this business has been implemented.
Provisions of R14,1 million were made for "bulking and undisclosed
profits" based on discussions with the Financial Services Board.
BEE
At group level, expenses were negatively impacted by a once-off BEE share-
based cost of R20 million, plus associated professional fees of R4,1
million. Kunene says the benefits of the BEE transaction concluded during
the year are already evident in terms of stronger business retention and
new business gains. During the year, BEE shareholding in the group
increased to 27,7% through the sale of a stake in the business to a range
of BEE investors, including Ayavuna Women"s Investment, Matemeku
Investments, the Makgulong Employee Ownership Scheme Trust and Kunene
Bros. Holdings.
Fraud
In terms of IFRS the cost of the fraud was expensed over the five years
during which it occurred. The anticipated recovery was recognised only
in the current financial year resulting in net credit to income of R19,5
million.
Commenting on the fraud, Kunene said that management is fully aware of
the seriousness of the situation and is taking the action necessary to
tighten systems and procedures to prevent a recurrence.
Taxation
The tax charge was R20,1 million (2005: R27,1 million). The high rate of
tax charge is due to the policy of not raising the deferred tax asset on
Benefit Services" current year losses and the deferred tax asset being
reversed for Benefit Services and STC, as well as permanent difference
relating to professional fees, BEE share-based costs and the fraud
insurance recovery. Benefit Services no longer raises nor maintains prior
year deferred tax assets.
Balance sheet and cash flow
The balance sheet shows gearing constant at 3%. Cash flows from
operations remain positive. Cash of R23 million was used to facilitate
the Makgulong acquisition, which formed part of the BEE transaction
concluded during the year, with a further amount of R36 million being
used for a share buyback in terms of the same transaction.
Kunene has assumed the role of acting chief executive officer, in
addition to his existing position of chairman, following the post year-
end resignation of Steve von Roretz.
Looking forward, Kunene says the outlook for 2007 is more positive. "The
group is being restructured to ensure that it is focused on its core
business and that it can now return results which are reflective of its
ability and standing in the market."
Dividend
Dividends totaling R71,2 million (2005: 69,8 million) were paid during
the year under review.
No dividend will be paid for the current period, though it is fully
intended that dividend payments will resume when the group is restored to
profitability.
ISSUED FOR : GLENRAND M.I.B LIMITED
CONTACT: Dr Dudu Kunene, Chairman and Acting CEO: 011 293 2932
FAX NO: 011 293 2755
E-MAIL: dkunene@glenrandmib.co.za
WEBSITE: www.glenrandmib.co.za
ISSUED BY: LETSEMA COMMUNICATIONS
CONTACT: Tish Stewart: 011 325 4195 / 082 443 6399
FAX NO: 011 325 4199
E-MAIL: tish@letsemacom.co.za
DATE: 19 September 2006
Date: 19/09/2006 03:13:07 PM Produced by the JSE SENS Department
