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GMB
GMB
Glenrand - Disposal of underwriting interest and withdrawal of cautionary
announcement
GLENRAND M I B LIMITED
(Incorporated in the Republic of South Africa)
Licensed Financial Services Provider
(Registration number 1997/008001/06)
Share code : GMB ISIN : ZAE000078010
("the company" or "Glenrand M#I#B")
DISPOSAL OF UNDERWRITING INTEREST AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Introduction
Shareholders are advised that Glenrand M#I#B ("the seller") has entered into
an agreement with Innovation Group (Pty) Limited, a subsidiary company of The
Innovation Group plc (Innovation), a company listed on the London Stock
Exchange, to sell its 60% investment in Holmwoods and Back and Manson (South
Africa) (Proprietary) Limited ("HBM"). HBM holds an investment in an
underwriting management company which specialises in medical related insurance
administration. The disposal is effective from 1 October 2006.
Nature of business
HBM is an investment holding company, of which 60% is held by Glenrand M#I#B.
The underwriting management company operates from Johannesburg, Cape Town and
Durban and is focused on providing specialist skills for and on behalf of
insurance companies and certain underwriters at Lloyd"s of London.
Rationale for the disposal
The nature of the underwriting agency and its client base requires access to
various distribution channels and high tech information technology systems
that are available in the international arena.
The future marketing of clients" portfolios also needs a shareholder that has
ready access to an internationally represented organisation to facilitate the
further growth and development of the business in the handling of existing
business and sourcing of new opportunities.
It is the considered view of the Glenrand M#I#B Board of Directors and
management of the underwriting company that the inability to achieve the above
two objectives would have held back the progress of the underwriting business
in a more competitive global market environment.
The business is well equipped in terms of intellectual capital and is likely
to benefit substantially from the linkage to a global leader in the
information technology business.
Consideration
The consideration for the disposal is R 61 920 000 to be settled in cash
("the consideration").
The proceeds of the disposal will be utilised for working capital and to fund
strategic acquisitions/expansions.
Financial effects of the disposal
Based on the audited results of Glenrand M#I#B for the year ended 30 June
2006, the unaudited pro forma financial effects of the disposal on fully
diluted earnings per share ("FDEPS"), fully diluted headline earnings per
share ("FDHEPS"), net asset value per share ("NAV") and net tangible asset per
share ("NTAV") are set out below. This unaudited pro forma financial
information has been prepared for illustrative purposes only and because of
its nature may not give a fair reflection of Glenrand M#I#B"s financial
position and results of operations, nor of the effect and impact of the
disposal on Glenrand M#I#B. The preparation of the pro forma financial
information is the responsibility of Glenrand M#I#B directors.
Before the After the % Change
disposal (1) disposal (2)
FDEPS (cents) 19,5 32,8 (3 & 4) 68
FDHEPS (cents) (11,3) (14,0) (3 & 4) (24)
NAV (cents) 49,2 67.1 36
NTAV (cents) 12,0 36,2 200
Weighted average fully
diluted shares in issue 255 594 255 594
for calculating FDEPS and
FDHEPS ("000)
Shares in issue for 226 526 226 526
calculating NAV and NTAV
("000)
Notes
Based on the published consolidated audited results of Glenrand M#I#B for the
year ended 30 June 2006.
Based on the assumption that the disposal took place on 1 July 2005 for income
statement purposes and on 30 June 2006 for balance sheet purposes.
FDEPS and FDHEPS have been adjusted to exclude the income attributable to the
disposal for the year ended 30 June 2006.
After taking into account profit arising on the disposal after capital gains
tax. No interest or other income has been attributed to the cash proceeds.
6. Condition Precedent
The agreement is subject to the Condition Precedent that The Innovation
Group plc provide a guarantee to a minority shareholder of HBM in terms
of a put option. The date of fulfilment of the Condition Precedent is 3
November 2006.
7. Categorisation
The disposal is a Category 3 transaction in terms of the JSE Limited
Listings Requirements.
8. Cautionary
Shareholders are referred to the cautionary announcement dated 19
September 2006. Further to the above, shareholders need no longer
exercise caution when trading in the company"s securities.
Randburg
1 November 2006
Investment bank and sponsor
Nedbank Capital
Attorneys to Glenrand MIB
Deneys Reitz
Attorneys to other parties
Innovation -
Other existing shareholders - Deneys Reitz
Date: 01/11/2006 11:02:33 AM Produced by the JSE SENS Department
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