annual report 2009 - sharedata

Annual Report 2009

Annual Report 2009

Glenrand M.I.B provides expert insurance broking and risk advisory services to a portfolio of local and international clients

These include 21 of the top JSE 100 companies, thousands of privately owned businesses and tens of thousands of private individuals.

But it’s not the number of clients we have that is extraordinary. It’s the long-standing relationships we share with them.

Relationships endure because of our insurance and risk advisory services, our understanding of their unique requirements and, above all, because of our lasting commitment to personal service of the highest calibre.

Our values

SUPPORTIVE > Inspiring individual and collective excellence

ENERGISED > Driven with passion, focused on results

ACCOUNTABLE > Doing what is right, not what is expedient

= CREATE GREATNESS

G l e n r a n d M • I • B A n n u a l R e p o r t 2 0 0 9 1

Our vision is to return sustainable profitable growth to our shareholders as a world class insurance broking and risk advisory company with our roots in Africa.

Our mission is to deliver superior service and build lasting client relationships in our chosen markets through the expertise and passion of our people, thereby providing “Service Beyond Expectation”.

www.glenrandmib.co.za

Governance

16 • Corporate governance

23 • Sustainability report

29 • Remuneration report

Financial overview 12 • Finance report

14 • Five year review

Overview

1 • Vision and mission

2 • Board of directors

4 • Executive committee

6 • Chairman’s statement

8 • Chief Executive Officer’s report

Financial statements

32 • Annual financial statementstable of contents

33 • Directors’ responsibility statement

34 • Independent auditor’s report

35 • Directors’ report

42 • Annual financial statements

101 • Shareholders’ information

103 • Board of directors

107 • Notice of Annual General Meeting

111 • Explanatory notes to the notice of Annual General Meeting

• Form of proxy – Attached

• Administration – Inside back cover

Table of contents

G l e n r a n d M • I • B A n n u a l R e p o r t 2 0 0 92

Board of directors

Gordon Whitcher (43)BSc, MCom, CA (SA), CISAChief Financial Officer

Appointed to the board on

27 November 2006

Dr Iraj Abedian (53)BA (Hons), MA (Economics), PhD (Economics)Independent

non-executive director


3 November 2008

Rick Cottrell (73)CA (SA), FCAIndependent

non-executive director

Appointed to the board

on 18 May 2001Bruce Chelius (41)CA (SA)Alternate director


on 2 April 2009

Hester Hickey (55)BCompt. (Hons), CA (SA)Independent non-executive director


1 July 2009

Andrew Chislett (47)Chief Executive Officer


on 1 November 2007

Dr Dudu Kunene (59)MBBCh (Wits), BSc (Hons) (FH), D.A.(SA)Non-executive Chairman


14 September 2000


Overview

Abrie du Preez (54)BCom (Hons), CA (SA)Non-executive director


25 February 2009

Tidi Khobane (48)BA (UNISA), MDP (UNISA SBL)Alternate director


27 May 2009

Moss Mashishi (46)BA, LLBNon-executive director


18 April 2006

Thandeka Mgoduso (52)MA, Clinical PsychologyNon-executive director


3 July 2007

Elva Price (48)ACISCompany Secretary

Appointed Company Secretary 16 July 2002

Nigel Payne (49)BCom (Hons), Higher Diploma in Accounting, CA (SA), MBLIndependent non-executive director


6 December 2006


Executive committee

Gordon WhitcherChief Financial Officer

Ridwaan BardienExecutive General Manager:

Information Technology

Francois de JagerExecutive General Manager:

Individual Insurance Solutions

Andrew John Chislett Chief Executive Officer

Walter CronjeExecutive General Manager: Risk Services

(Appointed with effect from 1 October 2009)


Overview

Adam RakgalakaneExecutive General Manager:

Customer Fulfilment and Sales

Pauls GibbonsExecutive General Manager:

People and Employer Brand

Rob AnsellExecutive General Manager:

Governance

(Permanent invitee)

Busi MabuzaExecutive General Manager:

Marketing and Development


Return to core business – focus on sustainable profitabilityIn our last annual report, I confirmed the disposal of our loss making Benefit Services subsidiary and our intention to focus on our profitable short-term broking and risk advisory business.

Glenrand M·I·B today is positioned as a market leading insurance broking and risk consultancy business with expertise deployed across the short-term insurance spectrum. Our client base ranges from the man-in-the-street to large multinational corporations.

Good results have been achieved in most of our continuing operations and the company is now delivering sustainable profits.

Benefit ServicesThe turnaround of the pension fund administration unit was a major focus area for our Benefit Services board and executive management team over the years. Despite major efforts, very little real progress was ever made, service levels dropped and a growing number of clients terminated their mandates and moved to other administrators, becoming terminated funds in the hands of Benefit Services. This in fact exacerbated the problem in the sense that as more clients terminated, the historical obligations increased against a shrinking ongoing business, which created substantial financial strain.

During this time the board of Glenrand M·I·B Limited reached a point where it decided to exit the benefit services field in South Africa and focus on the short-term broking and risk advisory business.

Over a protracted period a number of attempts were made to dispose of the business and in February 2008 agreement was finally reached with Absa Consultants and Actuaries to acquire the rights to the mandates of the funds still under active administration.

As an associated arrangement, Benefit Services commissioned Absa to complete the outstanding work on the terminated funds, the cost to be borne by Benefit Services. Despite the more professional approach brought to the project by Absa and the number of issues they were able to resolve, overall progress towards completion was significantly slower than expected.

Absa were unable to provide us with any certainty regarding the timeframes required to complete the project and it also became apparent that the project was consuming expenditure at more than double the anticipated rate.

In reviewing our results at 31 December 2008, the Glenrand M·I·B Limited board noted with mounting concern the need for further significant increases in the provisions and that completion of the work by Absa within the timeframe, at the estimated cost at 30 June 2008, was impossible. The uncertainty surrounding completion timelines, coupled with massive projected cost increases, led the board to conclude that ongoing financial support would place the going concern status of the holding company, Glenrand M·I·B Limited, at risk.

The board therefore resolved to withdraw financial support, leaving the board of Benefit Services with no alternative but to apply to the Court for the liquidation of the company. The Court granted the final liquidation order for the winding up of Benefit Services on 2 June 2009.

Any effect, however small, on individual fund members is deeply regretted.

Losses sustained in our Benefit Services subsidiary resulted in serious financial consequences for our group over many years and to continue to support that subsidiary would not have been acting in the best interests of our stakeholders.

Chairman’s statement

Dr Dudu KuneneNon-executive Chairman

In this section Return to core business – focus on

sustainable profitability

Benefit Services

Macro-environment

Financial highlights

Strategy

Directorate

Sustainability

Black Economic Empowerment

Appreciation


Macro-environmentThe current recessionary environment has had an impact on our business in terms of the tough trading conditions that many of our clients find themselves exposed to. This manifests itself in a number of different ways throughout our business and more details of this are contained in the chief executive officer’s report.

Glenrand M·I·B is well equipped to deal with the ongoing economic climate by virtue of our return to core competencies and a continued focus on cost efficient service delivery.

South African short-term insurance markets are experiencing underwriting profit margins in the low single digits which indicates a rising claims trend and this, coupled with poor investment returns, will ensure pressure on insurance premium pricing in the months ahead.

Financial highlightsOur broking revenue increased by 8% to R502,8 million during the period under review, which included R32,8 million attributable to the acquisition of Finrite. Investment income increased by 10,7% to R54,1 million following increased premium flows and improved treasury management. The group posted a profit of 20,5 cents per share (2008: loss of 36,2 cents) and headline earnings per share of 11,5 cents (2008: loss of 38,9 cents). We believe that the business has now been restored to sustainable profitability, whilst we acknowledge that we need to improve the cost to income ratio and subsequent returns to shareholders.

StrategyOur short-term insurance broking and risk advisory business has been further streamlined into two main business units that reflect the two main customer channels that we serve, namely:

Business to Business – Risk ServicesBusiness to Consumer – Individual Insurance Solutions

The strategy is to target areas where we have a lower than desired market share and where we are able to deliver consistent financial returns. These targeted areas include small to medium commercial clients, as well as personal lines clients.

We are privileged to count 21 of the JSE top 100 companies as our clients and our strategy in this corporate segment is focused on superior client service and quality control.

Directorate There have been numerous changes to the board during the year under review, as detailed in the Directors’ Report. I extend my thanks and appreciation to Peter Cooper, GT Ferreira, David Harpur, Allan Mansfield and Hixonia Nyasulu for their wise counsel and guidance to the board during their tenure as directors of the company. I welcome Iraj Abedian, Bruce Chelius, Abrie du Preez, Tidi Khobane, Thandeka Mgoduso and Hester Hickey to the board and look forward to working with them.

SustainabilityWe operate to the highest ethical standards as one of the most respected short-term insurance broking and risk advisory services businesses within southern Africa. Our business has provided a top class service to the insurance purchasing community for 70 years.

Glenrand M·I·B needs to play its part in the ever-widening social economic environment within South Africa. Corporate social responsibility is therefore an important business priority. Apart from investing in socio economic development projects, as outlined in our sustainability report, the company has launched an interactive radio campaign in partnership with Talk Radio 702 in support of the South African Police Service.

Black Economic EmpowermentWe are delighted that, for the second year running, we have retained an Empowerdex AA Rating – which is a Level Three Contributor in terms of the Department of Trade and Industry’s Broad Based Black Economic Empowerment Scorecard. As a value adding enterprise, clients who procure our services can claim 137,5% of their spend.

Glenrand M·I·B was ranked sixth in the Financial Mail Top Empowerment Companies 2009 survey and the third most empowered company in the financial sector in the same survey. We are justifiably proud of this achievement which is the result of a lot of hard work and commitment to transformation. There is still work to be done and we have strategies in place across all pillars of transformation. We support the aims of government and transformation is a key strategic enabler in our business.

AppreciationI would like to thank my fellow board members for their continued support, guidance and wisdom. I would also like to express my thanks to Andrew Chislett, his management team and the entire staff for the exceptional work undertaken during the year.

Dr Dudu KuneneNon-executive Chairman

Overview


Chief Executive Officer’s report

Andrew John ChislettChief Executive Officer

Realignment of continuing operationsThe company’s operating model, which was implemented in 2007, was critically reviewed during the past year with a view to enhancing efficient service delivery. The operating model has been streamlined from three business units to two:

Risk Services – catering for all of our non personal lines clients (Business to Business); and

Individual Insurance Solutions – catering for all of our personal lines clients (Business to Consumer).

The realignment will increase customer focus into our delivery model to unlock increased revenue earning opportunities.

Back office claims fulfilment and administration services, previously housed under a separate division, are now attached to the front end sales and customer services channel. This ensures direct accountability for superior customer service.

Financial review The business turned around from a loss of R80 million in 2008 to a profit of R48,7 million in 2009. The profit in our continuing operations increased from R2,7 million last year to R38,1 million this year.

Despite a macro environment of soaring liquidations and credit defaults, our continued focus on collections resulted in only a marginal increase in the provision for doubtful debts. All of our continuing business units are cash generative and at year end we had R80 million in own cash reserves.

Our cost base remains too high and certain anticipated cost reductions have not yet fully materialised. We continue to address the fixed cost base of the company and have restructured many of our property leases. Cost cutting initiatives will receive ongoing attention in the coming year.

The year under review can be summarised as returning the company to sustainable profitability by continued refinement of our delivery model and the exit from our loss making Benefit Services subsidiary.

In this sectionRealignment of continuing operations

Financial review

Operational review

Information technology

Growth strategy

Executive management changes

Prospects

Appreciation


Operational reviewRisk Services (Business to Business)Corporate Property and Casualty DivisionRevenue increased marginally compared to last year due mainly to the non-achievement of new business targets and below budget organic growth. The lack of real revenue growth is a reflection of the current economic downturn with a reduction in size of the operations of a number of our corporate clients due to downscaling, mothballing of plants and lower turnovers experienced. Our client retention record remains excellent in this area but fees have come under severe pressure as we respond to our clients’ need to contain expenditure.

Commercial DivisionMarginal revenue growth was experienced in this division. Commercial clients are reducing the level of cover purchased to compensate against their own reducing turnovers. Although our retention record remains excellent, the commercial insurance market remains soft, impacting negatively on the commissions earned in this division.

Specialist DivisionCredit and Political Risks experienced a marked decrease in declared values received from most clients but particularly from our steel sector clients. These value decreases range from 25% to 35%. This division did however manage to increase annuity revenue by 5% due to good new business gains. We have started to experience a rate hardening from insurers due to recent large credit default losses and the resultant premium increases will take hold in F2010.

Marine has also reported a marked decline in declared shipment values and frequency due to the decline in import and export activity this past year. A mitigating factor at the beginning of the financial year was the positive impact of the strong US dollar which resulted in premiums holding firm. The division achieved a 10% increase in revenue over the prior year.

Professional Services’ result was not only affected by the economic downturn but also by the highly competitive trading conditions experienced in the commercial professional indemnity sector, with rates on some individual risks declining as much as 40%. We are still experiencing positive fee increases that have protected revenue and this division posted marginally higher revenue than the previous year.

Financial Markets successfully implemented the first phase of a new administration platform. Efficiency benefits will accrue in the first quarter of F2010. The revenue generated in this division was marginally down on the previous year.

Construction Projects was the most negatively impacted by the economic climate with our growth targets proving very difficult to achieve. We have experienced a dramatic decline in construction and contracting activity where many contracts have either been postponed indefinitely or cancelled outright. Despite these difficult conditions, we achieved a similar revenue contribution as the previous financial year in this division.

Our industry and the environment in which we operate are dynamic and we need to ensure that we are flexible enough to respond to the changing needs of business.

Corporate Commercial Specialists

Africa Personal Lines ClaimsFul�lment and Finrite

22%

19%

17%

7%

19%

16%

Revenue segmentation

Overview


Chief Executive Officer’s report continued

The realignment will increase customer focus into our delivery model to unlock increased revenue earning opportunities.

AfricaWe operate in Namibia, Swaziland, Botswana, Mozambique and Zimbabwe. Revenue from these operations exceeded the prior year by 15% due primarily to strong new business flows. Although not currently a major contributor to overall revenue, our Africa business continues to improve its profit contribution and we remain alert to new opportunities in the region.

Individual Insurance Solutions (Business to Consumer)Household and Motor Products (Personal Lines) Revenue growth was flat in this division for the period under review. Due to the current economic climate, the decline in new vehicle sales and the drop in market value on vehicles, we did not achieve revenue growth on our existing client base. Clients are looking for ways to reduce their insurance expenditure and this is resulting in a reduction in the premium base.

The division produced a profitable result for insurers which removed the necessity for above inflation annual increases in premiums, which in turn enabled us to remain very competitive in this segment. This competitive advantage assisted in new policy sales and client retention.

Claims FulfilmentClaims Fulfilment receives fees from underwriters for claims handling and associated administration services. There was little organic growth, however new revenue will be generated as we roll these services out into other areas of our business.

FinriteFinrite is a high volume insurance product administrator that primarily services retailers that provide and sell insurance products to their client base. The business was purchased in February 2008 and this was the first year of full contribution.

Information technology Last year I reported on various impairments of operating systems and the need to align our information technology systems with our strategic growth and efficiency targets. We have identified strategic enablers which have been translated into a number of projects that will:• realise our information technology vision;• ensure the success of existing project initiatives; and• implement the building blocks required to support the

organisation’s business drivers.

A new contact centre has been established in Randburg with the roll out to branches being scheduled in a phased approach for completion during 2010. Our IT roadmap requires continued investment in process improvements and work flow with expenditure of R9 million having been incurred this year and expenditure of R34 million envisaged for F2010.

The streamlining of back office processes remains a key enabler in our ability to service customers more effectively whilst reducing the manual ‘workarounds’ currently in place. Whilst much progress has been made in automating governance and control improvements, it is anticipated that it will take another two years before we can maximise all of our cost saving opportunities.

Growth strategyWe remain committed to our segmental revenue growth strategy based on market share targets driven by detailed business plans. The essential components of this strategy are:• critical focus on business development and up-sell, and• targeted segments for aggressive growth: – Personal Lines – Commercial.

Retention of key strategic accounts with a focus on quality service remains key to the achievement of our growth targets.

We will continue to explore suitable acquisition opportunities in our targeted segments.

Executive management changesOur industry and the environment in which we operate are dynamic and we need to ensure that we are flexible enough to respond to the changing needs of business. With this in mind, I implemented leadership changes and a realignment of some of the reporting structures. Three new appointments were made – Walter Cronje (EGM: Risk Services), Francois de Jager (EGM: Individual Insurance Solutions) and Adam Rakgalakane (EGM: Customer Fulfilment and Sales). This realignment drives a segmentation strategy of Business to Business (Risk Services) and Business to Consumer (Individual Insurance Solutions), as well as recognising the changing demands of customers.

Four executives left the company – Denis Ternent, Ian Graham, Rajen Govender and Derek Watson – and I thank them for their valued contribution over many years.

G l e n r a n d M • I • B A n n u a l R e p o r t 2 0 0 9 1 1

ProspectsLast year we advised that we were targeting a profit margin before taxation of 20% by the end of the 2010 financial year. This target contained assumptions regarding the economic climate that have now been shown to be too optimistic. This however remains our target margin.

Despite continuing uncertainty in the South African economy, we will strive to show another improvement in profit in the 2010 financial year.

AppreciationMy thanks go to the board, my management team and to each and every staff member who has made the turnaround in the group a reality. I would also like to thank our loyal clients, as well as our many and varied business partners and professional advisors for their continued support.

Andrew ChislettChief Executive Officer

We remain committed to our segmental revenue growth strategy based on market share targets driven by detailed business plans.

Overview

Finance report


In this sectionOverview

Financial performance

Discontinuing operations

Impairments

Change in financial year end

Segmentation

Financial reporting controls

Dividends

Accounting policies and standards

Acknowledgements


OverviewThe past financial year has been characterised by severe economic pressures. Despite these external factors, the group returned to profitability after a number of years of sustained losses. Whilst the continuing business units have always remained profitable, the year under review witnessed the conclusion of our exit from the loss making Benefit Services subsidiary.

We have made investments in a number of projects which we see as key enablers to ensure our sustainability. We also implemented a number of initiatives to reduce our cost base. We believe that the business is firmly on the road to sustainable profits and we will be pursuing a growth agenda, through organic growth and the appropriate acquisition opportunities, where they present themselves.

Financial performanceBoth the chairman’s and the chief executive officer’s reports highlight the most often used performance indicators. As with all businesses, at the heart of our operational performance is the ability to generate free cash flow. We deal with the exit from Benefit Services below in more detail, the result being that the cash outflows required to fund the onerous provisions of that business have ceased.

To establish the true investment income for the year, the expected return on the defined benefit plan assets amounting to R18,4 million (2008: R18,2 million) must be excluded, resulting in actual investment income of R54,1 million (2008: R48,8 million). Likewise, the finance costs for the year includes a charge for post-retirement benefits of R18,5 million (2008: R17,6 million), leaving a cash based amount of R8,4 million (2008: R8,7 million).

The finance costs relate to the premium backed funding facility utilised by the Premium Finance Solutions business and are matched by premium debtors in the balance sheet. This facility is not available for any other purpose and does not provide any financial leverage to equity shareholders. There is therefore no gearing on the balance sheet. Own cash at 30 June 2009 was R80 million (2008: R102 million).

Discontinuing operationsAt 30 June 2008 the Benefit Services cluster of operations was disclosed as “held for sale” in terms of IFRS 5. Benefit Services was placed in provisional liquidation with effect from 31 March 2009, with a final winding up order being granted on 2 June 2009. The effective date for accounting purposes is 31 March 2009. Accordingly, we have consolidated the segmental results until that date.

At 31 March 2009 Benefit Services had a negative net asset value (NAV) of R190,4 million and, on deconsolidation of the entity, the effect is a reversal of the negative NAV. However, Benefit Services owed its holding company


Financial overview

R166,3 million, which is now recognised as a loss. Benefit Services also owned shares in its holding company, which were previously disclosed as treasury shares. Now that they are under the control of the Master of the High Court, we had to mark them to market and recognised a loss of R1 million. The effect of the deconsolidation is therefore a R23,1 million credit through the income statement. This does not represent a cash flow benefit to Glenrand M·I·B.

Benefit Services discontinued its operating activities over the past two years and the operating assets of the business were sold to various parties, each as a going concern. None of the proceeds of these disposals were utilised to repay the loan from Glenrand M·I·B. The cash and cash equivalents deconsolidated at 31 March 2009 amounted to R39,7 million and remain in the insolvent estate.

ImpairmentsIn performing our impairment tests of goodwill and intangible assets, we considered the current economic conditions and we have therefore adjusted expected growth rates downwards to a range of between 2% to 6,5% and used fair rates of return in the range of between 15,3% to 17,5%. The result was a goodwill impairment of R2,8 million. The expected purchase price of Finrite was also reduced by R5,9 million and is reflected as an adjustment against goodwill. The other goodwill and intangible assets were considered to be fairly valued.

Change in financial year endThe board of directors has resolved to change our financial reporting date to 30 September. The majority of corporate policy renewals occur in the period March to July, which coincides with current financial reporting of 30 June. The rationale behind this decision is to allow operations to focus on the business during the peak renewal period which will allow for improved reporting and forecasting. The decision will be implemented during the 2010 financial year, with a fifteen month reporting period to 30 September 2010. We will issue reviewed summarised results for the twelve months to 30 June 2010.

The movements in working capital at the reporting date have always been a function of the timing of receipts and payments relative to insurance debtors and creditors, which is largely determined by renewal dates. The new reporting date is outside of the renewal period and will therefore reduce the volatility normally evident from the cash flow statement.

SegmentationThe chief executive officer’s report describes the realignment of our business units and from 2010 onwards we will be segmenting our reporting accordingly.

Financial reporting controlsAs part of the drive to achieve operating efficiencies and an improved control environment, we are centralising transactional activity and implementing the appropriate systems in support of this initiative. As part of the latter project, the new general ledger went live on 1 July 2009.

DividendsThere were no distributions to shareholders during the period under review. Dividend payments will resume when the board of directors considers it prudent to do so.

Accounting policies and standardsThe principal accounting policies are consistent with those applied in the previous year. The annual financial statements for the year ended 30 June 2009 have been prepared in accordance with International Financial Reporting Standards (IFRS) and comply with the requirements of the South African Companies Act.

AcknowledgementsMy thanks go to the finance team for their efforts over the past financial year, as well as to the executive committee and board of directors for their invaluable support. I also wish to extend my appreciation for the input of the audit, risk and compliance committee.



Five year review

2009 2008 2007 2006 2005 R’000 R’000 R’000 R’000 R’000

Group Income StatementsOperating revenue and investment income 575 324 533 036 452 785 420 527 435 727Operating expenses (486 871) (453 494) (404 420) (397 438) (370 322)Disposals and impairments (5 490) (27 953) 2 593 (5 482) (13 972)

Trading profit 82 963 51 589 50 958 17 607 51 433Finance costs (26 850) (26 219) (7 412) (5 357) (6 151)

Operating profit – continuing 56 113 25 370 43 546 12 250 45 282Share of profit of equity accounted investees 980 1 374 788 774 835Profit (loss) from discontinuing operations 10 581 (82 740) 43 486 65 531 (28 861)

Profit (loss) before taxation 67 674 (55 996) 87 820 78 555 17 256Taxation (19 016) (23 997) (3 604) (16 046) (27 103)

Profit (loss) after taxation 48 658 (79 993) 84 216 62 509 (9 847)Minority interest (2 111) (2 057) (3 674) (12 899) (12 981)

Profit (loss) attributable to shareholders 46 547 (82 050) 80 542 49 610 (22 828)

Group Balance SheetsAssetsProperty, plant and equipment 21 994 20 335 23 378 30 362 32 184Investments 2 357 3 123 10 247 11 274 30 083Goodwill and intangible assets 106 712 119 302 84 428 84 148 88 243Long-term accounts receivable – 1 260 6 615 14 921 –Deferred taxation asset 25 894 36 697 40 642 41 872 46 909Linked investment backing policyholder contracts – – – 5 129 803 3 325 219

Total non-current assets 156 957 180 717 165 310 5 312 380 3 522 638Current assets 430 399 511 537 427 724 546 343 597 919Assets classified as held for sale – 2 918 219 5 576 409 55 806 –

Total assets 587 356 3 610 473 6 169 443 5 914 529 4 120 557

Equity and liabilitiesShareholders’ equity of Glenrand M·I·B 157 255 112 674 192 405 107 171 130 108Minority interest 3 757 4 042 4 037 17 070 18 160

Total equity 161 012 116 716 196 442 124 241 148 268

Long-term liabilities 46 640 48 064 34 643 37 738 40 902Deferred taxation liability 9 163 8 579 117 117 222Policyholder liabilities – – – 5 244 552 3 318 668

Total non-current liabilities 55 803 56 643 34 760 5 282 407 3 359 792Current liabilities 370 541 534 347 352 411 492 011 612 497Liabilities classified as held for sale – 2 902 767 5 585 830 15 870 –

Total equity and liabilities 587 356 3 610 473 6 169 443 5 914 529 4 120 557

1 5G l e n r a n d M • I • B A n n u a l R e p o r t 2 0 0 9

Financial overview

2009 2008 2007 2006 2005 R’000 R’000 R’000 R’000 R’000

Consolidated Cash Flow StatementsNet cash (outflow) inflow from operating activities (34 965) 28 118 23 955 (176 597) 58 275Net cash (outflow) inflow from investing activities (14 771) (19 673) 62 310 (28 347) (23 449) Net cash (outflow) inflow from financing activities (11 876) 3 262 4 452 (46 475) 587

Net (decrease) increase in cash resources (61 612) 11 707 90 717 (251 419) 35 413

Ratios and StatisticsOrdinary share performanceNumber of ordinary shares (‘000) – issued 292 128 292 128 292 128 292 128 243 270 – weighted average 226 784 226 526 226 526 238 682 240 836 – weighted average and fully diluted 226 784 226 612 226 526 255 594 242 656Headline earnings (loss) per ordinary share – diluted (cents) 11,5 (38,9) 6,7 (11,5) (1,8) Basic earnings (loss) per ordinary share – diluted (cents) 20,5 (36,2) 35,6 19,4 (9,4) Dividend per ordinary share (cents) – – – 20,0 15,0Dividend cover (times) – – – (0,6) (0,1)

ProfitabilityTrading margin – continuing operations 14,4% 9,7% 11,3% 4,2% 11,8% Effective taxation rate 27,9% 43,3% 15,6% 33,1% 134,1%

Liquidity ratiosNet cash (outflow) inflow from operating activities (R’000) (34 965) 28 118 23 955 (176 597) 58 275Current ratio 1,16 0,96 1,21 1,11 0,98

DefinitionsHeadline earnings per ordinary share: Headline earnings divided by fully diluted weighted average number of ordinary shares in issue during the year.

Dividend cover: Headline earnings per share divided by dividends declared per ordinary share.

Trading margin: Trading profit as a percentage of operating revenue (including investment income).

Current ratio: Ratio of current assets to current liabilities.


The board is committed to the principles of transparency, integrity and accountability as set out in the King II Report and believes it has complied with King II during the period under review, excluding the independence of the chairman, as set out in this report.

The boardThe company has a unitary board made up of a majority of non-executive directors. As at the date of this report, the board comprises two executive directors and eight non-executive directors, four of whom are independent. There are also two alternate directors on the board and a set of principles has been adopted by the board that govern the role of the alternate directors. Changes to the board during the period under review are set out on page 36 of the Directors’ Report.

The roles of chairman and chief executive officer are separate. Dudu Kunene, although non-executive, is not independent as a result of his shareholding in the company through Kunene Finance Company and Kunene Bros., however, Rick Cottrell is the lead independent director which the board believes brings the necessary independence to the chair.

The directors are individuals of a high calibre with diverse backgrounds and expertise, facilitating independent judgment and broad deliberations in the decision-making process. There is an appropriate balance of power and authority on the board.

The directors are listed from page 103 to 106 of this report, together with brief curriculum vitae of each director, as well as their categorisation.

In terms of the Board Charter, non-executive directors are required to retire at the age of 70, subject to annual board review. As Rick Cottrell has reached the age of 73, the board of directors deliberated on this matter at the board meeting held on 25 February 2009 and voted unanimously in favour of Rick Cottrell continuing in office, subject to further annual review.

Procedures for appointments to the board are formal and transparent, assisted by the remuneration and nominations committee. Appointments to the board are made taking into account the need for the board to comprise a diverse range of skills, knowledge and expertise, as well as the need to ensure that sufficient independent directors are available to comply with statutory requirements. An induction process for newly appointed directors is in place to apprise them, where required, of their fiduciary duties, and to acquaint them with the operations of the company. All new directors are provided with a governance file which includes the charter of the board and its committees, the company’s Memorandum and Articles of Association, minutes of the board and committee meetings for the previous year and other pertinent information.

Declarations of interests are submitted by all directors at least annually in order to determine any conflicts of interest. Any potential conflict of interest is disclosed immediately.

The remuneration and nominations committee reviews the performance of the chief executive officer each year against his performance contract which is approved annually by the remuneration and nominations committee, with the input of the chairman.

The performance of the board and its committees is assessed annually and during the year under review directors underwent two processes: the first a review of the effectiveness of the board as a whole, and the second a 360º assessment by each director of the other directors. No material concerns were expressed in these evaluations and the board and its committees have, in their opinion, honoured their responsibilities during the year.

An assessment of the chairman’s performance was also conducted by the lead non-executive director and the chairman of the remuneration and nominations committee.

In terms of its charter, which is reviewed regularly, the board has the following responsibilities:

• providing strategic direction to the company;

• approval and adoption of the strategic plans and annual budgets of the company;

• monitoring management in the implementation of the approved annual strategy and budgets;

• responsibility for the preparation of the group’s annual financial statements, interim results and preliminary profit announcement;

• approval of significant acquisitions and disposals;

• ensuring that the company has appropriate risk management, internal control and compliance procedures in place;

• appointment of the chief executive officer; and

• approval of the composition of, and the terms of reference of, board appointed committees.

The Board Charter also addresses issues such as the composition and size of the board, board procedures, matters reserved for board decisions, frequency and proceedings of meetings, share dealings by directors and declarations of interests.

The board has developed a formal approvals framework to ensure that decisions are appropriately authorised and ratified where applicable, and that the correct consultation and communication of decisions takes place. It serves the purpose of delegating certain responsibilities of the board to senior executives and, where applicable, to operational staff.

In terms of the company’s Articles of Association, newly appointed directors hold office until the next Annual General Meeting at which they retire and their re-appointment is required to be approved by shareholders. Also in terms of the Articles of

Corporate governance


Association, at least one third of the directors are required to retire at the Annual General Meeting of shareholders, but the retiring directors may offer themselves for re-election.

The board meets quarterly. Should an important matter arise between scheduled meetings, additional meetings may be convened, with two additional meetings being held during the year under review. A meeting is also held each year to consider

budgets and group strategy, however, this meeting was held over to August 2009 to allow the business to fully consider the impact of the current financial climate on its long-term planning. Material decisions are taken between meetings by way of written resolutions, as provided for in the company’s Articles of Association. The record of attendance by each director for the period under review was as follows:

Governance

#5 Aug *10 Sept *19 Nov + *25 Feb #23 Mar *27 May 2008 2008 2008 2009 2009 2009

I Abedian¹ A √ √ √AJ Chislett √ √ √ √ √ √RG Cottrell √ √ √ √ √ √P Cooper² √ √ AP du Preez3/BA Chelius √ √GT Ferreira4/P Cooper A √ DJ Harpur4 √ √ √ MF Kunene √ √ √ √ √ √AW Mansfield5 √ √ A MR Mashishi A √ √ √ √ √TH Nyasulu6/TN Mgoduso A √ √ √ TN Mgoduso7 √ √NG Payne √ √ √ A √ √G Whitcher √ √ √ √ √ √

¹Appointed 3 November 2008²Appointed full director (previously alternate to GT Ferreira) on 19 November 2008. Resigned 25 February 20093Appointed 25 February 20094Resigned 19 November 20085Retired 19 November 20086Resigned 2 April 20097Appointed full director (previously alternate to TH Nyasulu) on 2 April 2009# = Ad hoc meetings* = Scheduled meetings+ = Date of meeting re-scheduledA = Absent with apologies

There is disclosure of the individual executive and non-executive directors’ emoluments, shareholdings and share options in the annual financial statements, from page 37 to 41.

There are no service contracts for non-executive directors. Andrew Chislett has a service contract with a one year notice period and Gordon Whitcher a service contract with a six month notice period.

All directors have unlimited access to the advice and services of the company secretary and are entitled to obtain the advice of independent professionals, where appropriate, at the expense of the company and in accordance with the board policy in this regard.

Board committeesSpecific responsibilities have been delegated to board committees with defined terms of reference set out in their

respective charters. All committee charters are reviewed and updated regularly. There is full disclosure from board committees to the board. In this regard the minutes of committee meetings are submitted to the board and reported thereon by the chairmen of those committees.

The board recognises that it is ultimately accountable and responsible for the performance and affairs of the group and that the use of delegated authorities to board committees in no way mitigates the discharge by the board and its directors of their duties and responsibilities.

During the year under review the board took a decision that shareholder representatives would no longer have standing invitations to attend committee meetings.


The current board committees are:

Remuneration and nominations committeeThis committee comprises Rick Cottrell, Abrie du Preez, Thandeka Mgoduso and Nigel Payne and is chaired by Nigel Payne, an independent director. The remuneration and nominations committee is primarily responsible for assisting the board in discharging its responsibilities to ensure that the group’s executive directors and senior executives are appropriately remunerated, in terms of base pay, as well as short- and long-term incentives. Invitees to the committee’s meetings are the chief executive officer and the executive general manager: People and Employer Brand.

In terms of its charter, the main responsibilities of the remuneration and nominations committee include:

• reviewing the composition of the board;

• making recommendations to the board for new directors;

• reviewing plans for the succession of the chairman, the chief executive officer and executive directors;

• approving the remuneration of the chief executive officer and other senior executives;

• approving performance bonuses of senior executives;

• recommending the fees to be paid to non-executive directors which are then submitted to shareholders for approval at the Annual General Meeting;

• recommending to the board the granting of share option allocations in terms of the company’s share incentive scheme;

• reviewing and making recommendations regarding the terms of the existing share scheme or any proposed share incentive schemes; and

• approving the remuneration report to shareholders.

The committee meets as and when required, with a minimum of two meetings per annum. Four meetings were held during the period under review. The chief executive officer does not participate in discussions regarding his own remuneration.

The record of attendance by each committee member for the period under review was as follows:

#3 Sept *6 Oct *28 Apr #24 June 2008 2008 2009 2009

RG Cottrell √ √ √ √AP du Preez¹ √DJ Harpur² √ A AW Mansfield3 √ √ T Mgoduso1 °√ °√ °√ √NG Payne √ √ √ √

¹Appointed to the committee on 27 May 2009²Resigned from the board on 19 November 2008³Retired from the board on 19 November 2008# = Ad hoc meetings* = Scheduled meetings°√ = Observer capacity

A = Absent with apologies

The remuneration report is set out later in this annual report.

Audit, risk and compliance committeeThis committee comprises three independent non-executive members, namely Iraj Abedian, Rick Cottrell and Nigel Payne, chaired by Rick Cottrell. Subsequent to the year end, Hester Hickey has also been appointed as an independent non-executive member, effective 9 September 2009.

The external and internal auditors, the chief executive officer, the chief financial officer, the executive general manager: Governance and the chief compliance officer attend meetings by invitation. At least annually the committee meets with the internal and external auditors without any executives being present. The external auditors have unrestricted access to the committee and the committee has unrestricted access to the group’s management, employees, external and internal auditors and outside consultants.

The role of the audit, risk and compliance committee is to assist the board by performing an objective and independent review of the functioning of the finance, risk and compliance mechanisms.

The risk committee reports to the audit, risk and compliance committee and reviews risk management and compliance procedures to ensure that appropriate controls are in place to address those risks.

In terms of its charter, the main responsibilities of the audit, risk and compliance committee include:• carrying out all the functions as required in terms of legislation;• performing all the functions of an audit committee for those

operating subsidiaries that do not have their own audit committee;

• nominating to the shareholders a registered external auditor who, in the opinion of the committee, is independent of the company, for appointment as external auditor of the company, as well as nominating for appointment the designated individual auditor;

• consideration and recommendation to the board of the appointment, removal or replacement of the internal auditors of the group;

• consideration of the accounting treatment of significant or unusual transactions and areas of judgment that have a significant impact on the financial statements;

• determination of the nature and extent of any non-audit services which the external auditor may provide to the company and pre-approval of any proposed contract with the external auditor for the provision of those non-audit services;

• review and approval of the annual internal audit operational plan;

• monitoring the compliance of the group with legal requirements, statutes, regulations and the group’s code of ethics;

• consideration of the reports by the internal and external auditors on their findings and recommendations;

Corporate governance continued


• consideration of the interim results, preliminary profit announcement, the annual report and any other relevant announcements to shareholders;

• review of the effectiveness of the group’s systems of internal control, including internal financial control and business risk management;

• review of the relationship between management, the internal auditors and the external auditors;

• reviewing the skills and experience of the chief financial officer in terms of the JSE Listings Requirements; and

• receiving and dealing appropriately with any complaints (whether from within or outside the company) relating either to the accounting practices and internal audit of the company or to the content or auditing of its financial statements, or to any related matter.

The committee discharges its board responsibilities by meeting at least quarterly to review the group’s financial results, to receive and review reports from both the internal and external auditors and to meet with management to review the progress on identifying and addressing key risk areas within the business. These review findings are then reported to the board at the next meeting which is always held within a week of the committee meeting. During the year under review the committee met six times.

The tax compliance committee reports into this committee.

The record of attendance by each committee member for the year under review was as follows:

#22 Aug *3 Sept *13 Nov *18 Feb #16 Mar *22 May 2008 2008 2008 2009 2009 2009

I Abedian¹ A √RG Cottrell √ √ √ √ √ √NG Payne √ √ √ √ √ √

¹Appointed to the committee on 25 February 2009# = Ad hoc meetings* = Scheduled meetingsA = Absent with apologies

In accordance with the Corporate Laws Amendment Act, the board has re-appointed Iraj Abedian, Rick Cottrell and Nigel Payne as the members of the committee for the 2010 financial year, as well as Hester Hickey with effect from 9 September 2009. The committee will continue to be chaired by Rick Cottrell.

In accordance with the JSE Listings Requirements, the committee has considered and is satisfied that Gordon Whitcher, the chief financial officer of the company, possesses the appropriate expertise and experience to meet the responsibilities of that position.

No complaints (whether from within or outside the company) relating either to the accounting practices and internal audit of the company or to the content or auditing of its financial statements in respect of the year ended 30 June 2008, or to any related matter were received by the committee.

For the period under review, the committee underwent a process of self-assessment in order to ensure that it functioned effectively in accordance with its terms of reference.

The audit committee has satisfactorily complied with its objectives for the year under review. The committee is also satisfied that the 2009 audit conducted by the external auditors was independent.

Rick CottrellChairman – Audit, risk and compliance committee

Risk committeeThe risk committee operates under a charter approved by the board and is responsible for assisting the board in ensuring that management creates, maintains and operates an effective process for the identification, management and monitoring of risk. It also provides a forum at which constructive and open interaction can take place between the non-executive directors, executive management, the risk, compliance and legal officers and the internal auditors.

During the period under review the risk committee was chaired by David Harpur up until 19 November 2008 when he stood down as a non-executive director. Nigel Payne, an independent non-executive director and already a risk committee member, was appointed as chairman. Other committee members comprise the chief executive officer, the chief financial officer, the executive general manager: Governance, the chief information officer, the chief compliance officer and the chief legal officer. Meetings are attended by the internal auditors and the company secretary.

Risks are assessed at business unit level and aggregated and summarised to represent the key risks facing the group. These are reported to the risk committee which meets before each quarterly board meeting.

The following sub committees and/or functions report in to the risk committee:

• Ethics and anti-fraud;

• Insurance procurement; and

• Occupational health and safety.

Governance


Internal auditInternal audit operates under a charter approved by the board. All work is performed in accordance with the Standards for the Professional Practice of Internal Auditing of the Institute of Internal Auditors. The internal auditors attend all meetings of the audit, risk and compliance committee and the risk committee where reports of their findings are considered. The internal auditors have unrestricted access to the chief executive officer, the chairman of the board and the chairman of the audit, risk and compliance committee. For administrative purposes, internal audit reports through the executive general manager: Governance.

PricewaterhouseCoopers continued in their role as outsourced internal auditors. Work was performed in terms of an annual risk-based work plan developed in line with the rolling three year internal audit strategic plan and in consultation with management. The annual plan was agreed by the audit, risk and compliance committee and included follow-up work on previous engagements.

All new audits performed during the year were ranked as less significant at enterprise level with the exception of the IT control audits that were ranked as significant, an improvement against the previous critical ranking in the period ended June 2008. Management continues to address identified shortcomings and follow-up work performed in respect of all critical and significant findings continues to show improvement.

Internal controlThe directors recognise their responsibility for reviewing the effectiveness of internal control, both financial and operational. Ethical behaviour, compliance with legislation and sound accounting practice underpin the system of internal control.

The executive directors are responsible for designing and maintaining the operation of the financial and operational controls and for their ongoing appropriateness.

The review and redefinition of standard operating procedures and minimum operating standards incorporating all regulatory and internal control requirements is largely complete. The embedding process continues with all affected staff being bound to operate in accordance with these requirements. Management monitors the performance of staff against these requirements and independent monitoring is conducted by the compliance function and internal audit. Disciplinary action is taken when significant non-compliance is observed.

The board has noted substantial improvements made to system controls during the course of the year and the further improvements to be addressed as part of the implementation of the Strategic IT Roadmap. Although we are not in a position where the external auditors can rely on application controls,

where these are in place they are well designed and operated, and dependence on associated manual preventative and detective controls has reduced significantly. The directors are satisfied that the combined operation of system and manual controls provide reasonable assurance that significant associated risks are appropriately managed. Management is committed to the ongoing identification and correction of areas of weakness and to developing a culture of compliance and accountability.

Risk managementAs part of its commitment to sound corporate governance, Glenrand M·I·B recognises the need for an effective risk management process. The board acknowledges its responsibility for the entire process of risk management, as well as for forming an opinion on the effectiveness of this process. Management is accountable to the board for designing, implementing and monitoring the process of risk management, as well as integrating it into the day-to-day activities of the business.

Glenrand M·I·B regards risk management as a strategic enabler, facilitating the achievement of stakeholder expectations through a rigorous and coordinated approach to assessing and responding to all risks that affect the achievement of strategic and financial objectives. This approach is geared to optimise risk-taking, as well as to protect against unforeseen losses. It responds to every type of risk in every part of the business.

Risk assessments have been conducted across all business units and appropriate mitigation or facilitation actions have been identified and are being driven through a risk improvement task management system. Risk response plans are articulated and progress is reported at all levels of the business. Risk and control updates take place quarterly and the results are reported to the risk committee, the audit, risk and compliance committee and the board.

Internal audit performed a review of the risk function during the year with an overall finding of “less significant”. Certain areas for improvement were identified in line with emerging best practice and the draft King III report, in particular the combined assurance model and the linking of risk and performance to enhance the delivery of sustainable growth and return to stakeholders.

Information technologyInformation technology (IT) is a key enabler of the Glenrand M·I·B service offering to both its clients and business partners, as well as providing the employees and decision makers of the organisation with critical information needed to support these services and make effective decisions on behalf of our clients and the organisation.

The focus for the past year was on alignment between the business strategy and IT strategy, operational effectiveness and



efficiency, as well as the governance around legacy applications. The focus of the IT systems development is now aligned to the business segments where we are targeting growth opportunities.

To deliver on these services, IT Services has adopted Information Technology Infrastructure Library (ITIL) as a framework. ITIL is the world’s most popular non-proprietary, publicly available library of best practices for network and systems management. ITIL is based on global consensus, and is not owned or controlled by any one organisation.

Each of the legacy systems were examined in terms of risks, total cost of ownership and requirements of the strategic business units. Projects were initiated to enhance certain legacy systems to give the business the required functionality while alternative systems are being investigated and built.

This has created the ability to deliver on strategic projects by our project management office, which has a formalised project management methodology and governance framework. This methodology has been adopted by IT and the business units. All new IT initiatives and projects are subject to a rigorous approvals process which entails a business case which must articulate a return on investment. Call centre technology, process automation and applications have been successfully implemented in the past year as a result of this new approach.

Technology is and will increasingly play a key role within the organisation, and it is for this reason that the review and formulation of an information technology roadmap was undertaken to ensure that our technology investments are continuously improved and guided by a well thought out, comprehensive technology plan. This roadmap spans over three years and addresses the needs of the business for strategic enablers to assist them in reducing costs, improving productivity, increasing revenue and defining the technology requirements.

ComplianceThe compliance function at Glenrand M·I·B Limited has actively engaged in providing assurance to management through a comprehensive monitoring programme specifically designed to ensure national coverage of all business units. Furthermore, the scope of the monitoring performed has extended beyond that of regulatory compliance to include assurance regarding adherence to internal controls, policies and procedures. The introduction of control self-assessments as a mechanism for compliance monitoring during the past financial year has served as an additional means of providing assurance.

We continue to use Cura risk management software to capture and record compliance monitoring findings. The software has been enhanced to improve on the reporting capability to enable management to gain a proper understanding of compliance levels within the organisation.

The latter part of the financial year saw the roll out of an intensive compliance training programme. Training was conducted nationally and included regulatory requirements such as the Financial Advisory and Intermediary Services Act, the Financial Intelligence Centre Act and the organisation’s governance related policies. The compliance training is intended to not only create greater awareness of the regulatory and internal policy requirements, but to enhance the overall compliance culture within Glenrand M·I·B.

All employees of Glenrand M·I·B are required to complete an annual governance affirmation sign-off. This process requires confirmation by employees that they have read, understood and comply with company policies. All employees have completed the affirmation process in respect of the 2009 financial year.

In accordance with legislation, Glenrand M·I·B has a comprehensive complaints policy and procedure which is maintained and managed by the compliance function. Complaints are assigned to management for resolution and the details thereof are recorded in Cura which facilitates the effective and efficient resolution of complaints.

Glenrand M·I·B is committed to providing an ethical working environment and to rendering financial services that are honest and in the best interests of its clients. This is supported by the company’s continued retention of Tip-offs Anonymous for anonymous reporting of unethical and fraudulent activities.

The 2009 financial year saw the publication of numerous board notices including the Determination of Fit and Proper Requirements, 2008 and the Determination of Qualifying Criteria and Qualifications for Financial Services Providers. The compliance function actively monitors regulatory developments and, in conjunction with management, takes the appropriate action to enable the organisation to comply with the regulatory requirements.

In the months ahead, the compliance function will continue to focus on changes in the regulatory environment. There are numerous statutes due to come into effect during the course of 2010. These include the regulations to the Insurance Laws Amendment Act and certain provisions of the Act itself, as well as the Consumer Protection Act.

Dealing in securitiesIn line with the JSE’s Listing Requirements, dealings in Glenrand M·I·B shares by the directors of the company and the company secretary require permission from the chairman or, failing him, the chief executive officer, prior to dealing in the securities of the company. In the case of the chairman, permission must be obtained from the lead independent director. This policy also extends to members of the executive committee. Once clearance to deal has been obtained, a written record is filed with

Governance


the company secretary and, as soon as the deal has taken place, disclosure is made on Stock Exchange News Service (SENS) as is required in terms of the JSE Listings Requirements.

Directors, managers and all employees of the company are prohibited from dealing in the shares of the company during the prohibited periods commencing at the end of the half-year and the end of the financial year, until publication of the results for those periods. Additional prohibited periods may be declared from time to time, if circumstances so warrant.

The company secretary monitors compliance with these policies.

Going concernOn the recommendation of the audit, risk and compliance committee, the board annually considers and assesses the going concern basis for the preparation of the financial statements at the year end. A similar process is followed at the interim reporting period to enable the board to consider whether or not there is sufficient reason for this conclusion to be affirmed.

Company secretaryThe company secretary is responsible for providing guidance to the directors, individually and collectively, on the discharge of their duties to the company in terms of the legislative, regulatory and governance requirements.

The company secretary plays a pivotal role in the company’s corporate governance process and ensures that, in accordance

with the pertinent laws, the proceedings and affairs of the directorate, the company itself and, where appropriate, shareowners, are properly administered.

The directors have unlimited access to the advice and services of the company secretary.

Relations with shareholdersGlenrand M·I·B is committed to a structured investor relations programme and strives to continually enhance disclosure through timely, transparent and reliable communication with all internal and external stakeholders. The group is proactive in the distribution through the JSE SENS communication system, media releases and the statutory publication of its financial results. Regular briefings to analysts and institutional investors are held to inform them about the group’s operations and performance. The group has strict written guidelines which are intended to ensure control over price-sensitive information. The chief executive officer and the chief financial officer are the designated spokesmen for the group and are accessible to all investors, analysts and the media. An external investor relations consultancy advises the group on all corporate communications.

The board encourages shareholders to attend the Annual General Meeting where interaction is welcomed. The chairmen of the audit, risk and compliance committee and the remuneration and nominations committee are available at the meeting to respond to questions from shareholders. Voting at general meetings is conducted by way of a poll rather than a show of hands.



The departments of Human Resource Management, Human Resource Development, Internal Communications and Corporate Social Responsibility have been combined as People and Employer Brand. This reflects the importance of people in a company dependent on intellectual capital for its success. Being a values-based company, and having a strong employer brand, is key to attracting, retaining and engaging with people.

StrategyThe key strategic focus areas of People and Employer Brand are:

• Accelerate transformation;

• Attract and retain talent;

• Build a high performance culture;

• Develop skills and leadership;

• Embed values; and

• Optimise technology (e-HR).

Executing our strategy

Transformation Embracing diversity and supporting the seven pillars of transformation

Talent Implementing a talent management model which seeks to: Attract, Acquire, Develop, Deploy and Retain

High performance Creating Greatness and cascading strategy through to individual accountability

Skills and leadership Growing our talent and providing developmental opportunities

Values and culture Being Supportive, Energised and Accountable

e-HR Optimising technology and improving efficiencies

Transformation – 7 pillarsWe support the aims of government’s broad-based black economic empowerment (BBBEE) legislation and have aligned our transformation targets to the Department of Trade and Industry’s (DTIs) Codes of Good Practice which are more stringent than the Financial Services Charter (FSC). We remain committed to transformation as a business imperative; BBBEE features high on our corporate agenda and we have strategies in place to improve all seven pillars of transformation. We critically monitor our progress and are delighted that, for the second year running, we have retained an Empowerdex AA rating – Level Three Contributor in terms of the DTI’s BBBEE scorecard. We are a Value Adding Enterprise which means that clients who procure our services can claim 137,5% of their spend.

Glenrand M·I·B was ranked sixth in the Financial Mail Top Empowerment Companies 2009 survey, and the third most empowered company in the financial sector in the same survey. We are justifiably proud of this achievement which is the result of a lot of hard work and commitment to transformation.

Responsibility for transformation rests with the chief executive officer and is driven throughout the business with accountability reflected in managers’ key performance areas.

Sustainability report

Governance


The following is a comparison of the company’s scorecard for the current and previous years:

Current Prior year year Compliance Target actual actual target score score score

Ownership: 25% + 1 20 20,73 20,86

Management controlBlack directors’ voting rights 50% 3 1,50 1,88Black executive directors 50% 2 0,00 1,00Black senior management 40% 3 0,00 1,88Black independent non-executives 40% 2 1,00 0,83

10 2,50 5,59

Employment equitySenior management 43% 5 0,00 –Middle management 63% 4 1,68 0,00Junior management 68% 4 3,51 3,06Disabled employees 25% 2 0,00 0,00Total black employees N/A N/A N/A N/AExistence of EE plan N/A N/A – –

15 5,19 3,06

Skills development spent on black employeesAs % of payroll (leviable amount) 3,0% 6 5,57 6,00As % of leviable amount on disabled 0,3% 3 3,00 0,00Number of black learnerships 5,0% 6 6,00 6,00

15 14,57 12,00

Preferential procurement fromAll black suppliers 50% 12 12,00 12,00EME & QSE suppliers 10% 3 3,00 3,0050% black-owned suppliers 15% 5 2,17 1,4530% black women-owned suppliers 15% – 0,27 –Use of verification agents N/A N/A – –

20 17,44 16,45

Enterprise development 3% NPAT 15 15,00 15,00

Socio economic development 1% NPAT 5 5,00 5,00

Total score 100 80,43 77,96

Ownership and controlThe company’s black shareholders at 30 June 2009 are:

• Kunene Bros. Holdings (Pty) Limited;

• Kunene Finance Company (Pty) Limited;

• Ayavuna Women’s Investments (Pty) Limited;

• Matemeku Investments (Pty) Limited, and

• The Makgulong Employee Ownership Scheme Trust (beneficiaries are restricted to the black employees of the company).

The composition of the company’s executive committee is 37,5% black as follows:

White males 4

Black males 2

Black females 1

White females 1

Sustainability report continued

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Employment equityOur annual employment equity report was submitted to the Department of Labour, as required by legislation. Employment equity is viewed as a core driver of transformation and progress towards achieving targets continues, albeit not as quickly as we would like. The table below sets out our employment equity profile at the end of June 2009:

Male Female White Foreign Nationals Black % Black Occupational Levels African Coloured Indian African Coloured Indian White Male Male Female Total Black % Female Female

Top management 0 1 1 1 0 0 0 4 1 1 9 3 33,33 1 11,11

Senior management 2 1 0 0 1 1 8 13 0 0 26 5 19,23 2 7,69

Prof & mid management 12 3 15 7 5 11 76 66 7 8 210 53 25,24 23 10,95

Skilled & jnr management 51 20 10 60 45 32 147 21 0 6 392 218 55,61 137 34,95

Semi-skilled 46 19 6 92 20 14 45 2 2 4 250 197 78,80 126 50,40

Unskilled 8 0 0 12 0 0 0 0 0 0 20 20 100,00 12 60,00

Total permanent 119 44 32 172 71 58 276 106 10 19 907 496 54,69 301 33,19

0

50

100

150

200

250

300EE Statistics - end June 2009

FSC Targets DTI Targets June 2009

Governance

Black Top Managers

Black Females Top Managers

Black Senior Managers

Black Female Senior Managers

Black Middle Managers

Black Female Middle Managers

Black Junior Managers

Black Female Junior Managers

Black Disabled


The key increase metrics year-on-year are as follows:

% Black % Black Female Current Previous Current Previous year year year year

Top management 33,33 25,00 11,11 0,00Senior management 19,23 8,33 7,69 4,17Prof & mid management 25,24 27,36 10,95 12,94Skilled & jnr management 55,61 51,76 34,95 33,82Semi-skilled 78,80 75,45 50,40 45,09Unskilled 100,00 100,00 60,00 55,00

Total permanent 54,69 51,90 33,19 31,09

It is pleasing to note an improvement in the employment equity score in our BBBEE Empowerdex Rating (up from 3.06 in 2008 to 5.19 in 2009). Although progress is slower than desired, the trend is favourable. It is the company’s intention to increase black representation at all occupational levels.

We have set internal five year employment equity targets and have strategies in place to achieve these. Progress is monitored by our employment equity committee. The special needs of the disabled continue to be reasonably accommodated, where these do not already exist, to promote their access to employment in the company. It remains an objective of Glenrand M·I·B to increase the number of disabled employees.

Skills developmentWe recognise the crucial role that skills development plays in transformation and its critical link to employment equity. We are pleased to note the improvement in our skills development score in the BBBEE Empowerdex rating from 12 in 2008 to 14.57 in 2009. The following initiatives are indicative of the company’s focus on transformation in the sector:

• Thirty two sponsored learners completed a structured learnership achieving a Level 4: Short-Term Insurance qualification. The learners comprised able-bodied, as well as 24 disabled learners. Thirteen of the learners were employed by the business after the completion of their learnership and details of the remaining learners were circulated to the wider industry to encourage employment uptake. Glenrand M∙I∙B actively participates in the SA Employer’s Forum for Disability (E4D).

• The Glenrand M∙I∙B graduate programme is a formal, structured internship initiative for university graduates who have completed a degree in commerce specialising in risk management, insurance or economics. There are currently eight black graduates in this two year internship programme.

• The Glenrand M·I·B Bursary Framework is a bursary scheme aimed at attracting students into the short-term insurance profession and to position Glenrand M·I·B as an employer of choice. During the last year we sponsored two black students through the University of the Witwatersrand to complete a BComm (Risk Management) degree.

ProcurementThe company continues to make excellent progress in terms of procuring its goods and services from BEE suppliers and, once again, exceeded its targeted preferential procurement spend of 50% from black suppliers. Our improved score in the BBBEE Empowerdex rating shows that this is starting to work and we can see the targeting of spend on black women-owned suppliers beginning to have an impact.

Enterprise developmentWe continue to look at investment in enterprise development projects, with a focus on offering non-financial assistance to small, black-owned businesses in the form of skills development, technical and other support and assistance. Socio economic developmentFundamental to our corporate social responsibility (CSR) programme is a commitment to supporting both communities and individuals, focusing on projects relating to skills development and education, as well as providing community safety-nets to support the vulnerable and needy children of our society.

The company’s socio economic development (SED) spend for the year is summarised as follows: 2009 2008 R R

Skills development – university 81 297 161 200Skills development – outsourced learnerships 981 524 605 900HIV/Aids community projects 334 079 253 100Other community-based projects 448 262 537 500

Total 1 848 162 1 557 700

The following is a synopsis of the main initiatives supported during the year:

“Reach-a-Cross” Outreach Programme“Reach-a-Cross” is a programme initiated by Southern Cross School which supports local schools in the Limpopo province to assist teachers to improve their teaching skills, learning competencies and computer-literacy training.

Workers Academy of InsuranceWe have, for the past five years, run successful learnerships for unemployed matriculants through the Workers Academy of Insurance, a black-owned training service provider, which is accredited with the Insurance Sector SETA (INSETA).

The company was part of an historic transformation initiative in the insurance industry and during 2009 it supported 32 learners, 24 of whom were disabled.


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NOAH (Nurturing Orphans of Aids for Humanity)NOAH was conceptualised in 2000 in response to the realisation that South Africa faces an “epidemic of orphans” in the wake of the Aids pandemic.

The company has sponsored a full resource centre at the Khayelihle Ark in Bhekuzulu, KwaZulu-Natal, since 2006 and, together with NOAH, have made a marked difference in the lives of the children in the community.

WaterForAllSince the NGO’s founding in 2004, WaterForAll has provided access to clean, potable water for hundreds of schools and communities in rural South Africa.

The company has supported WaterForAll since 2006 and has installed seven water pumps to date.

Support Programme for Police Stations (SPPS)/Business Against Crime (BAC)The company has supported Linden Police Station since the inception of the SPPS in 1997 with mentoring, training and team-building.

Glenrand M∙I∙B Police Station Renovation We are particularly excited about the launch of the Glenrand M∙I∙B Police Station Renovation Project. This is an interactive campaign in partnership with Talk Radio 702 in support of the South African Police Service in the fight against crime. We will be upgrading facilities at police stations nominated by the public and work in conjunction with the station personnel to assist in upgrading conditions at their stations. Our “Great Giving” volunteers will be assisting wherever possible to make a difference for the country’s crime fighters.

Rally-to-ReadRally-to-Read is a joint venture between the Read Educational Trust, McCarthy Motor Holdings, the Financial Mail and participating sponsors of the project.

“Great Giving” employee volunteer programmeThe “Great Giving” volunteer programme allows employees of Glenrand M·I·B to give of their own personal time and skills to make a difference in the lives of those less fortunate within our communities.

Other InitiativesOther institutions that benefited from the company’s SED programme are:

• The Tshepang Trust;

• Cell C “Take a Girl Child to Work”; and

• Papillon Foundation.

TalentWe continue to attract high calibre employees to the company and our labour turnover has trended downwards throughout the year.

A technical career-pathing model has been developed for our Risk Services business and the position of principal broker has been implemented for senior technically qualified individuals.

We have given considerable attention to remuneration during the past year (see remuneration report) and the interventions have addressed many of the past pay anomalies.

Care is taken to draw up individual development plans linked to each job’s skill requirements in order to optimise employee capacity and build a stronger allegiance to the Glenrand M∙I∙B employer brand, resulting in improved retention levels.

High performanceWe continued, during the year, to restructure in business areas and service units to ensure efficiency in operations and, supporting our high performance drive, a number of disciplinary issues have been dealt with.

All employees (including employees in our Africa operations) underwent a formal performance appraisal in terms of the G-Force assessment.

We reviewed our non-monetary reward system Service Excellence Awards and have replaced them with Create Greatness Awards which are more aligned to our values but continue to recognise our commitment to Service Beyond Expectation.

Skills and leadershipGlenrand M·I·B is committed to developing the professionalism and competency of staff within the company, as well as the broader insurance sector.

SkillsWe have, once again, spent in excess of 3% of payroll on skills development initiatives.

The total number of training beneficiaries was 1 404, of which 929 were black employees and 955 female employees. There were 24 disabled learners amongst those trained.

There is an increased focus on technical proficiency and FAIS accreditation. Continuous technical training is critical to ensure that we maintain high standards of technical excellence. By the end of 2009 all key individuals and representatives will have a full qualification in insurance, in terms of the FAIS fit and proper requirements.

Governance


LeadershipThere was a focus during the year on leadership effectiveness and a number of interventions took place at executive level, including a 360° EXCO team effectiveness review. A restructuring and re-alignment exercise was completed and a number of executive level leadership changes took place, as set out in the chief executive officer’s report.

Values and cultureThe company launched its values under the banner of Create Greatness. Our values and value statement is as follows:

Each value is being focused on to reinforce the importance of culture and values on employee behaviour.

Our corporate social responsibility approach is threefold: socio economic development; community and staff support (non-SED); and caring for our environment (G3).

Community and staff support (non-SED)The company and staff, through the various employee-organised committees and in support of national charity days, support other social initiatives which do not form part of SED.

The Employee Wellness programme was relaunched as “Feel Great”. This programme offers support and advice to employees on health (both physical and emotional), as well as on wealth (with financial assistance and education). Free flu vaccines were offered to all employees and branches conducted a very well attended Wellness Day.

G3

Glenrand M∙I∙B Going Green – G3 – was launched during Arbour week in 2008. An awareness campaign was rolled out throughout the company and various mini-projects within this project were conducted, including an energy saving project which resulted in a 9% drop in terms of kilowatt usage per month, organic market day, earthworm farms and earth hour.

An initiative to reduce printing costs has been implemented.

e-HRA project is underway to automate all transactional HR processes by fully utilising the integrated HR/Payroll software.

Value Statement

Supportive Inspiring individual and collective excellence

+ Energised Driven with passion, focused on results

+ Accountable Doing what is right, not what is expedient

= Create Greatness Extraordinary people – Extraordinary results



Remuneration philosophyThe company wants to position itself as an employer of choice and attract and retain talented employees in a competitive environment. The attraction and retention of intellectual capital is a fundamental enabler of company strategy and the company will continue to invest in people with a focus on talent management and transformation. The aim is to ensure that individual performance supports the company’s strategy and objectives (performance management), that remuneration and benefits are fair and equitable between employees (internal equity) and competitively positioned within the market place (external equity).

Remuneration comprises a balanced mix of guaranteed pay and performance-enhancing incentives aimed at attracting, retaining, developing, motivating and rewarding the best talent, thus ensuring that the company has the necessary talent and skills to enable us to achieve business objectives.

Pay for performanceA job profile is drawn for each position which sets out the main purpose of each job and the main outcomes – key performance areas (KPAs) – as well as the qualifications and experience necessary to perform the job. Psychometric assessments identify the behavioural competencies required to perform the job optimally. Jobs are graded in terms of the Patterson grading system according to their relative worth in the company. The G-Force performance management system translates key strategic and operational drivers into annual performance contracts in a balanced scorecard format. To ensure strategic alignment, KPAs are cascaded from the chief executive officer’s performance contract. Contracting takes place on commencement of employment and there is an annual review after performance appraisal when performance contracts are re-assessed for relevance for the next twelve month period. Performance is measured formally once per annum in a performance appraisal and, informally, at least once more per annum.

Performance scores are inputs into salary review and the incentive bonus scheme. Performance exceeding expectation is rewarded and poor performance is extinguished through a formal performance improvement process. There is no consideration of performance-related salary increases or incentive bonus payments without evidence of a performance score. Training is provided to managers in the performance management system on induction and on an ongoing basis.

Remuneration and benefitsRemuneration is largely on a fixed (salary) and incentive (variable) basis. The major portion of the remuneration is the salary package with performance criteria influencing the annual bonus. Salaries and benefits are benchmarked annually with the assistance of

external consultants. Glenrand M·I·B currently participates in three surveys:

• 21st Century Short-Term Broking survey;

• 21st Century General Staff survey; and

• Deloitte Top Executive survey.

In the annual review process, remuneration is compared externally against 25th (lower), 50th (median), 75th (upper) and 90th quartiles of the relevant surveys and internally against similar positions in the company. Further, an analysis is prepared showing employee level, race and gender equity trends. In a scarce skills environment there is a strategic imperative to remunerate talented employees appropriately and this means positioning such employees above the median quartile and, ideally, at or above the 75th quartile. This, together with an opportunity to earn bonus payments in terms of the incentive scheme and to participate in broader wealth creation through participation in share options, ensures there is a component of pay at risk subject to high performance. Risk rating and performance rating scores are key considerations in remuneration benchmarking.

Specific remuneration components may comprise all or some of the following based on level of responsibility and/or technical skill:

• Salary;

• Benefits;

• Short-term incentives;

• Medium-term incentives; and

• Long-term incentives.

SalaryThe company operates in the financial services industry where employment costs often represent the biggest single cost item. Cost management is critical and the company has partially passed the risk of employment costs to the employee by adopting a total cost of employment (TCE) strategy. This strategy is consistent with industry and market trends. Employees are given the opportunity to choose remuneration options which best suit individual lifestyle and personal needs within a carefully managed basket of options. The importance of individual choice is accepted by the company. Although many employment costs can be contained by adopting the above approach, there are elements beyond the control of the company and, therefore the employer will necessarily retain some risk.

This cost management philosophy applies equally to retirement funding and to medical aid where the company is intent on limiting, and finally eliminating, its long-term liabilities. The conversion from defined benefit to defined contribution retirement funds and the management of post-retirement medical aid liabilities is evidence of this. Neither of these liabilities can be eliminated instantly and, therefore, the company is doing so on a planned, phased basis.

Remuneration report

Governance


TCE is flexible in that employees can choose benefits most suited to their lifestyle and it empowers employees to structure competitive packages which, at all times, are governed by a strict compliance with current tax legislation. Employees are able to structure their TCE over 12 or 13 months to provide for a December double payment if desired.

BenefitsThe company offers a variety of benefits. Where benefits are discretionary, they are calculated according to business need. They are listed below:

• Medical aid (unless on spouse’s medical aid or under minimum salary threshold);

• Pension fund;

• Travel allowance;

• Car insurance;

• Cellular phone;

• Magazine, newspaper and professional subscriptions;

• Study leave;

• Social club;

• Parking;

• Subsidised canteen;

• Competitive personal insurance rates;

• Flexible working hours; and

• 20 days leave with option to buy up to 30 days.

Short-term incentivesIncentive bonus schemeShort-term performance-based incentives tie significant remuneration costs to the fortunes of the business and drive awareness of and alignment to strategy. All permanent employees are eligible for annual performance-related awards in terms of the incentive bonus scheme, although payment is subject to achievement of strict performance-based outcomes set out in a balanced scorecard format performance contract and is, therefore, only made to those individuals who achieve a performance rating of =/> 3.5 on the G-Force performance management system. The scheme is designed to motivate and reward talent and, because it is a strong driver of strategy, is subject to review as strategy changes. It is largely formula driven and comprises two components:

• Component 1: Is self-funding and is based on the creation of a profit pool split

60/40 between shareholders and employees based on the achievement of year-on-year financial growth targets.

An above benchmark profit pool (ABPP) is created on achievement of above targets. Distribution to individuals is based on strategic business unit performance against budget and year-on-year financial growth. Ten per cent of the overall ABPP is withheld in order to make discretionary rewards of superior performance where the formulaic calculations do not adequately reflect performance delivered. A percentage

is allocated to service unit employees. Thereafter, distribution flows to business teams in proportion to their relative contribution to the financial results of the strategic business unit. Individuals who are eligible to participate (who have scored 3.5 or more on the G-Force performance management system) have a weighting applied as follows:

EXCO members 7 Senior managers/senior technically skilled 4 Middle managers/middle technically skilled 2 All other staff 1

This, together with their performance score, forms the basis of calculation of their share of the business unit ABPP.

Payments may be withheld in cases where the qualifying participant’s actions have resulted in the company being brought into public disrepute or in the case of fines or penalties being incurred.

• Component 2: Certain limited bonuses may be paid to high performing

individuals (G-Force of 3.5 or more) where financial targets are not met but where individual performance exceeds expectations – this component is provided for as a salary cost. These bonuses equate to just over half a thirteenth cheque and reflect a greater loss of potential bonus payment (‘at risk pay’) as seniority increases as follows:

EXCO 7% Senior managers/senior technically skilled 6% Middle managers/middle technically skilled 5% All other staff 5%

Again, 10% of the overall Component 2 quantum is withheld in order to make discretionary rewards of superior performance where the formulaic calculations do not adequately reflect performance delivered.

Payments may be withheld in cases where the qualifying participant’s actions have resulted in the company being brought into public disrepute or in the case of fines or penalties being incurred.

Medium-term incentivesIndividual project-based bonusesProject-based bonuses may be paid to reward employees for their efforts over and above their normal working requirements and are limited to special project-engagement and successful completion. Potential awards are subject to moderation by EXCO and are capped at 20% of an individual’s TCE and may also be awarded to individuals contracted for specified periods, eg. those required to assist in managing key client portfolios/branches.

Remuneration report continued


Attraction and retention paymentsCertain executive committee members, key managers and technically skilled staff may be invited to sign restraint agreements and retention payments may be paid in recognition of this. A risk and reward matrix is completed in these instances and scores calculated according to:

• Leadership (both current and potential);

• BEE/PDI leadership (both current and potential);

• Key client relationship;

• Business effectiveness; and

• Risk of flight.

A claw-back clause enables the company to recoup payments made in the event that such a key employee resigns before a stipulated period (36 or 24 months).

Long-term incentivesEmployee share option schemeShare incentives are a powerful tool in aligning the interests of staff with those of shareholders and offer senior managers and technically skilled employees the opportunity to create long-term wealth. Allocations are reviewed annually and are subject to availability in terms of the trust deed. The risk and reward matrix is completed, in these instances, and scores calculated as set out above. There are bands of participation equated to responsibility levels and the ability to influence financial results.

Makgulong Employee Ownership Scheme TrustA number of black employees participate in the above scheme which is not an employer-operated scheme but is managed by the trustees of the Makgulong Employee Ownership Scheme Trust. Participation is based on EE levels as follows:

Senior managers/senior technically skilled 150 000 sharesMiddle managers/middle technically skilled 75 000 sharesJunior managers/junior technically skilled 35 000 sharesSemi-skilled staff 10 000 shares

‘Top Hat’ scheme for senior executivesAn investigation is taking place with a view to implementing such a scheme for executive-level managers who are able to strategically influence business. Performance hurdles will be built into such a scheme.

Other non-remuneration attraction and retention toolsAccording to global research, about 25% of ‘stay’ decisions relate to remuneration. Employees join companies and leave because of the behaviour of managers. Accordingly, and in terms of our talent management programme, there is considerable investment in non-remuneration initiatives in respect of development and employee-engagement, including leadership development. The retention of employees is far wider than ensuring appropriate remuneration levels and the company has, therefore, a multi-pronged attraction and retention philosophy.

The remuneration philosophy, strategy and components thereof are reviewed annually by the remuneration committee and are subject to overview from time to time by independent consultants to ensure that they remain appropriate and in line with best practice and industry trends.

Nigel PayneChairman – Remuneration and nominations committee

Governance


Annual Financial Statements

Contents Page

Directors’ Responsibility Statement 33

Certificate of the Company Secretary 33

Independent Auditor’s Report 34

Directors’ Report 35

Income Statements 42

Balance Sheets 43

Cash Flow Statements 44

Statements of Recognised Income and Expenses 45

Basis of Preparation and Significant Accounting Policies 46

Notes to the Annual Financial Statements 61

Shareholders’ Information 101

Board of Directors 103

Notice of Annual General Meeting 107

Explanatory Notes to the Notice of Annual General Meeting 111

Form of Proxy Attached

Administration Inside back cover



Directors’ Responsibility Statement

The directors are responsible for the preparation and fair presentation of the group annual financial statements and annual financial statements of Glenrand M·I·B Limited, comprising the balance sheets at 30 June 2009, the income statements, the statements of recognised income and expenses and cash flow statements for the year then ended, significant accounting policies and the notes to the financial statements, other explanatory notes, and the directors’ report, in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of South Africa.

The directors’ responsibility includes oversight of the processes relating to: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of these financial statements which provide reasonable assurance that they are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

The directors’ responsibility also includes maintaining adequate accounting records and an effective system of risk management, as well as the preparation of the supplementary schedules included in these financial statements.

The internal controls include a system of internal financial and operational controls designed to provide reasonable but not absolute assurance that assets are safeguarded and that transactions are executed and recorded in accordance with legislation, generally accepted business practices and the group’s policies and procedures. The directors’ report on the annual financial statements for the year ended 30 June 2008 noted that management had used the findings of both internal audit and regulatory compliance monitoring to identify and prioritise matters for attention and that where preventative controls were dependent upon technology that was not yet in place or sufficiently mature to provide such control mechanisms, compensatory and detective controls were included in standard operating procedures, subject to regular review by management and internal and external audit.

During the current year the directors are satisfied that the improvements to systems of control, coupled with the additional procedures, are sufficient to provide reasonable assurance of the integrity of these financial statements.

Going concernAfter making due enquiries, the directors are satisfied that the group has adequate resources to continue to operate for the foreseeable future. For this reason the financial statements have been prepared on the going concern basis.

The auditor is responsible for reporting on whether the group annual financial statements and annual financial statements are fairly presented in accordance with the applicable financial reporting framework.

Approval of group annual financial statements and annual financial statementsThe group annual financial statements and annual financial statements of Glenrand M·I·B Limited, as identified in the first paragraph, were approved by the board of directors on 9 September 2009 and signed on its behalf by:

Dr MF KuneneChairman

AJ ChislettChief Executive Officer

Certificate of the Company SecretaryIn my capacity as company secretary, I hereby confirm, in terms of section 268 G (d) of the Companies Act, 1973, that for the year ended 30 June 2009 the company has lodged with the Registrar of Companies all such returns as are required of a public company in terms of this Act and that all such returns are true, correct and up-to-date.

E PriceCompany Secretary

9 September 2009


Independent Auditor’s Report

Report on the financial statementsWe have audited the group annual financial statements and the annual financial statements of Glenrand M·I·B Limited, which comprise the balance sheets at 30 June 2009, and the income statements, the statements of recognised income and expenses and cash flow statements for the year then ended, significant accounting policies and the notes to the financial statements and the directors’ report as set out on pages 35 to 100.

Directors’ responsibility for the financial statementsThe company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of South Africa. This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances.

Auditor’s responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the financial statements present fairly, in all material respects, the consolidated and separate financial position of Glenrand M·I·B Limited at 30 June 2009, and its consolidated and separate financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards, and in the manner required by the Companies Act of South Africa.

KPMG Inc.Registered Auditor

Per DS ReadChartered Accountant (SA)Registered AuditorDirector9 September 2009

KPMG Crescent85 Empire RoadParktownJohannesburg



Directors’ Report

The directors have pleasure in presenting their annual report, together with the audited annual financial statements of the company and the group, for the year ended 30 June 2009.

Nature of businessGlenrand M·I·B is a leading provider of insurance broking services to a range of South African and international clients.

Year under reviewThe results for the year under review are detailed in the annual financial statements.

Special resolutionsAt the Annual General Meeting held on 19 November 2008 shareholders approved a special resolution granting the directors a renewable general authority to acquire shares of the company.

To date, no action in terms of this resolution has taken place.

Special resolution of subsidiary companiesSince the date of the previous report, one special resolution was passed by a subsidiary but is not considered material to the group.

DividendsNo dividends were declared in respect of the year under review.

Share capitalFull details of the authorised, issued and unissued capital of the company as at 30 June 2009 are contained in note 23 to the annual financial statements on page 79.

The company’s authorised share capital of 400 000 000 ordinary shares of 2 cents each and 22 127 406 “B” redeemable convertible preference shares of 0,01 cent each remained unchanged during the year.

The company’s issued share capital of 292 128 302 ordinary shares of 2 cents each remained unchanged during the year.

The directors are authorised, by resolution of the shareholders and until the forthcoming Annual General Meeting, to issue 5% of the unissued shares for any purpose and upon such terms and conditions as they deem fit. No shares were issued under this authority during the year under review.

Subsidiary companiesPages 96 to 97 sets out the list of companies considered by the directors to be necessary for the shareholders to obtain a proper appreciation of the affairs of the group. A full list of companies associated with the group will be made available to shareholders on request.

The attributable interest of the company in the profits and losses of the subsidiary companies, excluding Glenrand M·I·B Benefit Services (Pty) Limited (in liquidation), for the year ended 30 June 2009 are as follows: 2009 20081

R’000 R’000

Aggregate profits 28 505 20 890Aggregate losses (496) (8 080)

12008 has been restated to exclude Glenrand M.I.B Benefit Services (Pty) Limited


Directors’ Report(continued)

Year endThe board has resolved that the year end of the group will be changed from 30 June to 30 September, effective from 2010. The change in year end will allow for full focus by the business on, in particular, the corporate renewal period, and thereafter enable the establishment of a proper budget base for the following year.

Borrowing powersIn terms of the Articles of Association, the borrowing powers of the company are unlimited.

AuditorsKPMG Inc.

SponsorNedbank Capital.

SecretaryThe company secretary is Mrs Elva Price and her business and postal addresses are:

Postal address: PO Box 2544, Randburg, 2125Registered office: 288 Kent Avenue, Ferndale, Randburg, 2194, South Africa.

Transfer secretaryComputershare Investor Services (Pty) Limited.

DirectorsThe names of the directors in office at the date of this report appear on pages 103 to 106, together with their biographical details, as well as their categorisation.

The following appointments of directors took place during the year under review:

Iraj Abedian – appointed 3 November 2008Peter Cooper – appointed 19 November 2008 (previously alternate director to GT Ferreira)Abrie du Preez – appointed 25 February 2009Thandeka Mgoduso – appointed 2 April 2009 (previously alternate director to Hixonia Nyasulu)Bruce Chelius – appointed alternate director to Abrie du Preez on 2 April 2009Tidimalo Khobane – appointed alternate director to Moss Mashishi on 27 May 2009.

Subsequent to the year end, Hester Hickey was appointed as a director on 1 July 2009.

The following resignations and retirements took place during the year under review:

GT Ferreira – retired 19 November 2008David Harpur – resigned 19 November 2008Allan Mansfield – retired 19 November 2008Peter Cooper – resigned 25 February 2009Hixonia Nyasulu – resigned 2 April 2009.

In accordance with the Articles of Association, Iraj Abedian, Abrie du Preez, Thandeka Mgoduso and Hester Hickey hold office only until the forthcoming Annual General Meeting and, being eligible, have offered themselves for re-election.

In accordance with the Articles of Association, Nigel Payne and Gordon Whitcher retire from the board by rotation at the forthcoming Annual General Meeting. Nigel Payne and Gordon Whitcher, being eligible, have offered themselves for re-election.

Shareholders will be asked at the forthcoming Annual General Meeting to approve the following fees for the year ending 30 September 2010, which are unchanged from those fees approved by shareholders in respect of the year ended 30 June 2009:




Chairman of the board R450 000 per annumNon-executive director R70 000 per annumAudit, risk and compliance committee chairman R140 000 per annumAudit, risk and compliance committee member R70 000 per annumRemuneration and nominations committee chairman R70 000 per annumRemuneration and nominations committee member R40 000 per annumRisk committee chairman R100 000 per annumRisk committee member R60 000 per annum

Dudu Kunene, Moss Mashishi and Thandeka Mgoduso represent Kunene Bros., Matemeku Investments and Ayavuna Women’s Investments respectively and these companies are remunerated in accordance with the Performance Agreements entered into between Glenrand M·I·B and the BEE shareholders, approved by shareholders on 17 March 2006. In terms of those agreements, specified performance criteria are required to be met, for which performance Kunene Bros. and Matemeku Investments are each paid a fee. The fee is reviewed annually by a committee of non-executive directors of the board and can be adjusted upwards or downwards, depending on the determination by the committee of the BEE shareholders’ performance. The fee was reviewed by the remuneration and nominations committee during the year and an increase of 15% from R600 000 to R690 000 was approved effective 1 September 2008, based on the fact that the fee had not been adjusted for more than two years and that the performance by the BEE shareholders warranted such increase.

Glenrand M·I·B and Ayavuna Women’s Investments are negotiating a revised Performance Agreement.

Directors’ emolumentsFor directors in office during the year ended 30 June 2009:

Pension Total Cash Travel Medical contri- IFRS 2 emolu-Executive package allowance aid butions Bonus¹ charge mentsdirectors R R R R R R R

AJ Chislett 2 153 239 49 959 51 906 143 628 500 000 373 925 3 272 657G Whitcher 1 369 673 25 000 41 958 92 281 776 115 241 776 2 546 803

Total 3 522 912 74 959 93 864 235 909 1 276 115 615 701 5 819 460

¹Bonuses in respect of financial year 2008



Audit, Remune- risk and ration and Fees Perfor- Board compliance nominations Risk paid by mance Total meeting committee committee committee subsidiary agreement emolu-Non-executive fees fees fees fees companies fees Other mentsdirectors R R R R R R R R

I Abedian¹ 46 217 24 100 – – – – – 70 317RG Cottrell 70 000 140 000 40 000 – 120 000 – – 370 000P Cooper² 18 986 – – – – – – 18 986AP du Preez³ – – – – – – – –GT Ferreira4 26 977 – – – – – – 26 977DJ Harpur5 26 977 26 977 15 416 38 539 – – 242 882 350 791MF Kunene6 450 000 – – – – 667 500 – 1 117 500AW Mansfield7 26 977 26 977 15 416 – 79 489 – – 148 859MR Mashishi8 – – – – – 780 834 – 780 834TN Mgoduso9 17 228 – 3 772 – – – – 21 000TH Nyasulu10 – – – – – 150 000 – 150 000NG Payne 70 000 70 000 70 000 73 772 – – – 283 772

Total 753 362 288 054 144 604 112 311 199 489 1 598 334 242 882 3 339 036

¹Pro-rated from 3 November 2008²Pro-rated from 19 November 2008 to 25 February 2009³Director’s fees waived4Pro-rated to 19 November 20085 In terms of a service contract which expired on 31 October 2008, David Harpur was required to perform functions in the Risk Services division relating to client relationship management, client renewals and new business. David Harpur resigned from the board on 19 November 2008

6The fees in respect of Dr Kunene are paid to Kunene Bros. Holdings (Pty) Limited7Fee paid to AW Mansfield Family Investments (Pty) Limited. Pro-rated to 19 November 20088 Fee paid to Matemeku Investments (Pty) Limited. Fee includes a one-off fee paid in respect of meeting attendance by shareholder representative9Pro-rated from 2 April 200910Fee paid to Ayavuna Women’s Investments (Pty) Limited for the period 1 July 2008 to 30 September 2008

For directors in office during the year ended 30 June 2008: Cash Travel Medical Pension IFRS 2 TotalExecutive package allowance aid contributions Bonus2 charge emolumentsdirectors R R R R R R R

AJ Chislett¹ 1 415 757 28 345 31 802 87 446 974 000 201 988 2 739 338G Whitcher 1 278 741 30 000 37 662 79 051 635 000 142 473 2 202 927

Total 2 694 498 58 345 69 464 166 497 1 609 000 344 461 4 942 265

¹Pro-rated - appointed 1 November 20072Bonuses in respect of financial year 2007

Audit, Remune- risk and ration and Fees Board compliance nominations Risk paid by Performance Total meeting committee committee committee subsidiary agreement IFRS 2 emolu-Non-executive fees fees fees fees companies fees Other charge mentsdirectors R R R R R R R R R

RG Cottrell 70 000 140 000 40 000 – 151 000 – – – 401 000GT Ferreira 70 000 – – – – – – – 70 000DJ Harpur¹ 70 000 70 000 40 000 100 000 111 229 – 641 178 2 258 1 034 665MF Kunene² 375 000 – – – – 400 000 533 332 1 694 1 310 026AW Mansfield³ 70 000 70 000 49 435 – 435 138 – – – 624 573MR Mashishi4 – – – – – 600 000 – – 600 000TH Nyasulu5 – – – – – 600 000 – – 600 000NG Payne 70 000 70 000 47 242 60 000 – – – – 247 242

Total 725 000 350 000 176 677 160 000 697 367 1 600 000 1 174 510 3 952 4 887 506

¹In terms of a service contract, David Harpur was required to perform functions in the Risk Services division relating to client relationship management, client renewals and new business² The chairman’s fee and the performance fee were reduced whilst Dr Kunene acted as the chief executive officer. The amount of R533 332 was the fee for acting as chief executive officer. The fees in respect of Dr Kunene are paid to Kunene Bros. Holdings (Pty) Limited

³Fee paid to AW Mansfield Family Investments (Pty) Limited4Fee paid to Matemeku Investments (Pty) Limited5Fee paid to Ayavuna Women’s Investments (Pty) Limited




Directors’ interests in ordinary sharesFor directors in office during the year ended:

30 June 2009 30 June 2008 % of % of Direct Indirect issued Direct Indirect issued beneficial beneficial Total capital beneficial beneficial Total capital

BA Chelius 32 385 4 992 927 5 025 312 1,7 – – – –AJ Chislett 467 032 – 467 032 0,2 242 032 – 242 032 0,1RG Cottrell 4 385 – 4 385 * 4 385 – 4 385 *AP du Preez – 20 668 067 20 668 067 7,1 – – – –DJ Harpur – – – – 548 782 3 844 629 4 393 411 1,5TT Khobane – 1 219 812 1 219 812 0,4 – – – –MF Kunene 877 4 473 398 4 474 275 1,5 877 4 473 398 4 474 275 1,5AW Mansfield – – – – – 11 480 810 11 480 810 3,9MR Mashishi – 4 492 272 4 492 272 1,5 – 4 492 2721 4 492 272 1,5TN Mgoduso – 160 238 160 238 0,1 – 160 2381 160 238 0,1TH Nyasulu – – – – – 4 005 950 4 005 950 1,4

Total 504 679 36 006 714 36 511 393 12,5 796 076 28 457 297 29 253 373 10,0

* = Less than 0,1%1Restated

The above interests remained unchanged at the date of approval of the annual financial statements.

Directors’ interests in share options for the year ended 30 June 2009: Average Opening exercise Options Closing balance price forfeited balance Strike Vesting period 1 July Options Options per on resig- 30 June Benefit price From To 2008 granted exercised share nation 2009 derived

AJ Chislett ¹R2,18 20/12/2005 19/12/2009 65 000 – – – – 65 000 – ¹R3,17 18/10/2007 17/10/2011 400 000 – – – – 400 000 – ¹R1,55 01/11/2009 31/10/2013 600 000 – – – – 600 000 – R1,13 20/03/2011 19/03/2015 1 000 000 – – – – 1 000 000 – R1,00 28/05/2012 27/05/2016 – 400 000 – – – 400 000 –

2 065 000 400 000 – – – 2 465 000 –

DJ Harpur R2,18 20/12/2005 19/12/2009 200 000 – – – 200 000 – –

MF Kunene R2,18 20/12/2005 19/12/2009 150 000 – – – – 150 000 –

G Whitcher ¹R2,36 28/10/2008 27/10/2012 200 000 – – – – 200 000 – R1,55 01/11/2009 31/10/2013 200 000 – – – – 200 000 – R1,30 28/09/2010 27/09/2014 800 000 – – – – 800 000 – R1,00 28/05/2012 27/05/2016 – 400 000 – – – 400 000 –

1 200 000 400 000 – – – 1 600 000 –

Total 3 615 000 800 000 – – 200 000 4 215 000 –

¹ Granted prior to appointment as director

No other directors have been granted share options.



Directors’ interests in share options for the year ended 30 June 2008: Average Opening exercise Options Closing balance price forfeited balance Strike Vesting period 1 July Options Options per on resig- 30 June Benefit price From To 2007 granted exercised share nation 2008 derived

AJ Chislett ¹R2,18 20/12/2005 19/12/2009 65 000 – – – – 65 000 – ¹R3,17 18/10/2007 17/10/2011 400 000 – – – – 400 000 – ¹R1,55 01/11/2009 31/10/2013 600 000 – – – – 600 000 – R1,13 20/03/2011 19/03/2015 – 1 000 000 – – – 1 000 000 –

1 065 000 1 000 000 – – – 2 065 000 –

DJ Harpur R2,18 20/12/2005 19/12/2009 200 000 – – – – 200 000 –

MF Kunene R2,18 20/12/2005 19/12/2009 150 000 – – – – 150 000 –

G Whitcher ¹R2,36 28/10/2008 27/10/2012 200 000 – – – – 200 000 – R1,55 01/11/2009 31/10/2013 200 000 – – – – 200 000 – R1,30 28/09/2010 27/09/2014 – 800 000 – – – 800 000 –

400 000 800 000 – – – 1 200 000 –

Total 1 815 000 1 800 000 – – – 3 615 000 –

¹ Granted prior to appointment as director

No other directors have been granted share options.

Details of share incentive schemesThe Glenmib Employee Scheme (option scheme)The Glenmib Employee Scheme operates to incentivise executive directors, management and employees through equity participation in the company. The number of shares which may be made available for the purpose of this scheme shall not exceed 15% of the company’s issued shares from time-to-time. No individual may be granted options which would amount to greater than 1% of the issued shares of the company from time-to-time.

The company is required, in terms of the JSE Listings Requirements, to amend the Trust Deed of the Glenmib Employee Scheme. The remuneration and nominations committee has recommended amendments to the Trust Deed to comply with these requirements, as well as some further additional amendments. The proposed changes are set out in Appendix 1 to the Notice of Annual General Meeting and shareholders will be asked to approve these amendments at the Annual General Meeting.

Share options may be exercised as follows: up to 35% of the options after three years, up to 70% after four years and up to 100% after five years, with all options lapsing if not exercised within seven years from the date of being granted.

9 715 000 share options, at a price of R1,00 per option, were issued during the year under review. At 30 June 2009 the Glenmib Employee Scheme held 219 670 (2008: 219 670) Glenrand M·I·B shares.

The movement in share options granted under the Glenmib Employee Scheme is as follows: 2009 2008

At beginning of year 15 106 500 13 464 000Granted 9 715 000 5 050 000Forfeited (1 100 000) (3 407 500)

Total 23 721 500 15 106 500




Share options outstanding are as follows:Exercise date: Exercise price 2009 2008

Between December 2005 – December 2009 R2,18 1 406 500 1 606 500Between October 2007 – October 2011 R3,17 1 100 000 1 100 000Between October 2008 – October 2012 R2,36 200 000 200 000Between November 2009 – November 2013 R1,55 6 850 000 7 550 000Between September 2010 – September 2014 R1,30 3 450 000 3 650 000Between March 2011 – March 2015 R1,13 1 000 000 1 000 000Between May 2012 – May 2016 R1,00 9 715 000 –

23 721 500 15 106 500

The Makgulong Employee Ownership Scheme TrustThe Makgulong Employee Ownership Scheme Trust operates to provide black employees of the company with an opportunity to participate in the ownership of the company and to facilitate the black economic empowerment of the employees. Shares are allocated to employees based on occupational levels within the company. Shares may be purchased as follows: up to 35% of the shares after three years, up to 70% after four years and up to 100% after five years. Shares are offered to beneficiaries at R1,00 per share. To encourage beneficiaries to retain ownership for as long as possible, the cost is reduced to one cent when the transfer of ownership of the shares is delayed for 10 years from date of acceptance. Employees who retire from the company in terms of the rules of the company’s pension fund are entitled to take transfer of the shares, prior to vesting, at a cost of one cent per share.

The commencement date for the scheme was 1 January 2007 for all new beneficiaries, except for beneficiaries who exchanged their share options for shares under this scheme, which shares were offered with the same vesting dates as those relating to the original share options.

The movement in shares granted under the Makgulong Employee Ownership Scheme Trust is as follows:

2009 2008

At beginning of year 6 814 750 8 944 750Forfeited (1 040 000) (2 070 000)Exercised (145 000) (60 000)

Total 5 629 750 6 814 750

Shares outstanding are as follows:

ExerciseVesting period: price 2009 2008

Between March 2005 – March 2012 R1,00 15 000 15 000Between December 2005 – December 2012 R1,00 104 750 104 750Between April 2008 – April 2015 R1,00 645 000 745 000Between January 2010 – January 2017 R1,00 4 865 000 5 950 000

Total 5 629 750 6 814 750

AcquisitionsGlenrand M·I·B purchased 10% of the issued shares in Glenrand M·I·B Credit and Political Risk Consultants (Pty) Limited, thereby increasing its interest in this company to 80%, with effect from 14 November 2008.

DisposalsGlenrand M·I·B entered into an amendment to the Joint Venture Agreement with Absa Bank Limited relating to the pension fund backed lending scheme conducted under the style “Amhlope … the future of Housing Joint Venture” which resulted in the effective disposal of the pension fund backed lending scheme to Absa Bank Limited, with effect from 1 February 2009.

Liquidation of Glenrand M·I·B Benefit Services (Pty) LimitedThe board of Glenrand M·I·B resolved to withdraw financial support of its subsidiary Glenrand M·I·B Benefit Services (Pty) Limited, leaving the board of Benefit Services with no alternative but to apply to the Court for the liquidation of the company. The High Court granted the final liquidation order for the winding up of Benefit Services on 2 June 2009.


Income Statementsfor the year ended 30 June 2009

Group Company 2009 2008 2009 2008 Notes R‘000 R‘000 R‘000 R‘000

Continuing operationsRevenue 502 867 466 049 371 318 350 217Other income 1 1 160 6 532 20 683 34 478Operating expenses 2 (488 031) (460 026) (402 736) (393 072) Disposals 3 (2 286) 236 (2 294) 240Impairments 4 (3 204) (28 189) 439 (79 437)

Results from operating activities 10 506 (15 398) (12 590) (87 574)

Investment income 5 72 457 66 987 60 786 55 051Finance costs 6 (26 850) (26 219) (20 187) (18 452)

Net investment income 45 607 40 768 40 599 36 599

Share of profit of equity accounted investees 980 1 374 – –

Profit (loss) before taxation 57 093 26 744 28 009 (50 975)Taxation 7 (19 016) (23 997) (8 473) (15 736)

Profit (loss) from continuing operations 38 077 2 747 19 536 (66 711)

Discontinuing operationsProfit (loss) from discontinuing operations (net of taxation) including the effect of deconsolidation 8 10 581 (82 740) (38 796) 29 677

Profit (loss) for the year 48 658 (79 993) (19 260) (37 034)

Profit (loss) attributable to:Minority interest 2 111 2 057 – –Shareholders of Glenrand M.I.B 46 547 (82 050) (19 260) (37 034)

48 658 (79 993) (19 260) (37 034)

Earnings (loss) per shareBasic earnings (loss) per share (cents) 9 20,5 (36,2) – –Diluted earnings (loss) per share (cents) 9 20,5 (36,2) – –

Continuing operationsBasic earnings per share (cents) 9 15,9 0,3 – –Diluted earnings per share (cents) 9 15,9 0,3 – –



Balance Sheetsas at 30 June 2009


AssetsNon-current assetsProperty, plant and equipment 10 21 994 20 335 17 784 17 101Investments in subsidiary companies 11 – – 20 845 21 111Loans to subsidiary companies 11 – – 66 342 57 735Investments in associated companies and joint ventures 12 2 250 2 770 490 490Other investments 13 107 353 107 353Goodwill 14 36 710 44 530 25 956 27 264Intangible assets 15 70 002 74 772 27 456 25 177Long-term accounts receivable 16 – 1 260 – 1 260Deferred taxation asset 17 25 894 36 697 24 634 35 671

Total non-current assets 156 957 180 717 183 614 186 162

Current assetsTrade and other receivables 19 178 710 178 812 44 164 36 854Receivable from associated companies and joint ventures 471 2 006 471 2 006Receivable from subsidiary companies 11 – – 19 325 17 509Taxation 15 618 – 13 498 –Cash and cash equivalents 20 235 600 330 719 165 957 254 256

430 399 511 537 243 415 310 625Assets classified as held for sale 21 – 2 918 219 – –

430 399 3 429 756 243 415 310 625

Total assets 587 356 3 610 473 427 029 496 787

Equity and liabilitiesCapital and reservesShare capital and share premium 22 and 23 52 425 52 425 52 425 52 425Reserves 22 and 24 17 366 20 421 44 557 43 859Retained earnings (accumulated losses) 22 87 464 39 828 (4 754) 13 937Minority interest 22 3 757 4 042 – –

Total equity 161 012 116 716 92 228 110 221

LiabilitiesNon-current liabilitiesLoans from subsidiary companies 11 – – 18 993 22 958Long-term liabilities 25 46 640 48 064 44 195 38 775Deferred taxation liability 17 9 163 8 579 – –

Total non-current liabilities 55 803 56 643 63 188 61 733

Current liabilitiesTrade and other payables 30 294 862 356 102 245 931 288 153Provisions 31 4 927 96 352 4 927 12 289Payable to subsidiary companies 11 – – 20 713 19 464Payable to associated companies and joint ventures 42 65 42 65Taxation 1 522 4 270 – 4 862Bank overdraft 20 69 188 77 558 – –

370 541 534 347 271 613 324 833Liabilities classified as held for sale 21 – 2 902 767 – –

370 541 3 437 114 271 613 324 833

Total equity and liabilities 587 356 3 610 473 427 029 496 787


Cash Flow Statementsfor the year ended 30 June 2009


Cash flow from operating activitiesCash generated (utilised) by operations 32.1 22 628 (48 819) 8 675 16 829Working capital changes 32.2 (84 363) 56 181 (95 875) 29 337

Cash (utilised) generated from operations (61 735) 7 362 (87 200) 46 166Investment income– Interest received 33 60 231 55 816 37 998 33 546– Preference dividends 33 – 35 – 35– Dividends received from subsidiary and associated companies 33 – – 4 875 3 310– Dividends – other 33 174 – 174 –Interest paid 34 (6 673) (20 009) (1 133) (770)Taxation paid 35 (25 222) (13 318) (15 023) (4 159)Dividends paid (1 740) (1 768) – –

Net cash (outflow) inflow from operating activities (34 965) 28 118 (60 309) 78 128

Cash flow from investing activitiesMaintenance of property, plant and equipment (10 357) (3 452) (7 806) (2 421)Proceeds on disposal of property, plant and equipment 36 31 6 682 23 19Acquisition of software (11 875) (2 214) (10 567) (1 909)Cash effect of acquisition of subsidiary companies and businesses 37 – (30 000) – –Purchase of minority interest in subsidiary company (2 547) (1 511) (2 547) (1 511)Proceeds on disposal of investments 12 860 13 576 2 828 1 033Post-retirement benefits paid (2 883) (2 754) (2 883) (2 620)

Net cash outflow from investing activities (14 771) (19 673) (20 952) (7 409)

Cash flow from financing activitiesRepayments of long-term liabilities (15 433) (2 665) – –Cash inflow from long-term liabilities 877 260 877 96Income from long-term receivable 2 680 6 305 98 6 312Cash outflow from long-term receivable – (638) – (638)Increase in non-current receivables from subsidiary companies – – (7 971) (3 983)Decrease in non-current payables to subsidiary companies – – (42) –

Net cash (outflow) inflow from financing activities (11 876) 3 262 (7 038) 1 787

Net (decrease) increase in cash and cash equivalents (61 612) 11 707 (88 299) 72 506Cash and cash equivalents at beginning of the year 268 819 256 653 254 256 181 750Cash effect of deconsolidation of subsidiary 38 (39 660) – – –Effects of exchange rate fluctuations on cash held (1 135) 459 – –

Cash and cash equivalents at the end of the year 20 166 412 268 819 165 957 254 256



Statements of Recognised Income and Expensesfor the year ended 30 June 2009

Group Company 2009 2008 2009 2008 R‘000 R‘000 R‘000 R‘000

Actuarial loss on post-retirement benefits (3 161) (6 767) (3 161) (7 386)Deferred taxation on post-retirement benefits actuarial loss 773 1 767 773 1 767Translation of foreign subsidiary companies (5 061) 2 404 – –

Income and expenses recognised directly in equity (7 449) (2 596) (2 388) (5 619)Profit (loss) for the year 48 658 (79 993) (19 260) (37 034)

Total recognised income and expenses for the year 41 209 (82 589) (21 648) (42 653)

Attributable to:Minority interest 2 111 2 057 – –Shareholders of Glenrand M.I.B 39 098 (84 646) (21 648) (42 653)

Total recognised income and expenses for the year 41 209 (82 589) (21 648) (42 653)


Basis of Preparation and Significant Accounting Policiesfor the year ended 30 June 2009

1. Basis of preparation Glenrand M·I·B Limited (“the company”) is a company domiciled in South Africa. The consolidated financial statements of the

company for the year ended 30 June 2009 comprise the company and its subsidiaries (together referred to as “the group”) and the group’s interest in associated companies and joint ventures.

The annual financial statements are prepared in accordance with the requirements of International Financial Reporting Standards (IFRS) and the requirements of the South African Companies Act. The measurement basis used is the historical cost basis, except for available for sale and held-for-trading financial instruments, which are carried at fair value.

Non-current assets and disposal groups held for sale are stated at the lower of carrying amount and fair value less cost to sell.

The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Judgments made by management in the application of IFRS that have a significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are disclosed.

In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements are described in the following notes:

Note 14 – Goodwill Note 15 – Intangible assets Note 16 – Long-term accounts receivable Note 26 – Post-retirement medical obligations Note 27 – Obligation for employees on disability Note 28 – Retirement benefits Note 31 – Provisions

The annual financial statements are prepared on the going concern basis. The financial statements are presented in South African Rands, rounded to the nearest thousand, which is the company’s functional currency and the group’s presentation currency.

2. Significant accounting policies The significant accounting policies are set out below. These have been consistently applied to all periods presented in these

consolidated and separate financial statements.

The group did not early adopt any of the IFRS standards.

2.1 Principles of consolidation Subsidiary companies The consolidated annual financial statements of the group present the consolidated financial position and changes therein,

operating results and cash flow information of the company and its subsidiaries, together with the Glenmib Employee Scheme Trust. Consolidated annual financial statements are prepared using uniform accounting policies for transactions and other events in similar circumstances. Subsidiaries are those companies that the group controls. This control is normally evidenced when the group owns, either directly or indirectly, more than 50% of the voting rights of a company’s share capital and/or is able to govern the financial and operating policies of an enterprise so as to benefit from its activities. In assessing control, potential voting rights that are currently exercisable are taken into account.

The equity and net income attributable to minority shareholders’ interests are shown separately in the balance sheet and reconciliation of movements in reserves, respectively. Minorities are limited to nil in the event that the partially owned subsidiary is making losses, unless there is an agreement with the minorities that they will bear their share of the losses.



Basis of Preparation and Significant Accounting Policiesfor the year ended 30 June 2009 (continued)

2. Significant accounting policies (continued) 2.1 Principles of consolidation (continued) Subsidiary companies (continued) The purchase method of accounting is used for acquired businesses. The cost of an acquisition is measured at the fair value

of the stated assets, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the group’s share of identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement. Companies acquired or disposed of during the year are included in the consolidated annual financial statements from the effective date of acquisition or to the effective date of disposal.

Where the effective date of acquisition of shares in a subsidiary is different to the date of settlement by way of cash or shares then, in the case of cash payments, interest is imputed from the effective date to the settlement date. For purposes of calculating earnings per ordinary share, the shares issued in settlement of the purchase price are assumed to have been issued on the effective date.

Inter-company balances and transactions, including inter-company profits and unrealised profits and losses, are eliminated in preparing the consolidated annual financial statements.

The company carries its investment in subsidiaries at cost less accumulated impairment losses. At the balance sheet date an assessment is made, based on the net asset value of the relevant subsidiary, if there is any indication that an investment in a subsidiary may be impaired. If such an indication exists, the company estimates the recoverable amount of the asset to determine the carrying value.

Business combinations arising from transfers of interests in entities that are under the control of the shareholder that controls the group are accounted for as if the acquisition had occurred at the beginning of the earliest comparative period presented or, if later, at the date that common control was established; for this purpose comparatives are restated. The assets and liabilities acquired are recognised at the carrying amounts previously recognised in the group’s controlling shareholder’s consolidated financial statements. The components of equity of the acquired entities are added to the same components within group equity except that any share capital of the acquired entities is recognised as part of share premium. Any cash paid for the acquisition is recognised directly in equity.

Associates and joint ventures (Equity accounted investees) Associated companies are companies over whose financial and operating policies the group has the ability to exercise

significant influence and which is neither a subsidiary nor a joint venture of the group. Significant influence is determined based primarily on percentage voting rights (generally between 20% and 50%), together with other factors such as board participation and participation in the policy-making process.

Joint ventures are those entities over whose activities the group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions.

Associates and joint ventures are accounted for using the equity method on consolidation and the cost method, less impairment losses in the company’s annual financial statements. The group’s share of profits less losses of associates and joint ventures are included in the consolidated income statement, and the group’s share of post-acquisition accumulated profits and reserves is added to the cost of the investments in the consolidated balance sheet from the effective date the company became an associate or joint venture and up to the effective date that significant influence or joint control ceases. The accumulated profit, net of dividends received, is transferred to a non-distributable reserve.

Carrying amounts of investments in associates and joint ventures are reduced to their recoverable amount where this is lower than their carrying amount.

When the group’s share of losses exceeds its interest in an associate or joint venture, the group’s carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the group has incurred legal or constructive obligations or made payments on behalf of an associate or joint venture.



2. Significant accounting policies (continued) 2.1 Principles of consolidation (continued) Associates and joint ventures (continued) Adjustments are made on consolidation to bring the associates’ and joint ventures’ annual financial statements into line with

the group’s accounting policies where the effect of differing accounting policies is material.

Accumulated profit and movements on reserves are generally determined from the most recent audited annual financial statements of the associate and joint venture and unaudited information to latest date available.

Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

Distributions received from associates and joint ventures are included in investment income of the company.

2.2 Financial instruments Recognition and derecognition Financial instruments are recognised initially when the group becomes a party to the contractual provisions of the

instruments. Financial assets are derecognised if the group’s contractual rights to the cash flows from the financial assets expire or if the group transfers the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date, i.e. the date that the group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the group’s obligations specified in the contract expire or are discharged or cancelled.

Measurement Investments are classified as at fair value through profit or loss if it is held for trading or designated as such upon initial

recognition. Upon initial recognition, financial instruments are recognised at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition, all instruments classified at fair value through profit and loss are measured at fair value with changes in their fair value recognised in the income statement.

Other non-derivative financial instruments Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any

impairment losses.

Held-to-maturity investments If the group has the positive intent and ability to hold debt securities to maturity, then they are classified as held-to-maturity.

Held-to-maturity investments are measured at amortised cost using the effective interest method, less any impairment losses.

Trade and other receivables Trade and other receivables are measured at amortised cost less impairment losses. A provision for impairment of trade

receivables is established when there is objective evidence that the group will not be able to collect all amounts due according to the original terms of receivables. The amount of the impairment is recognised in the income statement. When a trade receivable becomes uncollectable, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited in the income statement.

Cash and cash equivalents Cash and cash equivalents are measured at fair value.

Trade and other payables Trade and other payables are recognised at amortised cost, using the effective interest method.

Financial liabilities Financial liabilities not carried at fair value through profit and loss are recognised at amortised cost, comprising original debt

less principal payments and amortisations, using the effective interest method.

Non-derivative financial liabilities are recognised at amortised cost comprising original debt less principal payments and amortisations.




2. Significant accounting policies (continued) 2.2 Financial instruments (continued) Derivative instruments Derivative instruments are measured at fair value, with changes in fair value recognised in the income statement.

Ordinary shares Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share

options are recognised as a deduction from equity, net of any tax effects.

Repurchase of share capital (treasury shares) When share capital recognised as equity is repurchased, the amount of the consideration paid, which includes directly

attributable costs, is net of any taxation effects, and is recognised as a deduction from equity. Repurchased shares are classified as treasury shares and are presented as a deduction from total equity. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity, and the resulting surplus or deficit on the transaction is transferred to/from retained earnings.

Offset Financial assets and financial liabilities are offset and the net amount reported in the balance sheet when the company has a

legally enforceable right to set-off the recognised amounts, and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

2.3 Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.

Depreciation is calculated to write off the cost on the straight-line basis over the current expected useful lives of the assets at the following rates to their estimated residual values:

Refurbishments 20% Furniture and fittings 10% Motor vehicles 25% Computer hardware and office equipment 33,3% Leasehold improvements Shorter of the lease term and the respective assets’ useful lives

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

The residual value, depreciation method and useful life, if not insignificant, are reassessed annually.

The initial cost of property, plant and equipment comprises their purchase price, including import duties and non- refundable purchase taxes and any directly attributable costs of bringing the asset to its working condition and location for its intended use.

Expenditures incurred after the property, plant and equipment have been put into operation, such as repairs and maintenance, are normally charged to income in the period in which the costs are incurred. In situations where it can be clearly demonstrated that the expenditures have resulted in an increase in the future economic benefits expected to be obtained from the use of property, plant and equipment, the expenditures are capitalised as an additional cost of property, plant and equipment.

Surpluses (deficits) on the disposal of property, plant and equipment are credited (charged) to income. The surplus or deficit is the difference between the net disposal proceeds and the carrying amount of the asset.

2.4 Finance leases Leases that transfer substantially all the risks and rewards of ownership of the underlying asset to the group are classified as

finance leases.



2. Significant accounting policies (continued) 2.4 Finance leases (continued) The group recognises finance leases as assets and liabilities in its balance sheet at amounts equal at the inception of the lease

to the fair value of the asset or, if lower, at the present value of the minimum lease payments. In calculating the present value of the minimum lease payments the discount factor used is the interest rate implicit in the lease, when it is practicable to determine; otherwise, the group’s incremental borrowing rate is used. Initial direct costs incurred are included as part of the cost of the asset.

Lease payments are apportioned between the finance charge and the capital repayment which reduces the outstanding liability. The finance charge is allocated to periods during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

A finance lease gives rise to a depreciation expense for the asset, as well as a finance expense for each accounting period. The depreciation policy for leased assets is consistent with that for depreciable assets that are owned. See accounting policy 2.3.

2.5 Operating leases Leases, where substantially all the risks and rewards of ownership are retained by the lessor, are classified as operating leases.

Lease payments made under an operating lease are recognised as an expense on a straight-line basis over the lease term.

2.6 Goodwill All business combinations are accounted for by applying the purchase method. Goodwill represents amounts arising on

acquisition of subsidiary companies and associated companies. In respect of business acquisitions that have occurred since 1 July 2004, goodwill represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired.

In respect of acquisitions prior to this date, goodwill is included on the basis of its deemed cost, which represents the cost of goodwill less accumulated amortisation at 30 June 2004.

Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is tested annually for impairment. Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which the goodwill has been allocated. The calculation of value in use requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate to calculate the present value.

In respect of associated companies, the carrying amount of goodwill is included in the carrying amount of the investment in the associated company.

Negative goodwill arising on an acquisition is recognised directly in profit or loss.

The gain or loss on disposal of a cash-generating unit includes the unimpaired balance of goodwill.

2.7 Intangible assets (purchased) Intangible assets are measured initially at cost. Intangible assets are recognised if it is probable that the future economic

benefits that are attributable to the asset will flow to the enterprise and the costs of the asset can be measured reliably. After initial recognition, intangible assets are measured at cost less accumulated amortisation and any accumulated impairment losses. Intangible assets are amortised on a straight-line basis over the best estimate of their useful lives. The amortisation period and the amortisation method are reviewed annually at each financial year end. The amortisation cost of trade marks is transferred to a non-distributable reserve.

The amortisation periods over the current estimated useful life are as follows: Trade marks 3 years Computer software 3 – 5 years Client list 10 years Favourable lease contract 2 years

Intangible assets with an indefinite life are not amortised but are subject to an annual impairment test.




2. Significant accounting policies (continued) 2.7 Intangible assets (purchased) (continued) Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to

which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss when incurred.

2.8 Linked investments backing policyholder contracts Linked investment contracts, which are contracts of insurance in legal form but which do not transfer significant insurance

risk, are recorded at fair value. Fair value is determined by reference to the addendum to PGN 104 issued by the Actuarial Society of South Africa.

Investment contracts are “designated as trading” financial liabilities. All gains and losses on those liabilities, whether realised or unrealised, are reflected as movements in policyholder funds, and are equivalent to the gains and losses on the linked investment backing policyholder funds.

Investment income Income from collective investment schemes is accounted for on distribution dates. Interest and other investment income is

recognised in the income statement on an accrual basis.

Investment gains and losses Gains and losses arising as a result of the fluctuation in the market value of linked investments backing policyholder funds,

whether realised or unrealised, are accounted for as movements in the policyholder funds.

Premium income and claims Single premium includes lump sums received in respect of linked business with retirement funds. Premiums received from

policyholders and benefits paid to policyholders are both recognised as adjustments to policyholder liabilities.

2.9 Impairment Financial assets A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative

effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate.

An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its current fair value.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

All impairment losses are recognised in profit or loss. Any cumulative loss in respect of an available-for-sale financial asset recognised previously in equity is transferred to profit or loss.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost and available-for-sale financial assets that are debt securities, the reversal is recognised in profit or loss. For available-for-sale financial assets that are equity securities, the reversal is recognised directly in equity.

Non-financial assets The carrying amounts of the group’s non-financial assets and deferred taxation assets are reviewed at each reporting date to

determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for use, recoverable amount is estimated at each reporting date.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that are largely independent from other assets and groups. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro-rata basis.



2. Significant accounting policies (continued) 2.9 Impairment (continued) The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-taxation discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

2.10 Non-current assets held for sale Non-current assets (or disposal groups comprising assets and liabilities) that are expected to be recovered primarily through

their sale rather than through continuing use are classified as held for sale. Immediately before classification as held for sale, the assets (or components of a disposal group) are remeasured in accordance with the group’s and company’s accounting policies. Thereafter, generally the assets (or disposal group) are measured at the lower of their carrying amount and fair value less cost to sell. Any impairment loss on a disposal group is first allocated to goodwill, and then to remaining assets and liabilities on a pro-rata basis, except that no loss is allocated to financial assets, deferred taxation assets, employee benefit assets and investment property, which continue to be measured in accordance with the group’s and company’s accounting policies. Impairment losses on initial classification as held for sale and subsequent gains or losses on re-measurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment.

2.11 Cash and cash equivalents Cash includes cash on hand and cash with banks. Cash and cash equivalents are short-term, highly liquid investments that

are readily convertible to known amounts of cash with original maturities of three months or less and that are subject to an insignificant risk of change in value.

Cash and cash equivalents and bank overdrafts placed in terms of the group’s cash management system with its primary bankers are offset.

Bank accounts opened on behalf of clients are excluded from cash resources.

Bank overdrafts that are repayable on demand and form an integral part of the group’s and/or company’s cash management form part of cash and cash equivalents for cash flow purposes.

2.12 Provisions A provision is recognised when the company or group has a present obligation (legal or constructive) as a result of a past

event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditures expected to be required to settle the obligation using a pre-taxation discount rate that reflects current market assessments of the time value of money and the risk specific to the liability.

Onerous contracts A provision for onerous contracts is recognised when the expected benefits to be derived by the group from a contract are

lower than the unavoidable cost of meeting its obligation under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the group recognises any impairment loss on the assets associated with that contract.

2.13 Revenue Revenue comprises short-term insurance commission, brokerage and fees, commission on long-term insurance and

consulting and administrative fees on employee solutions. Brokerage income is, in the main, recorded on the effective commencement or renewal dates of the related policies. However, in certain instances when uncertainty exists regarding the quantum or actual receipt, brokerage is only recorded on the earlier of the invoice date or cash receipt, when this is subsequent to the date of inception of risk. Only the commission income, and not the value of the business handled, is included in revenue. Long-term insurance commission earned is, in the main, credited to income on a cash receipts basis.




2. Significant accounting policies (continued) 2.13 Revenue (continued) In certain instances a fixed brokerage fee is earned on contracts entered into with insurers and reinsurers. These brokerage

fees are recognised with reference to the stage of completion method. Where the term of the contract extends over more than one accounting period, the brokerage fees are recognised in each accounting period in which services are rendered.

In certain instances a portion of insurance broking income is deferred to cover the cost of services provided over the contract period. The amount deferred is recognised as revenue over the contract period on a consistent basis, reflecting the level of servicing activities incurred during the period.

Rental income Rental income from investment property is recognised in the income statement on a straight-line basis over the term of the

lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease.

2.14 Investment income Interest is recognised on a time proportion basis, taking account of the principal outstanding and the effective rate over the

period to maturity, when it is probable that such income will accrue to the company and/or group.

Dividends are recognised when the right to receive payment is established.

2.15 Foreign currency Foreign currency transactions Foreign currency transactions are recorded in the functional currency by applying to the foreign currency amount the

exchange rate between the functional currency and the foreign currency at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gains or losses on monetary items is the difference between amortised cost in the functional currency at the beginning of the period, adjusted for the effective interest and payments during the period, and the amortised cost in foreign currency translated at the exchange rate at the end of the period. Exchange rate differences arising on the settlement of monetary items at rates different from those at which they were initially recorded during the periods are recognised in the income statement in the period in which they arise.

Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to the reporting currency at foreign exchange rates ruling at the dates the fair value was determined.

Foreign operations The majority of foreign consolidated subsidiaries are regarded as foreign operations since they are financially, economically

and organisationally autonomous. Their functional currencies are the respective local currencies. Annual financial statements of foreign consolidated subsidiaries are translated at year end exchange rates with respect to the balance sheet, and at exchange rates at the dates of the transactions with respect to the income statement. All resulting translation differences are included in a translation reserve in equity.

Any goodwill or fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation are recorded using the exchange rate at the effective date of the transaction. Exchange differences arising on a monetary item that, in substance, forms part of the company’s net investment in a foreign operation are classified as equity in the consolidated annual financial statements until the disposal of the net investment. Exchange differences on loans that form part of the company’s net investment in a foreign operation are taken directly to the translation reserve in equity which is part of the non-distributable reserve.

Foreign currency differences are recognised directly in equity. When a foreign operation is disposed of, in part or in full, the relevant amount in the translation reserve is transferred to profit or loss.



2. Significant accounting policies (continued) 2.16 Employee benefits Employee benefits The cost of all short-term employee benefits is recognised during the period in which the employee renders the related

service. The accruals for employee entitlements to wages, salaries and annual leave represent the amount which the group expects to pay, as a result of employees’ services provided to the balance sheet date. The accruals have been calculated at undiscounted amounts based on current wage and salary rates.

Equity compensation benefits The group grants share options to certain employees and directors under an employee share plan. The fair value of options

granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using an American binomial model, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest except where forfeiture is only due to share prices not achieving the threshold for vesting.

The group assumes a forfeiture rate based on historical experience and only once the share option group fully expires is the true forfeiture rate adjusted for in the profit or loss.

Obligation for employees on disability The group has an obligation to contribute in part towards employee benefits for eight employees on disability. Qualified

actuaries carry out a full valuation each year using the projected unit credit method. The obligation for employees on disability is measured at the present value of the estimated future cash outflows using mortality actuarial tables. Any actuarial gains or losses are recognised in profit or loss in the period in which they arise.

2.17 Retirement benefits Defined contribution and benefit plans The group sponsors defined contribution plans based on local practices and regulations. The plans cover full-time employees

and provide for contributions at 14% of salary. The group’s contributions relating to defined contribution plans are charged to income in the year to which they relate. The group’s defined contribution plan includes a defined benefit element. Defined benefit deficits are recognised.

All actuarial gains and losses arising from defined benefit plans are recognised directly in equity in the year that they occur.

The group’s net obligation in respect of defined benefit pension plans is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods, that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted. The calculation is performed by a qualified actuary using the projected unit credit method.

Post-retirement medical benefits The group has undertaken to fund a portion of the cost of post-retirement medical aid cover for eligible employees. Qualified

actuaries carry out a full valuation of the plan each year using the projected unit credit method. The post-retirement medical obligation is measured at the present value of the estimated future cash outflows using interest rates of long-term government stock and medical inflation and is accounted for under long-term liabilities.

All actuarial gains and losses arising from post-retirement medical benefits are recognised directly in equity in the year that they occur.

2.18 Finance costs Finance costs comprise interest expense on borrowings, interest on post-retirement benefits and unwinding of the discount

on provisions. All borrowing costs are recognised in profit or loss using the effective interest rate method.




2. Significant accounting policies (continued) 2.19 Taxation Current taxation Current taxation comprises taxation payable calculated on the basis of the expected taxable income for the year, using

the taxation rates enacted or substantively enacted at the balance sheet date, and any adjustment of taxation payable for previous years.

Current taxation is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Deferred taxation Deferred taxation is provided using the balance sheet liability method, based on temporary differences. Temporary

differences are differences between the carrying amounts of assets and liabilities for financial reporting purposes and their taxation base. The amount of deferred taxation provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities using taxation rates enacted or substantively enacted at the balance sheet date. Deferred taxation is charged to the income statement except to the extent that it relates to a transaction that is recognised directly in equity, or a business combination that is an acquisition.

Deferred taxation is not recognised for the following temporary differences: – the initial recognition of goodwill; – the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither

accounting nor taxable profit; and – differences relating to investments in subsidiaries to the extent that they probably will not reverse in the foreseeable future.

The effect on deferred taxation of any changes in taxation rates is recognised in the income statement, except to the extent that it relates to items previously charged or credited directly to equity.

A deferred taxation asset is recognised to the extent that it is probable that future taxable profits will be available against which the associated unused taxation losses and deductible temporary differences can be utilised. Deferred taxation assets are reduced to the extent that it is no longer probable that the related taxation benefit will be realised.

Secondary taxation Secondary taxation on companies (STC) is provided for at a rate of 10% (2008: 10%) on the amount by which dividends

declared exceed dividends received. STC is recognised as part of the current taxation charge in the income statement when the related dividend is declared. Unused STC credits are recognised as an asset in the financial statements to the extent that STC payable on future dividend payments is likely to be available for set-off.

2.20 Dividends Dividends and their related STC charge are accounted for in the period in which they are declared.

2.21 Earnings per share The group presents basic and diluted earnings per share (EPS) for its ordinary shares. Basic EPS is calculated by dividing the

profit or loss attributable to ordinary shareholders of the company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all diluted potential ordinary shares, which comprise share options granted to employees.

2.22 Discontinuing operations A discontinuing operation is a component of the group’s business that represents a separate major line of business or

geographical area of operation that has been disposed of or is held for sale, or is a subsidiary acquired exclusively with a view to resale.

Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held-for-sale, if earlier. When an operation is classified as a discontinuing operation, the comparative income statement is restated as if the operation had been discontinued from the start of the comparative period.



2. Significant accounting policies (continued) 2.23 Segment reporting The group is organised into two major operating segments, being Risk Advisory Services and Benefit Services. Segment

results include revenue and expenses directly attributable to a segment and the relevant portion of the entity’s revenue and expenses that can be allocated on a reasonable basis to a segment, whether from external transactions or from transactions with other group segments. All segments operate on an arm’s length basis in relation to inter-segment transfer pricing. Segment results are determined before any adjustments for minority interest.

Unallocated items comprise mainly investments and related revenue, loans and borrowings and related expenses, corporate assets and head office expenses and income taxation assets and liabilities.

2.24 Contingencies Contingent liabilities are not recognised in the annual financial statements. Material contingent liabilities are disclosed unless

the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognised in the annual financial statements but are disclosed when they are material.

3. Financial risk management The group has established a risk management framework that is designed to identify, assess, measure and manage exposure to

risk. The group monitors specific risks on a regular basis through the group risk monitoring framework. Business units are required to disclose to the group risk function all material risks, along with information on likelihood and severity of risks, and the mitigating actions taken or planned.

For the discussions below, the following financial instruments are disclosed in classes based on their similar characteristics:

Financial assets • Long-term accounts receivable • Trade and other receivables • Cash and cash equivalents

Financial liabilities • Long-term liabilities • Trade and other payables • Bank overdrafts

The group has elected not to apply IFRS 7 to assets and liabilities classified as held for sale.

The group is exposed to a variety of financial risks from its use of financial instruments: market risk (such as currency risk, fair value interest rate risk and cash flow interest rate risk), credit risk and liquidity risk.

3.1 Market risk Market risk is the risk of adverse financial impact due to changes in fair values or future cash flows of financial instruments

from fluctuations in interest rates, equity prices and foreign currency exchange rates.

Interest rate risk In the normal course of business the group and company are exposed to the effect of movements in interest rates.

The interest rate risk is managed by transacting with reputable financial institutions. Interest is received and incurred at market related rates on all bank and loan balances.

Insurance premium debtors are financed at both fixed and variable rates. Variable rates on interest-bearing assets expose the group to cash flow interest rate risk.

Borrowings issued at variable rates expose the group to cash flow interest rate risk. Borrowings issued at fixed rates expose the group to fair value interest rate risk.

Accounting for investment income and finance costs is disclosed in notes 5 and 6 in the financial statements.




3. Financial risk management (continued) 3.1 Market risk (continued) Cash flow sensitivity analysis for variable rate instruments This analysis assumes that all other variables remain constant.

In accordance with management’s assessment, an increase or decrease of 100 basis points in interest rates relating to financial instruments at the reporting date for the group would result in an increase/decrease of R1 677 225 (2008: R2 725 026).

In accordance with management’s assessment, an increase or decrease of 100 basis points in interest rates relating to financial instruments at the reporting date for the company would result in an increase/decrease of R2 300 258 (2008: R3 083 215).

Foreign currency risk The group is exposed to foreign exchange risk arising from currency exposure. Foreign exchange risk arises from future

commercial transactions and recognised assets and liabilities. The foreign exchange profit or losses arising from the translation of foreign operations from their functional currencies into rand are recognised in the currency translation reserve. Therefore, these movements in exchange rates have no impact on the profit (loss) of the group.

Sensitivity analysis At 30 June 2009, if the currency had weakened or strengthened by 10% against the Pound and Dollar with all other variables

held constant, the profit or loss for the year would have been approximately R1 899 732 (2008: R2 340 275) higher or lower, mainly as a result of foreign exchange changes on translation of foreign denominated cash and payables.

3.2 Credit risk Credit risk is the risk of financial loss to the group and company if a customer or counterparty to a financial instrument fails to

meet its contractual obligations, and arises principally from the company’s receivables from customers. The carrying amount of financial assets represents the maximum credit exposure. Refer to note 3.5 for details relating to carrying amounts.

The group’s financial instruments do not represent a concentration of credit risk, because the group deals with a variety of major banks and its trade receivables and other receivables are spread among a number of major companies, customers and geographic areas.

Credit risk arises on cash and cash equivalents, investments and trade receivables. The risk on cash and cash equivalents is managed by dealing with reputable financial institutions with good credit standing.

The carrying value of cash and cash equivalents as at 30 June for the group was as follows: Group Company External 2009 2008 2009 2008 credit rating* R’000 R’000 R’000 R’000

Cash at bank Nedbank Limited AA(zaf) 66 276 36 201 29 051 6 149 FirstRand Bank Limited AA(zaf) (5 440) 72 476 61 686 141 368 Stanlib – Money Market Fund AAA(zaf) 70 000 100 000 70 000 100 000 Sanlam alternative income fund AA-(zaf) 5 220 – 5 220 – Standard Bank Limited AA(zaf) 128 13 230 – 6 739 Absa Bank Limited AAA(zaf) 170 1 937 – – Foreign operations No rating 30 058 29 317 – –

166 412 253 161 165 957 254 256

*External ratings based on National ratings from Fitch Ratings.



3. Financial risk management (continued) 3.2 Credit risk (continued) Credit quality of long-term accounts receivable and trade and other receivables The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to historical

information.

Approximately 70% of the trade receivables relate to the group’s premium finance company. The company’s exposure to credit risk is limited by an established credit policy under which each new client is analysed individually for creditworthiness before the company’s standard payment terms and conditions are offered. The company’s review includes external ratings, where available, and in some cases bank references. Trade receivables comprise a wide client base. More than 70% of the premium finance company’s clients have been with the company since inception. Credit guarantee insurance cover is taken out to the extent available. A large portion of the trade receivables is refundable from underwriters in the event of default or cancellation of underlying client’s insurance policies.

The maximum exposure to credit risk at the report date was: Past due Past due Financial Neither past but not but not assets that due nor impaired impaired have been Carrying impaired 1 – 30 days over 30 days impaired Impairment value Financial assets R’000 R’000 R’000 R’000 R’000 R’000

Group At 30 June 2009 Long-term accounts receivable – – – 166 347 (166 347) – Trade and other receivables 145 233 10 703 19 902 4 545 (4 545) 175 838

At 30 June 2008 Long-term accounts receivable 1 260 – – – – 1 260 Trade and other receivables 155 460 9 174 11 812 9 754 (9 754) 176 446

Company At 30 June 2009 Long-term accounts receivable – – – 166 347 (166 347) – Trade and other receivables 24 171 4 341 12 809 4 061 (4 061) 41 321

At 30 June 2008 Long-term accounts receivable 1 260 – – – – 1 260 Trade and other receivables 29 905 3 816 818 6 602 (6 602) 34 539

Impairment losses The movement in the allowance for impairment losses in respect of trade receivables during the year was as follows: Group Company 2009 2008 2009 2008 R‘000 R‘000 R‘000 R‘000

Balance at 1 July 9 754 500 6 602 – Impairment loss recognised (reversed) (2 259) 9 254 409 6 602 Impairment loss written off (2 950) – (2 950) –

Balance at 30 June 4 545 9 754 4 061 6 602

Based on past experience, the group believes that no further impairment allowances are necessary in respect of trade receivables for those past due and not past due.

Loans due to and from subsidiary and associate companies and joint ventures to the company are disclosed in note 45 of the Annual Financial Statements, together with relevant impairments raised as at 30 June 2009.




3. Financial risk management (continued) 3.3 Liquidity risk Liquidity risk arises from the possibility that the group may not be able to meet its financial obligations as they fall due. To

manage this risk, the group periodically assesses its liquidity by regularly monitoring cash flows and ensuring that adequate cash is available. The group also ensures that trade accounts payable, comprising mostly insurance premiums, are only settled once the cash has been received from the insured.

The following are the contractual maturities of financial liabilities, including estimated interest payments: Due within Carrying Contractual 6 months 6 – 12 1 – 2 2 – 5 amount cash flows or less months years years Group R’000 R’000 R’000 R’000 R’000 R’000

At 30 June 2009 Other financial liabilities 5 230 5 592 – 5 592 – – Trade and other payables 246 147 246 147 230 750 1 711 3 422 10 264 Bank overdraft1 69 188 69 188 69 188 – – –

At 30 June 2008 Other financial liabilities 25 367 28 026 – 17 581 10 445 – Trade and other payables 321 072 321 072 283 735 28 385 2 237 6 715 Bank overdraft1 77 558 77 558 77 558 – – –

Company At 30 June 2009 Trade and other payables 205 422 205 422 193 168 1 361 2 723 8 170

At 30 June 2008 Trade and other payables 271 060 271 060 237 601 24 507 2 237 6 715

1The bank overdraft relates to insurance finance debtors and will be utilised on a continuous basis.

3.4 Capital management The group’s objectives when managing capital are to safeguard the group’s ability to continue as a going concern in order to

provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

There were no changes to the group’s approach to capital management during the year.

The group is not subject to minimum capital adequacy requirements imposed by Regulators or Statutes.

3.5 Fair values versus carrying amounts The fair value of current assets and liabilities approximates the carrying value due to the short-term nature of the instruments.

The fair value of long-term assets and liabilities approximates the carrying value due to the market related interest rates attached to the instruments.



3. Financial risk management (continued) 3.5 Fair values versus carrying amounts (continued) The fair values of financial assets and liabilities, together with the carrying amounts shown in the balance sheet, are as

follows: Carrying amount Fair value 2009 2008 2009 2008 Group R’000 R’000 R’000 R’000

Held to maturity investments Other investments1 (note 13) 107 353 107 353 Loans and receivables Trade and other receivables (note 19) 175 838 176 446 174 738 173 346 Long-term accounts receivable2 (note 16) – 1 260 – 1 260 Cash and cash equivalents3 (note 20) 235 600 330 719 235 600 330 719 Receivable from associated companies and joint ventures 471 2 006 471 2 006 Financial liabilities Long-term liabilities4 (note 25) (46 640) (48 064) (46 640) (48 064) Trade and other payables (note 30) (294 862) (356 102) (294 862) (356 102) Bank overdraft (note 20) (69 188) (77 558) (69 188) (77 558) Payable to associated companies and joint ventures (42) (65) (42) (65)

1 284 28 995 184 25 895

1Refer note 5 of Annual Financial Statements for preference dividends received from other investments. 2Refer note 5 of Annual Financial Statements for interest received from employee loans receivables. 3Refer note 5 of Annual Financial Statements for interest earned on cash and cash equivalents. 4Refer note 6 of Annual Financial Statements for interest paid on long-term liabilities.

Carrying amount Fair value 2009 2008 2009 2008 Company R’000 R’000 R’000 R’000

Held to maturity investments Other investments1 (note 13) 107 353 107 353 Loans and receivables Trade and other receivables (note 19) 41 321 34 539 41 321 34 539 Long-term accounts receivable2 (note 16) – 1 260 – 1 260 Cash and cash equivalents3 (note 20) 165 957 254 256 165 957 254 256 Loans to subsidiary companies (note 11) 66 342 57 735 66 342 57 735 Receivable from subsidiary companies4 (note 11) 19 325 17 509 19 325 17 509 Receivable from associated companies and joint ventures 471 2 006 471 2 006 Financial liabilities Long-term liabilities5 (note 25) (44 195) (38 775) (44 195) (38 775) Trade and other payables (note 30) (245 931) (288 153) (245 931) (288 153) Payable to associated companies and joint ventures (42) (65) (42) (65) Loans from subsidiary companies (note 11) (18 993) (22 958) (18 993) (22 958) Payable to subsidiary companies (note 11) (20 713) (19 464) (20 713) (19 464)

(36 351) (1 757) (36 351) (1 757)

1Refer note 5 of Annual Financial Statements for preference dividends received from other investments. 2Refer note 5 of Annual Financial Statements for interest received from employee loans receivable. 3Refer note 5 of Annual Financial Statements for interest earned on cash and cash equivalents. 4Refer note 5 of Annual Financial Statements for interest received on loans due from subsidiary companies. 5Refer note 6 of Annual Financial Statements for interest paid on long-term liabilities.

Interest rates used for determining fair value The interest rates used to discount estimated cash flows, where applicable, are based on prevailing prime overdraft rates and

were as follows: 2009 2008

Trade receivables 9,0% 13,5%



Notes to the Annual Financial Statementsfor the year ended 30 June 2009


1. Other income Other income includes the following amounts: Management fee from subsidiary companies – – 18 383 23 818 Rental income from sub-lease 1 160 6 532 2 300 10 660

Total other income 1 160 6 532 20 683 34 478

2. Operating expenses Operating expenses are stated after taking into account the

following amounts:

2.1 Employment expenses 2.1.1 Employment expenses include the following: Employee costs 284 376 275 543 228 988 200 667 Contributions to defined contribution plans 13 357 12 061 9 508 7 851 Post-retirement medical obligations – service cost 564 480 564 480 Pension fund obligations – service cost 8 311 7 743 8 311 7 743 Share-based payments – options 3 655 4 915 3 655 5 602

Total employment expenses 310 263 300 742 251 026 222 343 Discontinuing operations (note 8) (3 142) (32 008) – –

Continuing operations 307 121 268 734 251 026 222 343

2.2 Share-based payment transactions 2.2.1 Share options The group accounts for share option expenses in accordance with IFRS 2 Share-based Payment, which requires the

fair value of share options granted to employees to be valued at the grant date and expensed through the income statement over the vesting period of the option. Fair value is measured using a binomial lattice valuation model.

2.2.1.1 The Glenmib Employee Scheme The group plan provides for a grant price equal to the weighted average market price on the 10 trading

days preceding the grant date. The vesting period is three to five years. If the options remain unexercised after a period of seven years from grant date, the options expire. Furthermore, options are forfeited if the employee leaves the group before the option vests. A share-based payment expense of R2 105 280 (2008: R2 862 578) was recognised.

2009 2008 Weighted Weighted Number average Number average of options strike of options strike

Outstanding at beginning of year 15 106 500 R1,66 13 464 000 R1,82 Forfeited and expired during year 1 100 000 R1,62 3 407 500 R1,75 Granted during year 9 715 000 R1,00 5 050 000 R1,47

Outstanding at end of year 23 721 500 R1,39 15 106 500 R1,72

Exercisable at end of year 2 278 808 R2,66 9 517 470 R1,96


Notes to the Annual Financial Statementsfor the year ended 30 June 2009 (continued)

2. Operating expenses (continued) 2.2 Share-based payment transactions (continued) 2.2.1 Share options (continued) 2.2.1.1 The Glenmib Employee Scheme (continued) 2009 2008

Weighted average remaining life 7,0 5,08 Weighted average volatility 49,84% 41,72% Weighted average risk-free rate zero-coupon 8,67% swap curve Weighted average dividend yield 4,50% 2,59% Forfeiture rate 13,40% 20,00% Weighted average strike price (Rand) 1,00 1,47 Weighted average share price (Rand) 1,05 1,27 Weighted average option price (Rand) 0,46 0,54

The risk-free interest rate indicates the rate of interest that can be earned without assuming any risks over a specified time period. The interest rates were obtained from the zero-coupon swap curve on valuation date. The swap curve was sourced from the Bond Exchange of South Africa. Volatility is determined based on the daily returns of the Glenrand M.I.B listed share price under the assumption that the share price returns are log-normally distributed. An equally weighted volatility, calculated over the historical period leading up to the grant date, equal in duration to the time to maturity, was used.

2.2.1.2 The Makgulong Employee Ownership Scheme Trust The Makgulong Employee Ownership Scheme provides shares at a grant price of R1. The vesting period

is three to five years. If the shares remain unexercised after a period of 10 years and 1 day from grant, the shares automatically exercise. Shares are forfeited if the employee leaves the group before the shares vest. The share-based payment expense for the year ended 30 June 2009 that has been recognised in the income statement, based on a 20,7% (2008: 30%) forfeiture rate, is R1 549 950 (2008: R2 739 422).

2009 2008 Weighted Weighted Number average Number average of options strike of options strike

Outstanding at beginning of year 6 814 750 R1,00 8 944 750 R1,00 Forfeited during year 1 040 000 R1,00 2 070 000 R1,00 Exercised during year 145 000 R1,00 60 000 R1,00

Outstanding at end of year 5 629 750 R1,00 6 814 750 R1,00

Exercisable at end of year 659 019 R1,00 370 750 R1,00

2009 2008

Weighted average remaining life 7,0 8,74 Weighted average volatility 49,84% 47,24% Weighted average risk-free rate zero-coupon 7,52% swap curve Forfeiture rate 20,70% 30,00% Weighted average strike price (Rand) 1,00 1,00 Weighted average share price (Rand) 1,05 1,59 Weighted average option price (Rand) 0,46 1,25

The risk-free interest rate indicates the rate of interest that can be earned without assuming any risks over a specified time period. The interest rates were obtained from the zero-coupon swap curve on valuation date. The swap curve was sourced from the Bond Exchange of South Africa. Volatility is determined based on the daily returns of the Glenrand M.I.B listed share price under the assumption that the share price returns are log-normally distributed. An equally weighted volatility, calculated over the historical period leading up to the grant date, equal in duration to the time to maturity, was used.




2. Operating expenses (continued) 2.2 Share-based payment transactions (continued) 2.2.1 Share options (continued) 2.2.1.2 BEE share scheme In terms of the BEE scheme, subscription shares were issued to three Black Business Partner consortiums

(BBPs), so that each BBP has a 5,5% equity interest in the group. This was funded through a notional loan for 97,7% of the shares’ market value, and attracts interest at 9,3% per annum. For as long as any balance on the BBP notional funding is outstanding, the BBPs will elect to receive capitalisation shares in lieu of cash dividends. The tenure of the BBP transaction is for a period of 10 years which commenced in April 2006. On the termination date of the BBP transaction, the group will call back as many capitalisation shares and subscription shares based on their then market value as are equal in value to the outstanding balance on the BBP Notional Funding at the termination date of the BBP transaction.

Although the group shares are legally issued, the group only received amounts equal to 2,3% of the share issue price of R2,15. Therefore the shares are not viewed as issued but rather as an equity instrument akin to a group share option that was granted to the BBPs at inception of the scheme.


2.3 Rent and IT expenses Rent and IT expenses include the following: Operating lease charges 31 077 34 674 26 305 22 382

Properties 26 779 31 278 22 407 20 852 Vehicles 132 154 113 108 Equipment 4 166 3 242 3 785 1 422

IT infrastructure and maintenance costs 18 893 25 607 11 055 18 173

Total rent and IT expenses 49 970 60 281 37 360 40 555 Discontinuing operations (note 8) (1 146) (11 239) – –


2.4 Amortisation and depreciation Amortisation and depreciation expenses include the following: Amortisation of intangible assets 15 809 12 374 8 288 8 118 Depreciation charge 8 296 7 980 6 917 7 054

Leasehold improvements 3 484 3 353 3 446 3 301 Motor vehicles 58 52 36 28 Furniture and fittings 1 134 1 323 1 034 1 062 Computer and office equipment 3 620 3 252 2 401 2 663

Total amortisation and depreciation 24 105 20 354 15 205 15 172 Discontinuing operations (note 8) (1 171) (1 832) – –





2. Operating expenses (continued) 2.5 Auditors’ remuneration Auditors’ remuneration expense includes the following: Audit fees 4 931 4 878 3 119 2 347 Prior year under provision 648 738 648 420 Other services 868 1 959 864 957

Total auditors’ remuneration 6 447 7 575 4 631 3 724 Discontinuing operations (note 8) (356) (2 357) – –


2.6 Vehicle costs Vehicle costs excluding depreciation 3 792 3 466 3 322 2 401 Discontinuing operations (note 8) – (557) – –


2.7 Repairs and maintenance Repairs and maintenance 5 170 6 213 4 397 3 866 Discontinuing operations (note 8) – (105) – –


3. Disposals Profit (loss) on disposal of investments, subsidiary companies

and divisions 544 18 497 (1 660) 262 Profit (loss) on disposal of property, plant and equipment 31 (1 383) 23 (22) Effect of deconsolidation of subsidiary company 23 136 – – –

Total disposals 23 711 17 114 (1 637) 240 Discontinuing operations (note 8) (25 997) (16 878) (657) –

Continuing operations (2 286) 236 (2 294) 240

4. Impairments Impairment of goodwill (2 840) (2 903) (2 840) (1 588) Impairment of investments – – – (1 201) Impairment of subsidiary company loans – – (37 033) (52 743) Impairment of property, plant and equipment (336) – (206) – Impairment of intangible assets (28) (17 990) – (17 715) Fair value adjustment for subsidiary company held for sale1 – 9 824 – 29 677 Impairment of trade and other receivables – (18 857) – (6 190)

Total impairments (3 204) (29 926) (40 079) (49 760) Discontinuing operations (note 8) – 1 737 40 518 (29 677)

Continuing operations (3 204) (28 189) 439 (79 437)

1The fair value adjustment for the subsidiary company held for sale relates to the disposal of the group’s investment in Glenrand M·I·B Benefit Services (Pty) Limited as at 30 June 2008. The fair value adjustment included the anticipated net realisable value of the assets at the completion date, as well as the impairment of loans receivable from employees within Glenrand M·I·B Benefit Services. The net realisable value was based on the current net asset value adjusted for expected future losses amounting to R19,2 million. The anticipated completion date for the disposal was 1 October 2007, but not all the suspensive conditions were met and thus the disposal did not take place. This resulted in the reversal of the fair value adjustment recognised during 2007 of R9,8 million.





5. Investment income Investment income includes the following: Dividends received Associates and joint ventures – – 1 500 1 000 Subsidiary companies – – 3 375 2 310 Preference dividends – 35 – 35 Dividend income fund 174 – 174 –

174 35 5 049 3 345

Interest received Bank balances 60 216 54 709 30 913 29 194 Subsidiary companies – – 7 070 3 274 Interest on employee loans receivable 333 1 034 333 1 034 Investment income on receivable 872 – 87 – Expected return on plan assets (note 28) 18 384 18 160 18 384 18 160 Other interest 15 73 15 44

79 820 73 976 56 802 51 706

Total investment income 79 994 74 011 61 851 55 051 Discontinuing operations (note 8) (7 537) (7 024) (1 065) –


6. Finance costs Long-term liabilities 975 229 952 – Short-term liabilities 5 230 6 276 – – Statutory interest payments 454 694 177 694 Interest costs on provisions for Benefit Services – 12 667 – – Interest cost for post-retirement benefits 18 488 17 551 18 488 17 551 Other 14 274 4 207 Fair value of financial liabilities 1 689 1 195 566 –

Total finance costs 26 850 38 886 20 187 18 452 Discontinuing operations (note 8) – (12 667) – –


7. Taxation South African normal taxation Current 9 338 15 822 2 344 10 088 Prior year (over) under provision (5 579) 145 (5 699) – Secondary taxation on companies 330 413 – – Capital gains taxation – 89 – – Deferred taxation 12 358 5 585 11 810 5 648

16 447 22 054 8 455 15 736

Foreign taxation Current 2 542 2 127 18 – Deferred taxation (198) (21) – –

2 344 2 106 18 –

Total taxation 18 791 24 160 8 473 15 736 Discontinuing operations (note 8) 225 (163) – –




Group Company 2009 2008 2009 2008 % % % %

7. Taxation (continued) Effective taxation rate reconciliation Statutory rate 28,0 28,0 28,0 28,0 Disallowable expenditure (exempt income) 6,9 (67,5) (159,2) (95,3) Secondary taxation on companies 0,5 (0,7) – – Unrecognised deferred taxation asset on losses (0,3) (0,1) – – Prior year (over) under provision (8,3) (0,3) 52,8 – Capital gains taxation – 0,2 – – Foreign withholding taxes 1,0 – (0,1) – Taxation rate change – (2,5) – (6,4) Other 0,1 (0,4) – (0,2)

Total effective rate 27,9 (43,3) (78,5) (73,9) Discontinuing operations (note 8) 5,4 133,0 108,7 43,0

33,3 89,7 30,2 (30,9)

8. Discontinuing operations R’000 R’000 R’000 R’000 Effect of discontinuing operations on the income statement

Revenue 2 976 39 800 – – Employment expenses (3 142) (32 008) – – Rent and IT expenses (1 146) (11 239) – – Amortisation and depreciation (1 171) (1 832) – – Other expenses (20 695) (86 796) – – Finance costs – (12 667) – – Investment income 7 537 7 024 1 065 – Profit on disposal of discontinued investments 2 861 16 878 657 – Impairments – (11 561) (40 518) – Reversal of fair value adjustment for subsidiary company

held for sale – 9 824 – 29 677 Effect of deconsolidation of subsidiary 23 136 – – –

Income and expenses of discontinuing operations before taxation 10 356 (82 577) (38 796) 29 677

Taxation on operations 225 (163) – –

Profit (loss) for the year 10 581 (82 740) (38 796) 29 677

Profit (loss) attributable to: Shareholders of Glenrand M.I.B 10 581 (82 740) (38 796) 29 677

Effective 5 February 2008, the group disposed of its pension fund administration business for an estimated R9,9 million. The disposal price, in accordance with the agreement, is based on annualised revenue as at 31 January 2009. A gain of R5,7 million was recorded for the group during 2008. A further R1,9 million was recorded during 2009 based on the actual annualised revenue.

Effective 1 March 2008, the group disposed of its healthcare book of business for R12,5 million. A gain of R12,5 million was recorded for the group.

The final liquidation order of Glenrand M.I.B Benefit Services (Pty) Limited was issued on 2 June 2009, with effect from 31 March 2009. The assets and liabilities of the Benefit Services business unit, which includes Ten-50-Six Life Limited, were previously disclosed as held for sale in terms of IFRS 5. As a consequence of the liquidation order, the insolvent subsidiary and its subsidiaries are no longer consolidated at 30 June 2009, but the results of the discontinued operations until 31 March 2009 were included. The effect of the deconsolidation was R23,1 million.

During the year ended 30 June 2009, the discontinued operations had cash outflows from operating activities of R24,2 million (2008: R51,1 million), cash outflows from investing activities of R24,5 million (2008: inflows of R12,6 million) and no cash flows from financing activities.




Group 2009 2008

9. Earnings (loss) and headline earnings (loss) per ordinary share 9.1 Reconciliation of diluted weighted average number of shares Weighted average number of shares in issue during the year (000) 292 128 292 128 Shares held by trust (000) (220) (220) Shares held by wholly-owned subsidiary companies (000) (17 053) (17 311) Shares held by BBPs (000) (48 071) (48 071)

Weighted average number of shares (000) 226 784 226 526 Potential dilutory effect of BBPs transaction and employee share options (000) – 86

Diluted, weighted average number of shares in issue during the year (000) 226 784 226 612

9.2 Calculation of basic earnings and diluted earnings per ordinary share The calculation of earnings per share is based on: Earnings (loss) of (R’000) 46 547 (82 050) Basic earnings (loss) per share (cents) 20,5 (36,2) Diluted earnings (loss) per share (cents) 20,5 (36,2)

9.3 Calculation of continuing earnings and diluted earnings per ordinary share The calculation of continuing earnings per share is based on: Continuing earnings of (R’000) 35 966 690 Continuing earnings per share (cents) 15,9 0,3 Diluted continuing earnings per share (cents) 15,9 0,3

9.4 Calculation of discontinued earnings and diluted earnings per ordinary share The calculation of discontinued earnings per share is based on: Discontinued earnings (loss) of (R’000) 10 581 (82 740) Discontinued earnings (loss) per share (cents) 4,7 (36,5) Diluted discontinued earnings (loss) per share (cents) 4,7 (36,5)

9.5 Calculation of headline earnings and diluted headline earnings per ordinary share The calculation of headline earnings per share is based on: Headline earnings (loss) of (R’000) 26 035 (88 164) Headline earnings (loss) per share (cents) 11,5 (38,9) Diluted headline earnings (loss) per share (cents) 11,5 (38,9)



Group 2009 Profit attributable Profit before Minority to taxation Taxation interest shareholders R‘000 R‘000 R‘000 R‘000

9. Earnings (loss) and headline earnings (loss) per ordinary share (continued)

9.6 Reconciliation of earnings to headline earnings Earnings attributable to ordinary shareholders 67 449 (18 791) (2 111) 46 547 Adjusted for: Profit on disposal of investments and subsidiary

companies (544) – – (544) Effect of deconsolidation of subsidiary company (23 136) – – (23 136) Impairment of goodwill 2 840 – – 2 840 Impairment of intangibles 28 – – 28 Profit on disposal of property, plant and equipment (31) – 2 (29) Impairment of property, plant and equipment 336 – (7) 329

Headline earnings attributable to ordinary shareholders 46 942 (18 791) (2 116) 26 035

Group 2008 Loss attributable Loss before Minority to taxation Taxation interest shareholders R‘000 R‘000 R‘000 R‘000

Reconciliation of loss to headline loss Loss attributable to ordinary shareholders (55 833) (24 160) (2 057) (82 050) Adjusted for: Profit on disposal of investments and subsidiary

companies (18 497) – – (18 497) Reversal of fair value adjustment for subsidiary

company held for sale (9 824) – – (9 824) Impairment of goodwill 2 903 – – 2 903 Impairment of intangibles 17 990 – (69) 17 921 Loss on disposal of property, plant and equipment 1 383 – – 1 383

Headline loss attributable to ordinary shareholders (61 878) (24 160) (2 126) (88 164)




2009 2008 Accumulated Accumulated depreciation depreciation and and impairment Carrying impairment Carrying Cost losses value Cost losses value R’000 R’000 R’000 R’000 R’000 R’000

10. Property, plant and equipment Group Furniture and fittings 19 870 (11 870) 8 000 20 533 (12 560) 7 973 Motor vehicles 632 (357) 275 595 (368) 227 Computer and office equipment 21 899 (14 080) 7 819 37 245 (32 581) 4 664 Leasehold improvements 16 760 (10 860) 5 900 14 828 (7 357) 7 471

Total 59 161 (37 167) 21 994 73 201 (52 866) 20 335

Company Furniture and fittings 18 476 (11 371) 7 105 19 516 (12 120) 7 396 Motor vehicles 439 (230) 209 468 (344) 124 Computer and office equipment 16 228 (11 509) 4 719 32 925 (30 619) 2 306 Leasehold improvements 16 390 (10 639) 5 751 14 462 (7 187) 7 275

Total 51 533 (33 749) 17 784 67 371 (50 270) 17 101

Group 2009 2008 Depreciation Carrying charge/ Carrying value Additions impairments1 value R’000 R’000 R’000 R’000

Movement summary 2009 Furniture and fittings 7 973 2 006 (1 979) 8 000 Motor vehicles 227 121 (73) 275 Computer and office equipment2 4 664 6 685 (3 530) 7 819 Leasehold improvements 7 471 1 545 (3 116) 5 900

20 335 10 357 (8 698) 21 994

1Includes foreign exchange differences of R66 000. 2Computer equipment with a carrying value of R1 million is subject to a finance lease. Refer note 25.

2007 Group 2008 Classified Depreciation Carrying as held charge/ Carrying value for sale Additions Disposals impairments value R’000 R’000 R’000 R’000 R’000 R’000

Movement summary 2008 Furniture and fittings 8 187 1 772 1 028 (1 691) (1 323) 7 973 Motor vehicles 34 – 245 – (52) 227 Computer and office equipment 4 793 63 3 248 (188) (3 252) 4 664 Leasehold improvements 10 364 – 460 – (3 353) 7 471

23 378 1 835 4 981 (1 879) (7 980) 20 335



10. Property, plant and equipment (continued) Company 2009 2008 Depreciation Carrying charge/ Carrying value Additions impairments value R’000 R’000 R’000 R’000

Movement summary 2009 Furniture and fittings 7 396 1 601 (1 892) 7 105 Motor vehicles 124 121 (36) 209 Computer and office equipment1 2 306 4 551 (2 138) 4 719 Leasehold improvements 7 275 1 533 (3 057) 5 751

17 101 7 806 (7 123) 17 784

1Computer equipment with a carrying value of R1 million is subject to a finance lease. Refer note 25.

Company 2008 2007 Depreciation Carrying charge/ Carrying value Additions Disposals impairments value R’000 R’000 R’000 R’000 R’000

Movement summary 2008 Furniture and fittings 7 729 770 (41) (1 062) 7 396 Motor vehicles 34 118 – (28) 124 Computer and office equipment 3 885 1 084 – (2 663) 2 306 Leasehold improvements 10 127 449 – (3 301) 7 275

21 775 2 421 (41) (7 054) 17 101

Company 2009 2008 R‘000 R‘000

11. Investments in subsidiary companies Shares, at cost 23 317 28 852 Loans to subsidiary companies (non-current and current) 109 743 228 860 Loans from subsidiary companies (non-current and current) (39 706) (42 422) Less: Impairment of loans and investments (26 548) (161 357)

66 806 53 933

Investments and loans to (from) subsidiary companies are disclosed as follows: Non-current assets: investments in subsidiary companies 20 845 21 111 Non-current assets: loans to subsidiary companies 66 342 57 735 Current assets: receivable from subsidiary companies 19 325 17 509 Non-current liabilities: loans from subsidiary companies (18 993) (22 958) Current liabilities: payable to subsidiary companies (20 713) (19 464)

66 806 53 933

Details of interests in subsidiary companies are set out in note 45 on pages 96 to 97.

Non-current loans to or from subsidiary companies are unsecured and have no fixed repayment terms. Interest is charged at variable rates related to the prime overdraft rate. These arrangements are subject to review from time to time.




Percentage holding Group Company 2009 2008 2009 2008 2009 2008 Name of company R‘000 R‘000 R‘000 R‘000

12. Investments in associated companies and joint ventures

Glenrand M.I.B Limpopo (Pty) Limited 50 50 2 163 2 695 462 462 Glenrand M.I.B Zimbabwe (Pvt) Limited 40 40 – – – –

Carrying value 2 215 2 215 – – Impairment1 (2 215) (2 215) – –

Kunene Glenrand (Pty) Limited 50 50 (3) (3) * * RMB Insurance Brokers (Pty) Limited 50 50 * * * * Supreme Glenvaal (Pty) Limited 50 50 2 2 2 2 SW Holdings (Pty) Limited 50 50 84 72 23 23 SW Insurance Brokers (Pty) Limited 50 50 * * * * TM Insurance Brokers (Pty) Limited 30 30 4 4 3 3

2 250 2 770 490 490

*Denotes amounts less than R1 000. 1Due to the severe restrictions on remittance of funds from Zimbabwe, the investment has been fully impaired.

The directors’ valuation of shares in unlisted investments is R2,9 million. The directors’ valuation is based on the following assumptions:

– for the group’s investment in Glenrand M·I·B Limpopo (Pty) Limited, a price earnings ratio of 3 was used based on maintainable earnings of R1,9 million; and

– the group’s investments in the other associates and joint ventures are based on the net asset value.

Summary financial information on associate companies and joint ventures – 100 percent 2009 2008 R’000 R’000

Assets 10 088 9 370 Liabilities 5 726 3 967 Equity 4 362 5 403 Revenues 8 055 7 824 Profit after taxation 1 960 2 748

Number of shares Group Company 2009 2008 2009 2008 2009 2008 R‘000 R‘000 R‘000 R‘000

13. Other investments Held to maturity investments, at

amortised cost Mahwa Investments (Pty) Limited –

Variable rate redeemable cumulative preference shares1 – 246 404 – 246 – 246

Other – – 107 107 107 107

107 353 107 353

1 The redemption date of the shares was 3 July 2008. The preference dividend was calculated at 70% of the prime interest rate.



Group 2009 Purchase Opening price Closing balance Acquisitions adjustment Impairment balance R’000 R’000 R’000 R’000 R’000

14. Goodwill Movement summary 2009 Goodwill 44 530 741 (5 721) (2 840) 36 710

Group 2008 Opening Closing balance Acquisitions Disposals Impairment balance R’000 R’000 R’000 R’000 R’000

Movement summary 2008 Goodwill 34 899 14 943 (2 097) (3 215) 44 530

Company 2009 Purchase Opening price Closing balance Acquisitions adjustment Impairment balance R’000 R’000 R’000 R’000 R’000

Movement summary 2009 Goodwill 27 264 1 398 134 (2 840) 25 956

Company 2008 Opening Closing balance Acquisitions Impairment balance R’000 R’000 R’000 R’000

Movement summary 2008 Goodwill 27 560 1 511 (1 807) 27 264

In accordance with the group’s accounting policies, an impairment test of goodwill was performed. Goodwill is allocated to individual cash-generating units. Impairment testing is done on a regular basis by comparing the net carrying value of the cash-generating units to the estimated “value in use”. The tests performed identified impairments as disclosed above.

For R7 million of goodwill, the value in use is determined by discounting estimated future cash flows of each cash-generating unit, using the following key assumptions:

Fair rate of return: 15% – 17,5% Growth rate: 2% – 6,5% Beta: 0,5

For R3,4 million of goodwill the value in use is determined by using a price earning ratio of 6 on maintainable earnings of R4,8 million.

Goodwill of R18,4 million was created during 2006 due to the acquisition of the 49,9% of the shares the group did not already own in Glenrand M.I.B Makgulong (Pty) Limited. The goodwill is valued by comparing the rate of retention of clients on an annual basis. The original valuation was based on a retention rate of 85% on a revenue basis of R29,7 million. The revenue for the year under review was R18,7 million which equates to a retention rate of 62,9%. An impairment loss of R2,8 million (2008: R1,6 million) was recognised. The carrying value was R14 million at the end of the year.

For goodwill arising on acquisition of R4,4 million relating to the Bymac book of business, value in use was determined by using a price earnings ratio of 1.633 on maintainable earnings of R6,9 million. The final consideration was adjusted upwards during the current year, which is recognised as a purchase price adjustment of R200 000.

The carrying value of the goodwill arising from the acquisition of the Finrite business of R7,9 million, which is considered to be a separate cash-generating unit, is tested using the discounted cash flow methodology. The net carrying value is calculated on the fair market value of the business unit, less the fair values of identifiable tangible and intangible assets, which comprise computer software, customer relationships, favourable lease arrangements and deferred taxation liabilities, using the key assumptions as set out above. The final consideration payable was adjusted downwards during the current year, which is recognised as a purchase price adjustment against goodwill of R5,9 million.




2009 2008 Accumulated Accumulated amortisation amortisation and and impairment Carrying impairment Carrying Cost loss value Cost loss value R’000 R’000 R’000 R’000 R’000 R’000

15. Intangible assets Group Trade marks1 168 392 (162 479) 5 913 168 392 (159 522) 8 870 Computer software2 63 849 (38 505) 25 344 66 418 (43 005) 23 413 Client list3, 4 43 729 (5 074) 38 655 43 729 (1 484) 42 245 Favourable lease contract5 308 (218) 90 308 (64) 244

Total 276 278 (206 276) 70 002 278 847 (204 075) 74 772

2009 2008 Accumulated Accumulated amortisation amortisation and and impairment Carrying impairment Carrying Cost loss value Cost loss value R’000 R’000 R’000 R’000 R’000 R’000

Company Trade marks1 168 392 (162 479) 5 913 168 392 (159 522) 8 870 Computer software2 50 505 (34 774) 15 731 39 938 (29 443) 10 495 Client list3 5 812 – 5 812 5 812 – 5 812

Total 224 709 (197 253) 27 456 214 142 (188 965) 25 177

2008 Group 2009 Carrying Impairment/ Carrying value Additions Amortisation adjustment value R’000 R’000 R’000 R’000 R’000

Movement summary 2009 Trade marks1 8 870 – (2 957) – 5 913 Computer software2 23 413 11 875 (9 136) (808) 25 344 Client list3,4 42 245 – (3 562) (28) 38 655 Favourable lease contract5 244 – (154) – 90

74 772 11 875 (15 809) (836) 70 002

2007 Group 2008 Classified Carrying as held Impairment/ Carrying value for sale Additions Amortisation adjustment value R’000 R’000 R’000 R’000 R’000 R’000

Movement summary 2008 Trade marks1 13 305 – – (4 435) – 8 870 Computer software2 31 516 3 862 13 944 (6 391) (19 518) 23 413 Client list3,4 8 150 – 35 625 (1 484) (46) 42 245 Favourable lease contract5 – – 308 (64) – 244

52 971 3 862 49 877 (12 374) (19 564) 74 772

2008 Company 2009 Carrying Carrying value Additions Amortisation value R’000 R’000 R’000 R’000

Movement summary 2009 Trade marks1 8 870 – (2 957) 5 913 Computer software2 10 495 10 567 (5 331) 15 731 Client list3 5 812 – – 5 812

25 177 10 567 (8 288) 27 456



15. Intangible assets (continued) 2007 Company 2008 Carrying Impairment/ Carrying value Additions Amortisation adjustment value R’000 R’000 R’000 R’000 R’000

Movement summary 2008 Trade marks1 13 305 – (4 435) – 8 870 Computer software2 31 514 1 909 (3 683) (19 245) 10 495 Client list3 5 812 – – – 5 812

50 631 1 909 (8 118) (19 245) 25 177

1Trade mark’s carrying value is amortised over 15 years of which three years remain. The period is re-assessed annually. 2 Computer software is amortised over three to five years. The period is re-assessed annually. An impairment loss of R18 million (company R17,7 million) was recognised during

2008. 3The client list is amortised on the loss of actual clients. 4 The client list acquired from Finrite is measured at fair value at date of acquisition less accumulated amortisation and accumulated impairment losses. The estimated

remaining useful life is 8,5 years. 5The favourable lease contract is amortised over two years.


16. Long-term accounts receivable Loans – interest bearing1 1 311 5 824 1 311 5 824 Less: Current portion included in other receivables (1 311) (5 004) (1 311) (5 004)

– 820 – 820

Estimated receivable2 479 2 367 479 2 367 Less: Current portion included in other receivables (479) (1 927) (479) (1 927)

– 440 – 440

Loans granted to company previously consolidated3 166 347 – 166 347 – Less: Impairment raised (166 347) – (166 347) –

– – – –

– 1 260 – 1 260

1 Loans are granted to employees from middle to top management whereby employees are required to repay the loans over a one to three-year period – the interest rate is market related and linked to prime. The interest rate varied between 8% and 10% during the current year.

2 In terms of the sale agreement of Reinsurance Consultants and Intermediaries division (RCI), the company is entitled to receive up to a maximum of R25 million, subject to the performance of RCI over a three-year period. The fair value has been valued on the following assumptions:

2010

Annual growth rate of RCI earnings (5,9%) Interest rate 8,68% Brokerage and fees (R’000) 26 905

3 This loan relates to loans granted to Glenrand M.I.B Benefit Services (Pty) Limited during the current and prior financial years. The loan has been fully impaired.





17. Deferred taxation The movement on the deferred taxation account at a rate of

28% (2008: 28%) is as follows:

At beginning of the year 28 118 40 691 35 671 39 552 Acquisitions of subsidiary companies and divisions – (8 776) – – Income statement charge (note 7) (12 160) (5 564) (11 810) (5 648) Recognised directly in statement of recognised income

and expenses 773 1 767 773 1 767

16 731 28 118 24 634 35 671

Deferred taxation asset The deferred taxation asset comprises the following:

Trade mark 7 774 10 091 7 774 10 091 Leave pay accrual 4 361 3 580 3 812 3 133 Post-retirement medical obligations 12 306 10 818 12 306 10 818 Obligation for employees on disability 631 783 631 755 Operating lease straight-line accrual 2 891 4 355 2 578 4 042 Bonus accrual 342 1 236 222 1 236 Computer software – 608 – – Other financial liabilities at fair value 314 336 – – Deferred revenue 8 309 8 496 7 930 8 120 Provision for professional indemnity insurance 977 3 440 977 3 440 Other provisions 135 95 – –

38 040 43 838 36 230 41 635

Deferred taxation liability The deferred taxation liability comprises the following:

Customer relationships 8 562 9 558 – – Favourable leases 25 68 – – Income not earned for taxation purposes 5 137 2 801 5 137 2 801 Prepaid expenses 64 28 64 28 Capital expenditure written off 93 130 – – Section 24C allowance for future expenditure 4 962 2 153 4 962 2 153 Restraint and severance accruals 765 393 765 393 Wear and tear allowance 18 589 17 589 Computer software 1 045 – – – Capital allowances 638 – 651 –

21 309 15 720 11 596 5 964

Disclosed as:

Deferred taxation asset 25 894 36 697 24 634 35 671 Deferred taxation liability (9 163) (8 579) – –

Total 16 731 28 118 24 634 35 671




18. Linked investments backing policyholder contracts Insurance policies – 1 115 906 – – Collective investment schemes – 1 473 308 – – Gilts and bonds – 14 032 – – Equity investments – 101 215 – – Property – 91 662 – – Cash and money market1 – 71 791 – –

– 2 867 914 – – Assets classified as held for sale (note 21) – (2 867 914) – –

Total – – – –

1These cash and cash equivalents are not available for use by the group.

19. Trade and other receivables Trade receivables 169 494 153 081 34 314 25 158 Other receivables 9 147 35 871 9 411 15 983 Prepayments 2 872 2 366 2 843 2 315 VAT & Lloyd’s taxation 1 742 – 1 657 – Less: Impairment loss (4 545) (9 754) (4 061) (6 602) Assets classified as held for sale (note 21) – (2 752) – –

Total 178 710 178 812 44 164 36 854

Trade receivables comprise insurance finance debtors amounting to R104,2 million (2008: R100,2 million) which have been ceded to FirstRand Bank Limited as security for the short-term funding facility included in the bank overdraft (refer note 20).

The balance of the trade receivables relate to monthly and non-monthly insurance premiums repayable within the next year.

An adjustment for impairment of receivables has been made for estimated irrecoverable amounts.

The directors consider that the carrying amount of trade and other receivables reflects their fair value.


20. Cash and cash equivalents Term deposits 149 689 104 822 142 924 100 000 Current accounts 16 723 163 997 23 033 154 256

166 412 268 819 165 957 254 256

The year end cash and cash equivalents comprise the following:

Cash and bank balances 235 600 346 377 165 957 254 256 Bank overdraft (69 188) (77 558) – –

166 412 268 819 165 957 254 256 Assets classified as held for sale (note 21) – (15 658) – –

Total 166 412 253 161 165 957 254 256

Effective 17 April 2008, the group entered into an agreement to cede the right to a fixed deposit, amounting to R2,7 million, as collateral security to Intermediaries Guarantee Facility Limited in respect of a subsidiary company.

Glenrand M.I.B’s own cash resources as at 30 June 2009 amounted to R80,2 million.

Insurance finance debtors amounting to R104,2 million (note 19) have been ceded to FirstRand Bank Limited as security for the bank overdraft of R69,2 million.




21. Assets classified as held for sale The following assets were held for sale as at 30 June 2008: The decision was made to transfer the assets of Ten-50-Six Life Limited to another company and therefore the assets and liabilities

were classified as held for sale during the prior financial year. The final liquidation order of Glenrand M.I.B Benefit Services (Pty) Limited was issued on 2 June 2009, with effect from 31 March 2009. The assets and liabilities of the Benefit Services business unit, which includes Ten-50-Six Life Limited, were previously disclosed as held for sale. As a consequence of the liquidation order, the insolvent subsidiary and its subsidiaries are no longer consolidated at 30 June 2009, but the results of the discontinued operations until 31 March 2009 were included.

Assets and liabilities classified as held for sale comprise the following: Group Company 2009 2008 2009 2008 R‘000 R‘000 R‘000 R‘000

Assets classified as held for sale Linked investment backing policyholder contracts – 2 867 914 – – Accounts receivable and prepaid expenses – 2 752 – – Accounts receivable – policyholders – 6 080 – – Cash and cash equivalents – 15 658 – – Cash and cash equivalents – policyholders – 25 815 – –

Total – 2 918 219 – –

Liabilities classified as held for sale Policyholder liabilities – 2 868 113 – – Accounts payable and accrued liabilities – 1 561 – – Accounts payable – policyholders – 31 696 – – Provisions – 1 172 – – Taxation – 225 – –

Total – 2 902 767 – –



Group Treasury Share shares and Retained capital share- earnings and based Non-distri- (accumu- Share- Share Share share payment butable lated holders’ Minority Total capital premium premium reserve reserve losses) equity interest equity R‘000 R‘000 R‘000 R‘000 R‘000 R‘000 R‘000 R‘000 R‘000

22. Capital and reserves Reconciliation of

movement in capital and reserves

Balance at 1 July 2007 5 842 46 583 52 425 (12 786) 29 949 122 817 192 405 4 037 196 442 Changes in equity for 2008 Total recognised income

and expenses for the year – – – – 2 404 (87 050) (84 646) 2 057 (82 589) Acquisition of shares in

subsidiary company – – – – – – – (284) (284) Share-based payment

reserve – – – 4 915 – – 4 915 – 4 915 Trade mark amortisation

reserve transfer – – – – (4 435) 4 435 – – – Share of profits of equity

accounted investees – – – – 374 (374) – – – Dividends paid – – – – – – – (1 768) (1 768)

Total changes – – – 4 915 (1 657) (82 989) (79 731) 5 (79 726)

Balance at 1 July 2008 5 842 46 583 52 425 (7 871) 28 292 39 828 112 674 4 042 116 716 Changes in equity for 2009 Total recognised income

and expenses for the year – – – – (5 061) 44 159 39 098 2 111 41 209 Acquisition of shares in

subsidiary company – – – – – – – (656) (656) Share-based payment

reserve – – – 3 655 – – 3 655 – 3 655 Trade mark amortisation

reserve transfer – – – – (2 957) 2 957 – – – Disposal of treasury shares – – – 1 828 – – 1 828 – 1 828 Share of profits of equity

accounted investees – – – – (520) 520 – – – Dividends paid – – – – – – – (1 740) (1 740)

Total changes – – – 5 483 (8 538) 47 636 44 581 (285) 44 296

Balance at 30 June 2009 5 842 46 583 52 425 (2 388) 19 754 87 464 157 255 3 757 161 012




Company Share Retained capital Share- earnings and based Non-distri- (accumu- Share Share share payment butable lated Total capital premium premium reserve reserve losses) equity R‘000 R‘000 R‘000 R‘000 R‘000 R‘000 R‘000

22. Capital and reserves (continued) Reconciliation of movement in capital

and reserves Balance at 1 July 2007 5 842 46 583 52 425 25 739 16 953 52 155 147 272 Changes in equity for 2008 Total recognised income and

expenses for the year – – – – – (42 653) (42 653) Share-based payment reserve – – – 5 602 – – 5 602 Trade mark amortisation – – – – (4 435) 4 435 –

Total changes – – – 5 602 (4 435) (38 218) (37 051)

Balance at 1 July 2008 5 842 46 583 52 425 31 341 12 518 13 937 110 221 Changes in equity for 2009 Total recognised income and

expenses for the year – – – – – (21 648) (21 648) Share-based payment reserve – – – 3 655 – – 3 655 Trade mark amortisation – – – – (2 957) 2 957 –

Total changes – – – 3 655 (2 957) (18 691) (17 993)

Balance at 30 June 2009 5 842 46 583 52 425 34 996 9 561 (4 754) 92 228


23. Share capital and share premium Authorised 400 000 000 ordinary shares of 2 cents each 8 000 8 000 8 000 8 000 22 127 406 “B” redeemable convertible preference shares of 0,01 cent each 2 2 2 2

8 002 8 002 8 002 8 002

5% of the unissued ordinary shares are under the control of the directors in terms of a resolution of members passed at the last Annual General Meeting. This authority remains in force until the next Annual General Meeting.

Issued 292 128 302 (2008: 292 128 302) ordinary shares of 2 cents each 5 842 5 842 5 842 5 842 Share premium arising on issue of shares 46 583 46 583 46 583 46 583

52 425 52 425 52 425 52 425




24. Reserves Reserves comprise the following: Treasury shares and share-based payment reserve (2 388) (7 871) 34 996 31 341 Comprise the following: Treasury shares owned by wholly-owned subsidiary companies, the

Glenmib Employees Scheme Trust and the BBP’s 64 566 989 (2008: 65 602 641) (37 384) (39 212) – –

Share-based payment reserve 34 996 31 341 34 996 31 341

Non-distributable reserve 19 754 28 292 9 561 12 518

Acquisition of subsidiary companies 2 975 2 975 2 975 2 975 Foreign currency translation reserve 9 484 14 545 – – Transfer from accumulated profits – – 672 672 Capital redemption reserve fund 1 1 1 1 Share of profits of equity accounted investees 1 381 1 901 – – Trade marks 5 913 8 870 5 913 8 870

17 366 20 421 44 557 43 859

The movement in the reserves is as follows: Group Share Treasury Foreign Capital of profits shares and Acquisition of currency redemption of equity share-based subsidiary translation reserve accounted Trade payment companies reserve fund investees marks reserve R’000 R’000 R’000 R’000 R’000 R’000

Opening balance 1 July 2007 2 975 12 141 1 1 527 13 305 (12 786) Translation of foreign investments – 2 404 – – – – Amortisation of trade marks – – – – (4 435) – Share of profits of equity accounted

investees – – – 1 374 – – Distributions of equity accounted

investees – – – (1 000) – – Share options expense for the year – – – – – 4 915

Closing balance 30 June 2008 2 975 14 545 1 1 901 8 870 (7 871)

Opening balance 1 July 2008 2 975 14 545 1 1 901 8 870 (7 871) Translation of foreign investments – (5 061) – – – – Amortisation of trade marks – – – – (2 957) – Share of profits of equity accounted

investees – – – 980 – – Distributions of equity accounted

investees – – – (1 500) – – Disposal of treasury shares – – – – – 1 828 Share options expense for the year – – – – – 3 655

Closing balance 30 June 2009 2 975 9 484 1 1 381 5 913 (2 388)




The movement in the reserves is as follows: Company Transfer from retained Capital Acquisition of earnings redemption Share-based subsidiary (accumulated reserve payment companies losses) fund Trade marks reserve R’000 R’000 R’000 R’000 R’000

24. Reserves (continued) Opening balance 1 July 2007 2 975 672 1 13 305 25 739 Amortisation of trade marks – – – (4 435) – Share options expense for the year – – – – 5 602

Closing balance 30 June 2008 2 975 672 1 8 870 31 341

Opening balance 1 July 2008 2 975 672 1 8 870 31 341 Amortisation of trade marks – – – (2 957) – Share options expense for the year – – – – 3 655

Closing balance 30 June 2009 2 975 672 1 5 913 34 996


25. Long-term liabilities Secured loans Finance lease1 973 – 973 –

Unsecured loans Loans – non-interest bearing 2 520 643 – 96 Present value of outstanding consideration for purchase of business2 5 230 25 367 – – Post-retirement medical obligations (note 26) 43 951 38 638 43 951 38 638 Disability obligations (note 27) 2 252 2 698 2 252 2 698

54 926 67 346 47 176 41 432 Less: Current portion included in trade and other payables (8 286) (19 282) (2 981) (2 657)

Finance lease (486) – (486) – Post-retirement benefits (2 495) (2 732) (2 495) (2 657) Present value of outstanding consideration for purchase of business (5 230) (16 550) – – Loans – non-interest bearing (75) – – –

Total 46 640 48 064 44 195 38 775

Long-term liabilities are repayable as follows: Due within one to two years 3 139 11 226 3 139 2 409 Due within two to three years 2 881 2 580 2 881 2 580 Due within three to four years 2 971 2 824 2 971 2 824 Due within four to five years 3 179 2 935 3 179 2 935 Five years and thereafter 34 470 28 499 32 025 28 027

46 640 48 064 44 195 38 775

1 The finance lease is secured by computer equipment with a net book value of R1 million as at 30 June 2009. Although the arrangement is not in legal form of a lease, the group concluded that the arrangement contains a lease of computer equipment, because fulfilment of the arrangement is economically dependent on the use of the computer equipment and it is unlikely that any parties other than the group will receive more than an insignificant part of the output. The lease was classified as a finance lease.

2 The purchase price for the business acquired is subject to certain profitability thresholds and has been discounted at interest rates linked to the prime overdraft rate, which fluctuates in accordance with prevailing interest rates.



26. Post-retirement medical obligations Defined benefit plan The group has an obligation to contribute in part towards post-retirement medical benefits of 157 (2008: 153) retired employees

and 97 (2008: 115) current employees. This liability was actuarially valued at R43,9 million as at 30 June 2009 (2008: R38,6 million) and is accounted for as a long-term liability. The expected contribution for 2010 is R2,1 million.

The assumptions used in the actuarial valuation are as follows: 2009 2008

Healthcare cost inflation 8,25% 9,25% Rate of interest 9,25% 10,25% Average retirement age 63 years 63 years Continuation of membership None (closed fund) None (closed fund)

The assumptions used by actuaries are the best estimates chosen from a range of possible actuarial assumptions which, due to the timescale covered, may not necessarily be borne out in practice.

Group 2009 2008 2007 2006 2005 R‘000 R‘000 R‘000 R‘000 R‘000

The amount recognised in the balance sheet is as follows:

Present value of the obligation 43 951 38 638 31 813 29 251 28 657

The amounts recognised in the income statement are as follows:

Current service cost 564 480 561 647 807 Interest on obligation 3 865 2 398 2 210 2 431 2 547 Past service cost – – – (320) 1 691

4 429 2 878 2 771 2 758 5 045

Movement in the liability recognised in the balance sheet:

Liability at beginning of year 38 638 31 813 29 251 28 657 24 783 Expenses recognised in the income statement 4 429 2 878 2 771 2 758 5 045 Benefits paid (1 878) (1 744) (1 491) (1 303) (1 303) Disposal of Reinsurance Consultants and

Intermediaries division – – – (680) – Actuarial losses (gains) recognised in the statement

of recognised income and expenses 2 762 5 691 1 282 (181) 132

Liability at end of year 43 951 38 638 31 813 29 251 28 657

The amount recognised in the statement of recognised income and expenses is as follows:

Cumulative amount recognised at beginning of year 6 973 1 282 – – – Actuarial loss 2 762 5 691 1 282 – –

Cumulative amount recognised at end of year 9 735 6 973 1 282 – –




Company 2009 2008 2007 2006 2005 R‘000 R‘000 R‘000 R‘000 R‘000

26. Post-retirement medical obligations (continued) The amount recognised in the balance sheet

is as follows: Present value of the obligation 43 951 38 638 31 060 28 683 27 907


Current service cost 564 480 376 647 807 Interest on obligation 3 865 2 398 2 210 2 431 2 547 Past service cost – – – (138) 1 541

4 429 2 878 2 586 2 940 4 895


Liability at beginning of year 38 638 31 060 28 683 27 907 24 183 Expenses recognised in the income statement 4 429 2 878 2 586 2 940 4 895 Benefits paid (1 878) (1 610) (1 491) (1 303) (1 303) Disposal of Reinsurance Consultants and

Intermediaries division – – – (680) – Actuarial losses (gains) recognised in the statement

of recognised income and expenses 2 762 6 310 1 282 (181) 132


The amount recognised in the statement of recognised income and expense is as follows:

Cumulative amount recognised at beginning of year 7 592 1 282 – – – Actuarial loss 2 762 6 310 1 282 – –

Cumulative amount recognised at end of year 10 354 7 592 1 282 – –

Assumed healthcare cost trend rates have a significant effect on the amounts recognised. The following sensitivity analysis illustrates how the results change under various alternative assumptions:

% Change in service % Change in cost plus past service interest cost (contractual (contractual Assumption Variation liability) liability)

Healthcare cost inflation +1% +12,8% +14,0% -1% -10,8% -11,8% Mortality +1% -10,4% -11,1% -1% +12,2% +13,1% Resignation +1% -1,7% -2,6% -1% +1,9% +2,8%



27. Obligation for employees on disability The group has an obligation to contribute in part towards employee benefits of 8 (2008: 11) employees who left the group’s

employment due to disability. The liability arose on the shortfall of the benefit paid to former employees and the amount recovered from insurance. This liability was actuarially valued at R2,2 million as at 30 June 2009 (2008: R2,7 million) and is accounted for as a long-term liability.

The assumptions used in the actuarial valuation are as follows: 2009 2008

Escalation % applied on amount paid by insurer 6% 6% Escalation % applied on the amount paid by the group 6% 6% Investment growth 9,20% 11,37% Mortality – actuarial tables, rated down three years for females SA 56-62 SA 56-62

2009 2008 2007 2006 2005 R‘000 R‘000 R‘000 R‘000 R‘000


Present value of the obligation 2 252 2 698 3 643 4 348 4 149


Current service cost – – – 633 1 279 Actuarial loss (gains) 309 (255) – – – Interest on obligation 250 320 391 355 316

559 65 391 988 1 595


Liability at beginning of year 2 698 3 643 4 348 4 149 3 507 Expenses recognised in the income statement 559 65 391 988 1 595 Benefits paid (1 005) (1 010) (970) (873) (749) Actuarial (gains) losses recognised in the statement of

recognised income and expenses – – (126) 84 (204)


28. Retirement benefits Until 30 September 1999, retirement benefits for Glenrand M·I·B employees were provided primarily by the Glenrand Pension Fund

and the M·I·B Group Pension Fund, both of which were defined benefit funds. With effect from 1 October 1999, the Trustees of the former fund amended its rules as follows:

(i) Changed the name to the Glenmib Group Pension Fund; (ii) Provided for the transfer into the fund of the membership of the M·I·B Group Pension Fund, the trustees of which applied to

the Financial Services Board for de-registration; (iii) Altered the benefit structure to defined contribution, with guarantees that benefits payable in future to the members and

pensioners immediately before transfer will not be less than those payable in terms of the provisions of the rules of their respective funds as at 30 September 1999; and

(iv) Provided for the admission of all new employees on a defined contribution basis only.

With effect from 1 March 2006, members were given the option to convert from the defined benefit fund to the defined contribution section. 234 members exercised this option, significantly reducing the liabilities of the Fund in respect of the defined benefit fund.

The Glenmib Group Pension fund is governed by the Pension Funds Act, 1956, which requires that an actuarial valuation be carried out at least every three years. The most recent actuarial valuation of the fund was effected on 1 March 2005 and confirmed that the fund was in a sound financial position.




28. Retirement benefits (continued) The most recent valuation of the fund was, consistent with previous valuations based on the projected unit credit method,

performed by projecting the current shares of the fund to retirement, and the pension that can be purchased at that time is compared with the pension payable under the original rules. Any shortfall is discounted to the valuation date. Allowance is made for estimated future investment returns and salary increases. The fair value of the plan assets in respect of the defined benefit structure of the fund amounted to R167,1 million (2008: R208,4 million), exceeding the present value of the funded obligations, amounting to R162,8 million (2008: R160,2 million), by R4,3 million at 28 February 2009 (2008: R48,2 million).

The surplus of R4,3 million (2008: R48,2 million) has not been recognised based on management’s assessment that the present value of any future economic benefits available in terms of refunds or reductions in future contributions to the plan is nil.

The assumptions used in the actuarial valuation are as follows:

Group and Company 2009 2008

Discount rate* 9,0% 9,5% Expected return on plan assets* 9,0% 9,5% Consumer price inflation 5,88% 6,5% Expected rate of salary increases 6,75% 7,5% Future pension increases 2,88% 3,25%

* The discount rate and expected rate of return on plan assets were determined by reference to market yields on high quality corporate bonds or government bonds in South Africa allowing for the average remaining service life of active members of 10,75 years and the average age of pensioners of 73,1 years.

Group and Company 2009 2008 2007 2006 2005 R‘000 R‘000 R‘000 R‘000 R‘000

Change in plan assets Opening balance 208 391 227 256 321 636 310 432 264 388 Actual return (11 527) 13 068 47 075 55 930 62 227

Expected return 18 384 18 160 16 379 25 926 25 630 Actuarial (loss) gain (29 911) (5 092) 30 696 30 004 36 597

Contributions by participants 4 699 5 492 5 738 20 362 22 235

Members 2 365 2 796 2 896 7 830 8 551 Employer 2 334 2 696 2 842 12 532 13 684

Benefits paid (including risk benefit payments) (34 452) (32 718) (30 764) (65 088) (38 418) Curtailment – (4 707) (116 429) – –

Closing balance 167 111 208 391 227 256 321 636 310 432

Change in liability Opening balance 160 205 183 119 317 450 301 392 262 750 Service cost 8 311 7 743 9 946 21 020 21 702 Interest cost 14 373 14 833 16 625 26 088 26 524 Actuarial loss (gain) 14 325 (8 065) (13 709) 34 038 28 834 Benefits paid (including risk benefit payments) (34 452) (32 718) (30 764) (65 088) (38 418) Curtailment – (4 707) (116 429) – –

Closing balance 162 762 160 205 183 119 317 450 301 392

Funding level Projected benefit obligation (162 762) (160 205) (183 119) (317 450) (301 392) Plan assets 167 111 208 391 227 256 321 636 310 432

Asset 4 349 48 186 44 137 4 186 9 040


Projected benefit obligation 162 762 160 205 183 119 317 450 301 392 Plan assets (167 111) (208 391) (227 256) (321 636) (310 432)

Net asset (4 349) (48 186) (44 137) (4 186) (9 040) Unrecognised due to para 58 of IAS 19 Employee Benefits 4 349 48 186 44 137 4 186 9 040

Net asset recognised – – – – –



Group and Company 2009 2008 2007 2006 2005 R‘000 R‘000 R‘000 R‘000 R‘000

28. Retirement benefits (continued) The amounts recognised in the income statement

and statement of recognised income and expenses are as follows:

Service cost 8 311 7 743 9 946 21 020 21 702 Interest cost 14 373 14 833 16 625 26 088 26 524 Expected return on plan assets (18 384) (18 160) (16 379) (25 926) (25 630) Change in para 58 of IAS 19 Employee Benefits amount (43 837) 4 049 39 951 (4 854) 7 401 Actuarial loss (gain) recognised 44 236 (2 973) (44 405) 4 034 (7 762) Member contribution and risk benefits (2 365) (2 796) (2 896) (7 830) (8 551)

2 334 2 696 2 842 12 532 13 684

Reconciliation of balance sheet item: Opening value – – – – – Employer contribution (2 334) (2 696) (2 842) (12 532) (13 684) Amount recognised in income statement and

statement of recognised income and expenses 2 334 2 696 2 842 12 532 13 684

– – – – –


29. Policyholder liabilities Balance at beginning of year – 5 468 768 – – Premium inflow – 405 817 – – Net investment income – dividends – 7 832 – –

Total inflow – 413 649 – –

Policy withdrawals – 3 012 377 – – Commission/broker fees/operating expenses – 10 488 – –

Total outflow – 3 022 865 – –

Net outflow for the year – (2 609 216) – – Realised and unrealised net changes in the market values of linked

investments backing policyholder contracts – 8 561 – –

Balance at the end of the year – 2 868 113 – – Liabilities classified as held for sale (note 21) – (2 868 113) – –

Continuing operations – – – –

The maturity profile of equity linked notes was between one and three years. The maturity date for the remainder of the linked investments backing policyholder contracts was determined by the policyholder (refer note 18).





30. Trade and other payables Trade and other payables comprise the following:

Trade accounts payable 177 476 184 409 150 974 154 045 Non-trade accounts payable 41 156 34 299 34 124 23 289 Operating lease straight-line accrual 10 334 15 748 9 206 14 436 Accrued expenses 7 567 2 376 5 915 331 VAT and Lloyd’s taxation 930 8 512 – 5 974 Current portion of long-term liabilities 8 286 19 282 2 981 2 657 Bonus accrual 1 910 10 115 793 8 561 Leave pay accrual 17 108 13 274 13 616 11 190 Deferred revenue 30 095 30 649 28 322 29 000 Revenue received in advance – 38 670 – 38 670 Dividend payable – 329 – –

294 862 357 663 245 931 288 153 Liabilities classified as held for sale (note 21) – (1 561) – –

294 862 356 102 245 931 288 153

Trade payables principally comprise amounts outstanding for insurance premiums.

The bonus accrual represents the liability accrued for at year end relating to guaranteed bonuses and performance bonuses to employees.

The leave pay accrual represents the cost of leave for the number of leave days due to employees at year end, based on their total employment cost to company at year end.

The deferred revenue amount represents the portion of insurance broking income deferred to recognise as revenue over the contract period on a consistent basis, reflecting the level of servicing activities incurred during the period.


31. Provisions Provisions comprise the following: (a) Professional indemnity provision 4 927 20 281 4 927 12 289 (b) Cost of termination of funds provision – 44 100 – – (c) Pension fund PAYE provision – 2 015 – – (d) FSB penalties payable provision – 17 246 – – (e) Bulking income provision – 6 857 – – (f) Provision for onerous contracts – 4 858 – – (g) Provision for employee termination benefits – 2 167 – –

4 927 97 524 4 927 12 289 Liabilities classified as held for sale (note 21) – (1 172) – –

4 927 96 352 4 927 12 289

Movement of significant provisions comprises the following:

(a) Professional indemnity provision Balance at beginning of the year 20 281 15 911 12 289 8 915 Provision utilised during the year (7 020) (13 322) (3 112) (2 882) Provision raised (released) during the year 7 866 17 692 (4 250) 6 256 Effect of deconsolidation (16 200) – – –

Balance at end of the year 4 927 20 281 4 927 12 289

The professional indemnity provision is based on the group’s expected exposure to litigation and claims from various parties.




31. Provisions (continued) (b) Cost of termination of funds provision Balance at beginning of the year 44 100 10 258 – – Provision utilised during the year (25 588) (3 804) – – Provision raised during the year 18 510 37 646 – – Effect of deconsolidation (37 022) – – –

Balance at end of the year – 44 100 – –

(c) Pension fund PAYE provision Balance at beginning of the year 2 015 2 278 – – Provision utilised during the year (352) (748) – – Provision (released) raised during the year (1 663) 485 – –


(d) FSB penalties payable provision Balance at beginning of the year 17 246 1 486 – – Provision utilised during the year (20) (226) – – Provision (released) raised during the year (17 226) 15 986 – –


(e) Bulking income provision Balance at beginning of the year 6 857 5 644 – – Provision transferred from undisclosed profit provision – 1 848 – – Provision utilised during the year (6 193) (635) – – Provision raised during the year 115 – – – Effect of deconsolidation (779) – – –


(f) Provision for onerous contracts Balance at beginning of the year 4 858 – – – Provision utilised during the year (788) – – – Provision raised during the year 370 4 858 – – Effect of deconsolidation (4 440) – – –


(g) Provision for employee termination benefits Balance at beginning of the year 2 167 – – – Provision utilised during the year (412) 2 167 – – Provision released during the year (1 243) – – – Effect of deconsolidation (512) – – –






32. Cash generated (utilised) by operations 32.1 Cash generated (utilised) by operations: Profit (loss) before taxation 67 449 (55 833) (10 787) (21 298)

– Continuing 57 093 26 744 28 009 (50 975) – Discontinuing (note 8) 10 356 (82 577) (38 796) 29 677

Adjusted for: Depreciation 8 296 7 980 6 917 7 054 Amortisation of intangible assets 15 809 12 374 8 288 8 118 (Profit) loss on disposal of property, plant and equipment (31) 1 383 (23) 22 Share-based payments 3 655 4 915 3 655 5 602 Foreign exchange (gain) loss on loan (3 935) 1 956 (3 935) 1 956 Share of profits of equity accounted investees (980) (1 374) – – Dividends/distributions received from associates and joint

ventures1 1 500 1 000 (1 500) (1 000) (Profit) loss on disposal of investments (544) (18 497) 1 660 (262) Dividends received from subsidiary companies – – (3 375) (2 310) Investment income (79 820) (73 976) (56 802) (51 706) Dividends received (174) – (174) – Finance costs 26 850 38 886 20 187 18 452 Preference dividends received – (35) – (35) Increase in post-retirement medical and disability obligations 873 225 873 225 Impairment of investments and loans 3 204 29 926 40 079 49 760 Accounting effect of deconsolidation of subsidiary company (23 136) – – – Movement in pension fund obligation – Service costs 8 311 7 743 8 311 7 743 – Member contribution (2 365) (2 796) (2 365) (2 796) – Employer contribution (2 334) (2 696) (2 334) (2 696)

22 628 (48 819) 8 675 16 829

1 Dividends/distributions received from associates and joint ventures are disclosed as investment income on the cash flow statement for the company and as part of cash

generated by operations for the group.


32.2 Working capital changes: Increase (decrease) in payable to associates and joint ventures 65 (82) (23) 48 Decrease (increase) in receivable from associates and joint ventures 1 442 (1 299) 1 535 (1 429) Increase in receivable from subsidiary companies – – (41 792) (60 113) Increase (decrease) in payable to subsidiary companies – – 1 249 (619) (Increase) decrease in trade and other receivables (15 544) 13 036 (10 097) 14 091 (Decrease) increase in trade and other payables and provisions (70 326) 44 526 (46 747) 77 359

(84 363) 56 181 (95 875) 29 337

33. Investment income received Investment income 79 994 74 011 61 851 55 051 Adjusted for: Expected return on plan assets (18 384) (18 160) (18 384) (18 160) Fair value adjustment on receivable (872) – (87) – Interest received on employee loans (333) – (333) –

Investment income received 60 405 55 851 43 047 36 891

Interest received 60 231 55 816 37 998 33 546 Preference dividends – 35 – 35 Dividends received 174 – 5 049 3 310




34. Interest paid Finance costs 26 850 38 886 20 187 18 452 Adjusted for: Interest cost for post-retirement benefits (18 488) (17 551) (18 488) (17 551) Fair value of financial liabilities (1 689) (1 195) (566) – Other – (131) – (131)

Interest paid 6 673 20 009 1 133 770

35. Taxation paid Taxation paid is reconciled to the amount disclosed in the

income statement as follows: (Unpaid) prepaid at beginning of the year (4 495) 783 (4 862) 1 067 Charge to the income statement (6 631) (18 596) 3 337 (10 088) (Prepaid) unpaid at the end of the year (14 096) 4 495 (13 498) 4 862

– Taxation (14 096) 4 270 (13 498) 4 862 – Assets classified as held for sale (note 21) – 225 – –

(25 222) (13 318) (15 023) (4 159)

36. Proceeds on disposal of property, plant and equipment Carrying value of assets disposed – 8 568 – 41 Profit (loss) on disposal of property, plant and equipment 31 (1 383) 23 (22)

31 7 185 23 19

Cash 31 6 682 23 19 Trade and other receivables – 503 – –

37. Cash effect on acquisition of business/subsidiary company On 1 February 2008 the group acquired the business of Finrite Insurance Administrators (Pty) Limited for R54,2 million, of which

R30 million was paid immediately in cash. The balance is subject to agreed profit threshold achievements. The business is involved in end-to-end administration and claims fulfilment of high volume insurance products for underwriters.

In the five months to 30 June 2008 the group realised a profit of R1,1 million. If the acquisition had occurred on 1 July 2007, management estimates that revenue would have been R35,6 million and the profit R2,8 million. In determining these amounts, management has assumed that the fair value adjustments that arose on the date of acquisition would have been the same if the acquisition had occurred on 1 July 2007.

Group 2009 2008 R‘000 R‘000

Property, plant and equipment – 1 476 Intangible assets – 47 663 Deferred taxation liabilities – 1 286 Other non-current assets – (10 062)

– 40 363 Goodwill arising on acquisition – 13 811

– 54 174 Consideration paid – cash and cash equivalents – (30 000) Balance payable – (24 174)

– –

Cash effect of acquisition of business/subsidiary company Cash paid for acquisition of business/subsidiary company – (30 000)




37. Cash effect on acquisition of business/subsidiary company (continued) Group Pre- acquisition Fair Recognised carrying value values on amount adjustment acquisition R‘000 R‘000 R‘000

The acquisition had the following effect: Property, plant and equipment 1 476 – 1 476 – software 16 324 (4 594) 11 730 – favourable lease – 308 308 – customer relationships – 35 625 35 625 Deferred taxation assets – 1 286 1 286 Deferred taxation liabilities – (10 062) (10 062)

Net identifiable assets and liabilities 17 800 22 563 40 363 Goodwill acquisition 13 811

Total consideration 54 174

The pre-acquisition carrying amounts were based on applicable IFRS’s immediately before the acquisition. The value of assets and liabilities recognised are their estimated fair values.

The goodwill recognised on the acquisition is attributable mainly to the assembled workforce, blue sky income, synergy benefits and future benefit growth.

A purchase price adjustment of R5,9 million was raised during the current year, reducing the goodwill by the same amount. The consideration paid during 2009 amounted to R15,4 million which is included in cash flow from financing activities, since the remaining purchase consideration is carried as a payable (note 25). The balance payable amounts to R5,2 million as at 30 June 2009, after paying R30 million in 2008 and R15,4 million in 2009.

Group 2009 2008 R‘000 R‘000

38. Cash effect of deconsolidation of subsidiary company Intangibles 808 –

– Cost 14 444 – – Accumulated amortisation and impairment losses (13 636) –

Trade and other receivables 4 798 – Cash and cash equivalents 39 660 – Investments 1 828 – Trade and other payables (70 230) –

(23 136) – Effect of deconsolidation 23 136 –

– –

Cash effect of deconsolidation of subsidiary company: Cash received – –

Cash and cash equivalents disposed of (39 660) –

(39 660) –




39. Operating lease commitments for continuing operations Property Cash flow due within one year 29 849 28 880 27 148 26 048 Already provided for (7 160) (4 702) (6 146) (4 633)

Future expenses 22 689 24 178 21 002 21 415

Cash flow due between two and five years 31 061 47 724 25 314 38 614 Already provided for (3 174) (11 034) (3 060) (9 803)

Future expenses 27 887 36 690 22 254 28 811

Total future cash flow 60 910 76 604 52 462 64 662 Total already provided for (10 334) (15 736) (9 206) (14 436)

Total future expenses 50 576 60 868 43 256 50 226

Equipment Due within one year 2 417 2 901 2 417 2 901 Due between two and five years 817 1 037 817 1 037

3 234 3 938 3 234 3 938

Motor vehicles Due within one year 97 109 97 109 Due between two and five years 104 194 104 194

201 303 201 303

Total operating lease commitments 54 011 65 109 46 691 54 467

40. Contingent liabilities (a) The directors advise that the group faces actual and threatened litigation, the resolution of which is uncertain. Such litigation

involves amounts which could, if awarded, be significant. The group carries professional indemnity insurance to mitigate the exposure. The directors advise that they have taken appropriate legal advice and, having regard to the group’s insurance arrangements, have provided amounts which they consider to be a realistic appraisal of the ultimate likely cost of these various claims, in compliance with IFRS. The provisions are subject to periodic review in the light of developments which could affect the assumptions on which the provisions are based.

(b) The directors advise that legal action has been instituted by Protector Group Holdings (Pty) Limited (in liquidation) (“PGH”) and its liquidators (the “Plaintiffs”) against Glenrand M·I·B Financial Services (Pty) Limited, Glenrand M·I·B Limited, Freefall Trading 65 (Pty) Limited and some of the past directors of PGH (the “Defendants”). The action relates to monies received by Glenrand M·I·B Financial Services (Pty) Limited and Protector Group Management Services (Pty) Limited in respect of the sale of shares in PGH, going back to December 2003. Different claims (and in differing amounts) are preferred against various of the Defendants. In respect of some of the claims, amounts of up to approximately R63 million, plus interest thereon, are claimed from the Defendants jointly and severally. Glenrand M·I·B believes it acted properly and the matter is being defended. A court date has been set for 4 November 2009.

Company The following contingencies, guarantees and commitments exist at 30 June 2009: •AnunlimitedsuretyshipinfavourofFirstRandBankLimitedinrespectoftheobligationsofawholly-ownedsubsidiary.Thebank

overdraft as at 30 June 2009 was R69,2 million (2008: R77,6 million) (refer note 20). •Lettersofsupportandsubordinationagreementshavebeenissued(refernote45).





41. Capital commitments Capital commitments, for which funds will be provided from

internal sources, comprise:

Contracted for – 6 000 – 6 000 Approved but not contracted for 5 282 – 5 282 –

5 282 6 000 5 282 6 000

42. Group segmental revenue and results analysis Risk Advisory Benefit Services Services Continuing Discontinuing Total 2009 R’000 R’000 R’000

Segmental revenues 502 867 2 976 505 843

Segmental results 15 996 (23 178) (7 182)

Segmental results 15 996 (23 178) (7 182) Adjusted for the following: Investment income 72 457 7 537 79 994 Finance costs (26 850) – (26 850) Share of profits of equity accounted investees 980 – 980 Headline adjusting items (5 490) 25 997 20 507

Profit before taxation 57 093 10 356 67 449

Risk Advisory Benefit Services Services Continuing Discontinuing Total 2008 R’000 R’000 R’000

Segmental revenues 466 049 39 800 505 849

Segmental results 3 944 (102 321) (98 377)

Segmental results 3 944 (102 321) (98 377) Adjusted for the following: Investment income 66 987 7 024 74 011 Finance costs (26 219) (12 667) (38 886) Share of profits of equity accounted investees 1 374 – 1 374 Headline adjusting items (19 342) 25 387 6 045

Profit (loss) before taxation 26 744 (82 577) (55 833)



Risk Advisory Benefit Unallocated/ Services Services consolidation entries Total 2009 2008 2009 2008 2009 2008 2009 2008 R‘000 R‘000 R‘000 R‘000 R‘000 R‘000 R‘000 R‘000

43. Group segmental balance sheet analysis

Assets Non-current assets Property, plant and equipment 21 994 20 335 – – – – 21 994 20 335 Goodwill and intangible assets 106 712 117 323 – 1 979 – – 106 712 119 302 Investments 2 357 4 158 – – – (1 035) 2 357 3 123 Long-term accounts receivable – 1 260 – – – – – 1 260 Deferred taxation asset – – – – 25 894 36 697 25 894 36 697

131 063 143 076 – 1 979 25 894 35 662 156 957 180 717

Current assets Trade and other receivables 179 181 292 396 – 15 674 – (127 252) 179 181 180 818 Taxation – – – – 15 618 – 15 618 – Cash and cash equivalents 235 600 324 358 – 6 361 – – 235 600 330 719

414 781 616 754 – 22 035 15 618 (127 252) 430 399 511 537

Assets classified as held for sale – – – 2 918 219 – – – 2 918 219

Total assets 545 844 759 830 – 2 942 233 41 512 (91 590) 587 356 3 610 473

Equity and liabilities Shareholders’ equity 157 255 293 670 – (176 839) – (4 157) 157 255 112 674 Minority interests 3 757 4 042 – – – – 3 757 4 042

161 012 297 712 – (176 839) – (4 157) 161 012 116 716

Non-current liabilities Long-term liabilities 46 640 48 064 – – – – 46 640 48 064 Deferred taxation liability – – – – 9 163 8 579 9 163 8 579

46 640 48 064 – – 9 163 8 579 55 803 56 643

Current liabilities Trade and other payables 299 789 235 116 – 90 086 – 127 252 299 789 452 454 Bank overdraft 69 188 77 558 – – – – 69 188 77 558 Other payables 42 65 – – 1 522 4 270 1 564 4 335

369 019 312 739 – 90 086 1 522 131 522 370 541 534 347

Liabilities classified as held for sale – – – 2 902 767 – – – 2 902 767

Total equity and liabilities 576 671 658 515 – 2 816 014 10 685 135 944 587 356 3 610 473




44. Related party disclosures 44.1 Subsidiary companies Details of investments in subsidiary companies are disclosed in notes 11 and 45 on pages 70 and 96 to 97 respectively of

these annual financial statements.

44.2 Associated companies and joint ventures Details of investments in associated companies and joint ventures are disclosed in note 12 on page 71 of these annual

financial statements.

44.3 Shareholders The principal shareholders of the company are detailed under Shareholders’ Information on page 101 of these annual

financial statements.

44.4 Directors Details relating to directors’ emoluments and shareholdings are disclosed on pages 37 to 40 of the Directors’ Report.

Certain of the directors of the group are also directors of other public companies which may transact with the group. The relevant directors do not believe that they have significant influence over the financial or operational policies of those companies. Those companies are thus not regarded as related parties.

44.5 Performance agreement fees Details relating to the performance agreement fees paid to the BBPs in terms of the BEE scheme are disclosed on page 37 of

the Directors’ Report.

44.6 Transactions with related parties The company entered into the following transactions during the year with related parties in the group: • Loans were advanced and repayments received on short-term and long-term intercompany accounts; • Management fees and rental income were received from several controlled entities and are disclosed as other income. • Subsidiary company loans were written off/impaired (note 4); and • The company acquired 10% of the issued shares which it did not already own in Glenrand M.I.B Credit and Political Risk Consultants (Pty) Limited, with effect 13 November 2008.

These transactions were undertaken on terms and conditions agreed between the parties. These intra-group transactions have been eliminated on consolidation.

Amounts due to and receivable from related parties in the group These amounts are set out in note 45 on pages 96 to 97 of these annual financial statements.

Ownership interests The ownership interests in related parties are set out in note 45 on pages 96 to 97 of these annual financial statements.



45. Analysis of investments in subsidiary companies Owing Issued Nominal % % Cost of by (to) Name of subsidiary ordinary value per holding holding shares subsidiary company Principal business share capital share 2009 2008 R’000 R’000

Direct holdings Dormant companies 1 138 36 608 17 Biccard Street Dormant company R1 R1 100 100 22 1 684 (Pty) Limited Bymac Insurance Brokers Dormant company R720 R0,01 100 100 9 672 (9 662) (Pty) Limited

Claims Fulfilment Company Insurance brokers R1 200 R1 100 100 1 2 204 (Pty) Limited

Glenrand M.I.B Border-Kei Dormant company R100 R1 100 100 * (1 230) (Pty) Limited

Glenrand M.I.B Consultants Insurance intermediary R1 000 R1 100 100 1 41 293 (Pty) Limited (trading as Finrite)

Glenrand M.I.B Credit and Credit and political R200 R1 80 70 2 957 (379) Political Risk Consultants risk consultancy services (Pty) Limited

Glenrand M.I.B Integrated Dormant company R1 000 R1 100 100 62 1 274 Risk Solutions (Pty) Limited

Glenrand M.I.B Makgulong Dormant company R1 000 R1 100 100 1 062 (5 730) (Pty) Limited

Glenrand M.I.B (Mauritius) Investment holding US$394 000 US$1 100 100 2 571 (229) (Pte) Limited (Mauritius)

Glenrand M.I.B (Mozambique) Insurance brokers Mt’800 809 000 No par 50 50 257 2 209 Lda (Mozambique) value

Glenrand M.I.B Premium Financing of premiums R1 R1 100 100 * 21 465 Finance Solutions (Pty) Limited

Glensure Limited Investment holding £1 112 442 £l 100 100 (Isle of Man) company – Ordinary 2 596 (18 764) – Preference shares 2 975

Recon Properties Dormant company R100 R1 100 100 3 677 (Pty) Limited

Signature Made Wholesale risk technical R1 R1 100 100 * 312 (Pty) Limited solutions and back office solutions provider

Underwriting Centre Investment holding R1 R1 100 100 * (2 842) (Pty) Limited

Total direct 23 317 68 890




45. Analysis of investments in subsidiary companies (continued) Owing Issued Nominal % % Cost of by (to) Name of subsidiary ordinary value per holding holding shares subsidiary company Principal business share capital share 2009 2008 R’000 R’000

Indirect holdings Glenrand M.I.B (Botswana) Insurance brokers P30 000 P1 75 75 1 134 (7) (Pty) Limited

Glenrand M.I.B (Namibia) Insurance brokers N$1 000 N$1 75 75 1 191 (Pty) Limited (Namibia)

Integrated Governance Governance and insurance R1 R1 100 100 * 460 Solutions (Pty) Limited advisory services

Integrated Intermediaries Provision of compliance R500 R1 100 100 426 – Solutions (Pty) Limited advice and services

Glenrand M.I.B (Swaziland) Insurance brokers E1 100 E1 60 60 240 503 (Pty) Limited (Swaziland)

Total indirect 1 801 1 147

Total direct and indirect 25 118 70 037 Less: impairments – Investments: direct (2 472) – – Loans: direct – (24 076)

Total direct and indirect 22 646 45 961

* Denotes amounts less than R1 000.

Country of incorporation is South Africa unless otherwise stated. Details of dormant companies are available on request. The directors’ valuation of shares in unlisted investments approximates carrying value as stated above.

The company issued subordination agreements to the following companies: – 17 Biccard Street (Pty) Limited – Risk Funding Services (Pty) Limited – Recon Properties (Pty) Limited

Loans to the following companies were partially impaired: – Risk Funding Services (Pty) Limited – Recon Properties (Pty) Limited – 17 Biccard Street (Pty) Limited

The loan to Glenrand M.I.B (Mozambique) Lda (Mozambique) was fully impaired.



46. Standards and Interpretations not yet effective At the date of authorisation of the financial statements of the group and the company for the year ended 30 June 2009, the

following Standards and Interpretations were in issue but not yet effective:

Standard/Interpretation Effective date

IAS 1 (AC 101) Presentation of Financial Statements Annual periods commencing on or after 1 January 2009*

IAS 23 (AC 114) Borrowing Costs Annual periods commencing on or after 1 January 2009*

IAS 27 (AC 132) amendment Consolidated and Separate Financial Statements Annual periods commencing on or after 1 July 2009*

IAS 32 (AC 125) & IAS 1 IAS 32 (AC 125) Financial Instruments: Annual periods commencing on (AC 101) amendment Presentation and IAS 1(AC 101) Presentation or after 1 January 2009* of Financial Statements: Puttable Financial Instruments and Obligations Arising on Liquidation

IAS 39 (AC 133) amendment Eligible Hedged Items Annual periods commencing on or after 1 July 2009*

There are 24 individual Improvements to International Financial Reporting Amendments are effective for annual amendments to 15 standards. Standards 2008 periods commencing on or after 1 January 2009, or for annual periods commencing on or after 1 July 2009*

There are 15 individual Improvements to International Financial Reporting Amendments are effective for annual amendments to 12 standards. Standards 2009 periods commencing on or after 1 January 2010, or for annual periods commencing on or after 1 July 2009*

IFRS 1 (AC 138) and IAS 27 Cost of an Investment in a Subsidiary, Jointly Controlled Annual periods commencing on or (AC 132) amendment Entity or Associate after 1 January 2009*

IFRS 1 (AC 138) First-time adoption of International Financial Reporting Annual periods commencing on or Standards after 1 July 2009*

IFRS 1 (AC 138) amendment Additional Exemptions for First-time Adopters Annual periods commencing on or after 1 January 2010*

IFRS 2 (AC 139) amendment Share-based Payment: Vesting Conditions and Annual periods commencing on or Cancellations after 1 January 2009*

IFRS 2 (AC 139) amendment Group Cash-settled Share-based Payment Annual periods commencing on or after 1 January 2010*

IFRS 3 (AC 140) Business Combinations Annual periods commencing on or after 1 July 2009*

IFRS 7 (AC 144) amendment Improving Disclosures about Financial Instruments Annual periods beginning on or after 1 January 2009

IFRS 8 (AC 145) Operating Segments Annual periods commencing on or after 1 January 2009*




46. Standards and Interpretations not yet effective (continued)

Standard/Interpretation Effective date

IFRIC 15 (AC 448) Agreements for the Construction of Real Estate Annual periods commencing on or after 1 January 2009*

IFRIC 16 (AC 449) Hedges of a Net Investment in a Foreign Operation Annual periods commencing on or after 1 October 2008*

IFRIC 17 (AC 450) Distribution of Non-Cash Assets to Owners Annual periods commencing on or after 1 July 2009*

IFRIC 18 (AC 451) Transfer of Assets from Customers Transfers received on or after 1 July 2009*

IFRS for SMEs IFRS for Small and Medium-sized Entities Effective date to be determined by the national regular in each jurisdiction*

*All Standards and Interpretations will be adopted at their effective date (except for those Standards and Interpretations that are not applicable to the group).

IAS 23, IAS 32, IAS 39, IFRS 2 amendment: Group Cash-settled Share-based Payment, IFRIC 15, IFRIC 17 and IFRIC 18 are not applicable to the business of the group and will therefore have no impact on future financial statements. The directors are of the opinion that the impact of the application of the remaining Standards and Interpretations will be as follows:

IAS 1 (AC 101) The group will present all non-owner changes in equity in a single statement of comprehensive income (which will include the

current income statement) and owner changes in equity in the statement of changes in equity.

Reclassification adjustments and income tax relating to each component of other comprehensive income will be disclosed on the face of the statement of comprehensive income. Currently these components are available-for-sale fair value gains/losses reserve and the foreign currency translation reserve.

IAS 27 (AC 132) amendments In accordance with IAS 27 (AC 132) amendments, acquisitions of additional non-controlling equity interests in subsidiaries have

to be accounted for as equity transactions. Disposals of equity interests while retaining control are also accounted for as equity transactions. When control of an investee is lost, the resulting gain or loss relating to the transaction will be recognised in profit and loss.

It has always been the group’s accounting policy to treat all acquisitions of additional interests in subsidiaries, as well as disposals of interests in subsidiaries, as equity transactions. The group will, however, change its accounting policy relating to the loss of control when an equity interest is retained. In future, when control is lost, through sale or otherwise, the resulting gain or loss recognised in profit and loss will include any remeasurement to fair value of the retained equity interest. All cash flows relating to acquisition and sale of interests in subsidiaries currently form part of the cash flows from investing activities. In future, changes in the equity holding in a subsidiary that do not result in loss of control will form part of cash flow from financing activities on the basis that these transactions are equity transactions.

The amendments to IAS 27 (AC 132) also require that losses (including negative “other comprehensive income” as detailed in the revised IAS 1 (AC 101)) have to be allocated to the non-controlling interest even if doing so causes the non-controlling interest to be in a deficit position. The group will in future change its accounting polices on the allocation of losses to non-controlling interests. In the past losses were allocated only until the non-controlling interests had a zero balance.

The amendments to IAS 27 (AC 132) have resulted in consequential amendments being made to IAS 28 (AC 110) Investments in Associates and IAS 31(AC 119) Interests in Joint Ventures.



46. Standards and Interpretations not yet effective (continued) IFRS 1 (AC 138) and IAS 27 (AC 132) amendments In future dividends received from subsidiaries, jointly controlled entities or associates will be recognised as dividend income in

the separate financial statements of Glenrand M.I.B Limited regardless of whether the dividends were declared from accumulated profits arising before or after acquisition by Glenrand M.I.B Limited.

IFRS 2 (AC 139) amendments: Vesting conditions and cancellations The amendments apply to equity-settled share-based payment transactions and clarify what are vesting and “non-vesting

conditions”. Vesting conditions are now limited to service conditions (as defined in the current IFRS 2 (AC 139)) and performance conditions. Non-vesting conditions are conditions that do not determine whether the entity receives the services that entitle the counterparty to a share-based payment are non-vesting conditions. Non-vesting conditions are taken into account in measuring the grant date fair value and thereafter there is no “true-up” for differences between expected and actual outcomes.

These changes will have no impact on the group’s financial statements as the treatment of ‘non-vesting’ conditions is consistent with the group’s current accounting policies.

IFRS 3 (AC 140) IFRS 3 (AC 140) applies to all new business combinations that occur after 1 July 2009. For these future business combinations, the

group will change its accounting policies to be in line with the revised IFRS 3 (AC 140). In future all transaction costs will be expensed and contingent purchase consideration will be recognised at fair value at acquisition date. For successive share purchases, any gain or loss for the difference between the fair value and the carrying amount of the previously held equity interest in the acquiree will be recognised in profit and loss.

IFRS 7 (AC 144) amendment In terms of the amendments additional disclosure will be provided on the fair value measurement disclosures for financial instruments

and the liquidity risk disclosures for financial liabilities. The possible impact of the application on the financial statements in the period of initial application is not yet known.

IFRS 8 (AC 145) In terms of this IFRS, segment reporting will be based on the information that management uses internally for evaluating segment

performance and when deciding how to allocate resources to operating segments. Such information may be different from what is used to prepare the income statement and balance sheet.

IFRIC 16 (AC 449) IFRIC 16 (AC 449) addresses the accounting treatment for hedges of a net investment in a foreign operation.

Hedge accounting for these instruments will cease prospectively beginning on 1 July 2009. From that date, the instruments will be held at fair value under IAS 39 (AC 133) with movements in fair value going through profit or loss.

There is no expected impact on the financial statements as the group does not carry financial instruments to hedge net investments in foreign operations.

G l e n r a n d M • I • B A n n u a l R e p o r t 2 0 0 9 1 0 1


Shareholders’ Informationas at 30 June 2009

Shareholder spread % of % of Number of share- Number issued shareholders holders of shares shares

1 – 1 000 shares 882 42,77 340 914 0,121 001 – 10 000 shares 635 30,80 2 973 770 1,0210 001 – 100 000 shares 370 17,94 11 631 180 3,98100 001 – 1 000 000 shares 133 6,45 41 868 709 14,331 000 001 shares and over 42 2,04 235 313 729 80,55

Total 2 062 100,00 292 128 302 100,00

% of % of Number of share- Number issued shareholders holders of shares shares

Banks 2 0,10 5 298 –Brokers 4 0,19 2 077 923 0,71Close corporations 29 1,41 431 652 0,15Empowerment 5 0,24 76 328 834 26,13Endowment funds 8 0,39 4 633 330 1,59Incentive scheme 1 0,05 219 670 0,07Individuals 1 768 85,74 49 376 192 16,90Insurance companies 7 0,34 4 057 921 1,39Investment companies 4 0,19 65 791 414 22,52Mutual funds 10 0,48 9 024 595 3,09Nominees and trusts 131 6,35 18 599 376 6,37Other corporations 9 0,44 77 208 0,03Pension funds 29 1,41 23 052 986 7,89Private companies 51 2,47 21 420 854 7,33Public companies 2 0,10 755 127 0,26Treasury stock 2 0,10 16 275 922 5,57

Total 2 062 100,00 292 128 302 100,00

Shareholders with an interest of 5% or more in sharesAs at 30 June 2009 the directors are aware of the following interests of 5% or more of the issued ordinary share capital

30 June 2009 30 June 2008 % of total % of total Number of issued Number issued shares shares of shares shares

RMB Holdings Limited – – 35 892 605 12,3Trustee Board Investments (Pty) Limited and GMIB Investments (Pty) Limited 65 708 414 22,5 22 266 994 7,6Micawber 427 (Pty) Limited (held by Kunene Bros. (Pty) Limited) 16 023 799 5,5 16 023 799 5,5Micawber 428 (Pty) Limited (held by Matemeku Investments (Pty) Limited and Clidet 390 (Pty) Limited) 16 023 799 5,5 16 023 799 5,5Micawber 429 (Pty) Limited (held by Ayavuna Women’s Investments (Pty) Limited) 16 023 799 5,5 16 023 799 5,5Kunene Finance Company (Pty) Limited 14 751 604 5,0 14 751 604 5,0

128 531 415 44,0 120 982 600 41,4


Shareholders’ Informationas at 30 June 2009 (continued)

Analysis of public and non-public shareholders Number of Number of % of issued shareholders shares capital

Strategic Investments 2 40 015 035 13,7

Trustee Board Investments (Pty) Limited and GMIB Investments (Pty) Limited 65 708 414 22,5Less: Shares held indirectly by directors 25 693 379 8,8

Directors of the company 8 36 511 393 12,5Directors of subsidiary companies 6 3 300 623 1,1Management 30 8 463 995 2,9Trustees of employee share scheme 2 13 725 503 4,7Treasury shares 1 16 275 922 5,6Empowerment (excluding directors’ interests included above) 5 65 982 238 22,6

Non-public shareholders 54 184 274 709 63,1Public shareholders 2 008 107 853 593 36,9

Total 2 062 292 128 302 100,0

Stock exchange performance 2009 2008 2007 2006 2005

Market price per share (cents)– Year end 104 100 139 158 257– Highest 120 160 185 280 410– Lowest 20 81 125 137 230– Volume weighted average price 95 124 137 219 318Market capitalisation (R’000) 303 813 292 128 406 050 461 560 625 205Number of transactions 848 2 799 4 152 5 803 5 721Number of shares traded 24 849 230 73 267 777 58 262 492 77 523 916 55 271 409Number of shares traded as a % of issued 8,5 25,1 19,9 26,5 22,7Value of shares traded (R’000) 22 138 90 590 87 552 169 998 176 595

2010 Financial calendar

Financial year end September 2010Interim report February 2010Twelve month preliminary profit announcement September 2010Preliminary profit announcement December 2010Annual report February 2011Annual general meeting March 2011Dividend declared* interim: February 2010 final: December 2010Dividend payable* interim: March 2010 final: January 2011

Dates are subject to change*if applicable



Board of Directors

Executive Directors

Andrew John Chislett (47)Chief Executive OfficerAppointed to the board on 1 November 2007

Andrew Chislett joined Glenrand M·I·B in 1997 with business development responsibilities. After two years with the division he was promoted to Regional Managing Director of the KwaZulu Natal office and was subsequently appointed as Chief Executive Officer of the Risk Services Division. Andrew had overall regional (Africa) responsibility for the short-term broking operations of Glenrand M·I·B and associated subsidiaries/investments. During that time he was responsible for restructuring the Risk Services division, disposing of non-core assets, negotiating the international partnership with Jardine Lloyd Thompson, as well as driving the acquisition programme and growth agenda.

Andrew has been in the insurance industry for 26 years. He was appointed Chief Executive Officer of Glenrand M·I·B Limited on 1 November 2007.

Gordon Whitcher (43)BSc, MCom, CA (SA), CISAChief Financial OfficerAppointed to the board on 27 November 2006

Gordon Whitcher joined Glenrand M·I·B in 2004 and was subsequently appointed CIO in April 2005. Gordon studied BSc IT and Applied Mathematics at the University of Stellenbosch before qualifying with a Masters of Commerce from Nelson Mandela Metropolitan University in 1993. He qualified as a CA (SA) with PricewaterhouseCoopers in 1996 and joined The Board of Executors directly after completing articles. In 1999 he was a founding executive to a green fields financial services company in the retirement fund administration industry and joined Glenrand M·I·B after the entity was acquired. He holds various executive directorships of subsidiaries in the group, together with acting as public officer.

Non-executive Directors

Dr Iraj Abedian (53)BA (Hons), MA (Economics), PhD (Economics)Independent non-executive directorAppointed to the board on 3 November 2008

Dr Iraj Abedian is the co-founder and chief executive of Pan-African Capital Holdings (Pty) Limited. He was professor of economics at the University of Cape Town, before joining Standard Bank Group in 2000 as Group Chief Economist. He was the founder and director of the Applied Fiscal Research Centre (AFReC) at UCT and has been a consultant on economics policy issues to public and private sector organisations in South Africa, as well as internationally.

Iraj has also served as economic columnist for the Sowetan, a Johannesburg-based daily newspaper. Iraj is currently a member of the board of directors of Munich Re, Wesizwe Platinum Limited and AFReC. He is chairman of the board of directors of Bigen Africa Limited, Pangbourne Properties Limited and PBS (Pty) Limited, and a member of the advisory board of the Auditor General (South Africa).

Iraj is a member of the audit, risk and compliance committee.


Board of Directors(continued)

Bruce Andrew Chelius (41)CA (SA) Alternate directorAppointed to the board on 2 April 2009

Bruce Chelius studied at the University of the Witwatersrand and qualified as a Chartered Accountant, completing his articles with Deloitte and Touche in Johannesburg. In 2002 he qualified as a Chartered Financial Analyst (CFA).

Bruce has more than ten years experience in private equity investing and corporate finance, having worked at Standard Corporate and Merchant Bank and BoE Bank/Nedbank.

In 2004 Bruce established Collins Private Equity (CPE) with three partners. He is currently the managing director and a shareholder of CPE. In his role as managing director of CPE he currently sits on the boards of Autovest Limited, where he is the chairman of the remuneration committee, and Eveready (Pty) Limited.

Bruce is alternate director to Abrie du Preez.

Richard Gray Cottrell (73)CA (SA), FCAIndependent non-executive directorAppointed to the board on 18 May 2001

Rick Cottrell is a former chairman and managing partner of Coopers and Lybrand, South Africa, a predecessor firm of PricewaterhouseCoopers. He is a past president of the Institute of Chartered Accountants, chairman of the Accounting Practices Committee and one of the two South African representatives of the then International Accounting Standards Committee.

After retiring from practice, he was appointed executive officer of the Financial Services Board, a position he occupied for over four years.

He is now a director of companies, including Regent Insurance Company Limited, Regent Life Assurance Company Limited and Metaf Investment Holdings (Pty) Limited. He is also chairman of the Accounting Standards Board, which sets public sector accounting standards for South African public entities.

Rick is chairman of Glenrand M·I·B’s audit, risk and compliance committee, a member of the remuneration and nominations committee, a trustee of the Glenmib Employee Scheme Trust and a non-executive director of Ten-50-Six Life Limited.

Abraham Petrus du Preez (54)BCom (Hons), CA (SA) Non-executive directorAppointed to the board on 25 February 2009

Abrie du Preez worked as Audit Senior at Theron van der Poel from 1979 until 1981 and thereafter joined Prima Foods as Financial Manager. In 1984 Abrie joined Prestasi Insurance Brokers and left in 1992 as Group Managing Director to launch Trustee Board Investments (Pty) Limited, of which he is the executive chairman.

Abrie is a member of the risk committee and the remuneration and nominations committee.




Hester Helena Hickey (55)BCompt (Hons), CA (SA)Independent non-executive directorAppointed to the board on 1 July 2009

Hester Hickey is a consultant, non-executive director, trustee and audit committee chairman for various organisations as follows:

Non-executive director and audit committee member of Omnia Limited; audit committee chairman of Two Rivers Platinum; trustee and chairman of the audit committee of AngloGold Ashanti Pension Fund; non-executive director and chairman of the audit committee of Agre Limited; trustee and member of the audit and risk committees of the Sentinel Pension Fund and the Mineworkers Pension Fund representing the Chamber of Mines.

Hester recently completed two terms over a period of seven years as a member of the Johannesburg Municipality audit committee, was the General Manager Risk Consulting at Marsh South Africa and during her career has been involved in many areas of risk, internal audit and corporate governance.

Hester has previously held the positions, amongst others, of chairman of SAICA (South African Institute of Chartered Accountants); executive officer: head of risk – AngloGold Ashanti; senior manager: corporate governance at Liberty Life; and partner at Ernst & Young. On completion of her articles Hester also lectured auditing and accounting at the University of the Witwatersrand and was national technical and training manager of BDO Spencer Steward.

Tidimalo (Tidi) Tranqueline Khobane (48)BA (UNISA), MDP (UNISA SBL)Alternate directorAppointed to the board on 27 May 2009

Tidi Khobane is the Chief Operating Officer of the Matemeku Group. Her previous experience includes that of chief director at the Department of Foreign Affairs (deputy chief of state protocol), executive director of Meropa Communications, Employee Wellbeing Manager at Eskom and international relations officer for the Cape Town Olympic Bid 2004.

She currently chairs the boards of Edusport Travel and Traffic Management Technologies (Gauteng). She is a non-executive director at Schindler Lifts SA (Pty) Limited and Ilizwi Holdings as well as a trustee of the Makgulong Employee Ownership Scheme Trust.

Tidi is alternate director to Moss Mashishi.

Dr Mduduzi Fortune Kunene (59)MBBCh (Wits), BSc (Hons) (FH), D.A.(SA)Non-executive ChairmanAppointed to the board on 14 September 2000

Dr Dudu Kunene was previously the executive director on the Glenrand M·I·B board responsible for diversity and empowerment. On 1 July 2006 Dudu was appointed non-executive chairman of the board of directors and on 18 August 2006 the acting chief executive officer on an interim basis. Dudu reverted to the role of non-executive chairman on 1 November 2007.

Dudu is also the chief executive officer of Kunene Bros. Holdings (Pty) Limited and the chairman of Kunene Finance Company (Pty) Limited, as well as Kunene Motor Holdings Limited. He is a director of Fortune Investment Holdings, First Beverages and Second Beverages, non-executive chairman of the CISCO SA Advisory Board and Trustee to the NOAH Trust. He practised as an anaesthetist until January 1998, whereafter he joined Kunene Bros. Holdings on a full-time basis. Apart from being on the board of Glenrand M·I·B, Dudu is also non-executive chairman of Glenrand M·I·B Limpopo (Pty) Limited.



Ramotheo Moses Mashishi (46)BA, LLBNon-executive directorAppointed to the board on 18 April 2006

Moss Mashishi is currently the executive chairman of Matemeku Group. His previous positions include being the chief executive officer of the following companies: The World Summit on Sustainable Development 2002, SA Tourism and Moribo Leisure.

His board appointments include being the non-executive chairman of the following: Ogilvy South Africa, Ogilvy Africa and Aristocrat Technologies Africa (ATA), non-executive director of the following: Schindler Lifts (SA) and Ponahalo Investment Holding, a BEE partner of De Beers Consolidated Mines, where he is also a shareholder.

Moss is a former president of the Sports Confederation and Olympic Committee (SASCOC), the sport body responsible for developing high performance sport in South Africa and a former member of the Sports and Environment Commission of the International Olympic Committee.

Thandeka Nozipho Mgoduso (52)MA, Clinical PsychologyNon-executive directorAppointed to the board on 3 July 2007

Thandeka Mgoduso works as an executive director for Human Resources at the University of Johannesburg. She is a non-executive director of Ayavuna Women’s Investments, the Deputy Chairman of the National Nuclear Regulator (NNR), non-executive director for the South African Reserve Bank, as well as a director of Ukhamba Holdings, a subsidiary of the Imperial Group, as well as of BIOSS SA.

Thandeka practised as a clinical psychologist in Cape Town, London and Johannesburg. She has been involved in logistics for a number of years as a CEO at Freightdynamics, as well as an executive director at Imperial Logistics, before joining Ayavuna on a full-time basis. Thandeka, previously alternate director to Hixonia Nyasulu, was appointed a full director of the company when Hixonia resigned from the board. Thandeka is a member of the remuneration and nominations committee.

Nigel George Payne (49)BCom (Hons), Higher Diploma in Accounting, CA (SA), MBLIndependent non-executive directorAppointed to the board on 6 December 2006

Nigel Payne is an independent corporate governance and risk management advisor. He currently holds various non-executive directorships, where he generally chairs the audit and risk committees. These include Bidvest Limited, JSE Limited, Mr Price Limited and BSI Steel Limited. Nigel is also a member of the King Committee. He is a member of the audit, risk and compliance committee and chairman of the risk committee and the remuneration and nominations committee and a trustee of the Glenmib Employee Scheme Trust.



Notice of Annual General Meeting

GLENRAND M·I·B LIMITEDRegistration No. 1997/008001/06(Incorporated in the Republic of South Africa)Share code: GMB ISIN: ZAE000078010(“Glenrand M·I·B”) or (“the company”)

Notice is hereby given that the twelfth Annual General Meeting of Glenrand M·I·B will be held at 08h30 on Wednesday, 18 November 2009 in the Boardroom, Ground Floor, 288 Kent Avenue, Ferndale, Randburg for the purpose of considering and, if deemed fit, passing, with or without modification, the following ordinary and special resolutions:

Ordinary Resolution Number 1To receive and adopt the annual financial statements for the year ended 30 June 2009, together with the reports of the directors and independent auditors.

Ordinary Resolution Number 2To ratify the appointments of:

2.1 Dr I Abedian; 2.2 Mr AP du Preez; 2.3 Ms TN Mgoduso;

who were appointed as directors during the year; and of

2.4 Ms HH Hickey

who was appointed as a director subsequent to the year end of the company.

A brief curriculum vitae in respect of each director referred to above appears on pages 103 to 106 of this annual report.

Ordinary Resolution Number 3To re-elect directors in place of those retiring in accordance with the provisions of the company’s Articles of Association. The directors retiring are:

3.1 Mr NG Payne; and 3.2 Mr G Whitcher

who, being eligible, offer themselves for re-election.

A brief curriculum vitae in respect of each director referred to above appears on pages 103 to 106 of this annual report.

Ordinary Resolution Number 4To approve the following non-executive directors’ fees for financial 2010:

4.1 Chairman – R450 000 per annum

4.2 Non-executive director of Glenrand M·I·B – R70 000 per annum

4.3 Audit, risk and compliance committee: Chairman – R140 000 per annum Member – R70 000 per annum

4.4 Remuneration and nominations committee: Chairman – R70 000 per annum Member – R40 000 per annum


Notice of Annual General Meeting(continued)

Ordinary Resolution Number 4 (continued)4.5 Risk committee: Chairman – R100 000 per annum Member – R60 000 per annum

Ordinary Resolution Number 5To re-appoint the auditors, KPMG Inc., as auditors of the company and to appoint Mr D Read as the designated auditor for the ensuing year.

The audit, risk and compliance committee has recommended the re-appointment of KPMG Inc. as auditors of the company as well as the appointment of Mr D Read as the designated auditor.

Ordinary Resolution Number 6“Resolved that the amendments to the Glenmib Employee Scheme indicated in mark-up on the document entitled Amended and Re-stated Glenmib Employee Scheme, a copy of which has been tabled at this Annual General Meeting and initialled by the chairman for purposes of identification (and which amendments are summarised in Appendix 1 to this notice of annual general meeting), be and are hereby approved.”

The Glenmib Employee Scheme will be available for inspection during normal business hours at the registered office of the company from the date of issue of the annual report of which this notice of Annual General Meeting forms part, up to and including the date of the Annual General Meeting.

Ordinary Resolution Number 7To consider and, if deemed fit, to pass, with or without modification, the following resolution as an ordinary resolution:

“Resolved that the unissued ordinary shares in the capital of the company be and are hereby placed under the control of the directors of the company as a general authority in terms of section 221 of the Companies Act, 1973 (Act 61 of 1973), as amended, (the Act), subject to the provisions of the Act and the JSE Limited (JSE) Listings Requirements, until the next Annual General Meeting, for allotment and issue to such persons and on such conditions as the directors may deem fit.”

The issuing of shares granted under this authority will be limited to Glenrand M·I·B’s existing contractual obligations to issue shares, including for purposes of Glenrand M·I·B’s BEE transaction approved in 2006, any capitalisation share award and shares required to be issued to the Glenmib Employee Scheme for the purpose of carrying out the terms of the share incentive scheme.

Special Resolution“Resolved that, the company and/or any subsidiary of the company be and is hereby authorised by way of a general approval contemplated in sections 85(2) and 85(3) of the Act, to acquire the issued ordinary shares of the company, upon such terms and conditions and in such amounts as the directors of the company may from time to time determine, but subject to the Articles of Association of the company, the provisions of the Act and the JSE Listings Requirements, where applicable, and provided that:

(a) the repurchase of ordinary shares will be effected through the main order book operated by the JSE trading system and done without any prior understanding or arrangement between the company and the counter party;

(b) this general authority shall only be valid until the company’s next annual general meeting, provided that it shall not extend beyond 15 (fifteen) months from the date of passing of this special resolution;

(c) in determining the price at which the company’s ordinary shares are acquired by the company in terms of this general authority, the maximum premium at which such ordinary shares may be acquired will be 10% (ten percent) of the weighted average of the market price at which such ordinary shares are traded on the JSE, as determined over the 5 (five) trading days immediately preceding the date of the repurchase of such ordinary shares by the company;

(d) the acquisitions of ordinary shares in the aggregate in any one financial year do not exceed 10% (ten percent) of the company’s issued ordinary share capital from the date of the grant of this general authority;




(e) the company and the group will be in a position to repay their debt in the ordinary course of business for a period of 12 months after the company first acquires ordinary shares in accordance with this general authority and subject to (i) below;

(f) the assets of the company and the group, being fairly valued in accordance with International Financial Reporting Standards, will be in excess of the liabilities of the company and the group at the time the company first acquires ordinary shares in accordance with this general authority and subject to (i) below;

(g) the ordinary capital and reserves of the company and the group will be adequate for a period of twelve months after the company first acquires ordinary shares in accordance with this general authority and subject to (i) below;

(h) the available working capital will be adequate to continue the operations of the company and the group for a period of twelve months after the company first acquires ordinary shares in accordance with this general authority and subject to (i) below;

(i) upon entering the market to proceed with the repurchase, the company’s Sponsor has complied with its responsibilities contained in Schedule 25 of the JSE Listings Requirements;

(j) after such repurchase the company will still comply with paragraphs 3.37 to 3.41 of the JSE Listings Requirements concerning shareholder spread requirements;

(k) the company or its subsidiaries will not repurchase ordinary shares during a prohibited period as defined in paragraph 3.67 of the JSE Listings Requirements, unless a repurchase programme (where the dates and quantities of ordinary shares to be repurchased during the prohibited period are fixed) is in place and full details thereof announced on SENS prior to commencement of the prohibited period;

(l) when the company has cumulatively repurchased 3% of the initial number of the relevant class of shares, and for each 3% in aggregate of the initial number of that class acquired thereafter, an announcement will be made; and

(m) the company only appoints one agent to effect any repurchase(s) on its behalf.”

Other disclosure in terms of Section 11.26 of the JSE Listings Requirements The JSE Listings Requirements require the following disclosure, some of which are disclosed in the annual report of which this notice forms part as set out below: – Directors and management – pages 103 to 106 and pages 4 and 5– Major shareholders of Glenrand M·I·B – page 101 – Directors’ interests in securities – pages 39 and 40 – Share capital of Glenrand M·I·B – page 79

Material change Other than the facts and developments reported on in the annual report, there have been no material changes in the affairs or financial position of Glenrand M·I·B and its subsidiaries since the date of signature of the audit report and the date of this notice.

Directors’ responsibility statement The directors, whose names are given on pages 103 to 106 of the annual report, collectively and individually accept full responsibility for the accuracy of the information pertaining to this Special Resolution and certify that to the best of their knowledge and belief there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that this resolution contains all such information.

Litigation statement In terms of section 11.26 of the JSE Listings Requirements, the directors, whose names are given on pages 103 to 106 of the annual report of which this notice forms part, are not aware of any legal or arbitration proceedings, including proceedings that are pending or threatened, that may have or have had in the recent past, being at least the previous 12 months, a material effect on the group’s financial position.



Reason for and effect of Special ResolutionThe reason for and effect of the Special Resolution is to authorise the company and/or its subsidiaries by way of a general authority to acquire its own issued ordinary shares on such terms, conditions and such amounts determined from time to time by the directors of the company, subject to the limitations set out above.

The directors of the company have no specific intention, at present, to effect the provisions of the Special Resolution but will, however, continually review the company’s position, having regard to prevailing circumstances and market conditions, in considering whether to effect the provisions of the Special Resolution.

Voting and ProxiesAll holders of ordinary shares will be entitled to attend and vote at the annual general meeting. On a show of hands, every holder of ordinary shares who is present in person or by proxy or, in the case of a company, the representative appointed in terms of S188 of the Act, shall have one vote and, upon a poll, every holder of ordinary shares present in person or by proxy and entitled to vote shall have one vote for every ordinary share held.

Any member entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend, speak and vote thereat in his stead. The proxy so appointed need not be a member of the company. Proxy forms should be forwarded to reach the transfer secretaries of the company by no later than 08h30 on Monday, 16 November 2009.

Only members holding shares in certificated form or recorded on the sub-register in dematerialised electronic form in “own name” may complete proxy forms. All other beneficial owners who have dematerialised their shares through a Central Securities Depository Participant (CSDP) or broker must provide the CSDP or broker with their voting instructions. Alternatively, should such a shareholder wish to attend the meeting in person, in terms of the custody agreement entered into between the beneficial owner and the CSDP or broker, such shareholder may request the CSDP or broker to provide the shareholder with a letter of representation.

By order of the board

E PriceCompany Secretary

Johannesburg9 September 2009

Registered office288 Kent AvenueFerndaleRandburg 2194

PO Box 2544Randburg 2125

Transfer secretariesComputershare Investor Services (Pty) LimitedGround Floor70 Marshall StreetJohannesburg 2001

PO Box 61051Marshalltown 2107



Explanatory Notes to the Notice of Annual General Meeting

Ordinary Resolution Number 1This is ordinary business and there are no special items to bring to the attention of shareholders.

Ordinary Resolution Number 2Dr I Abedian, Mr AP du Preez and Ms TN Mgoduso were appointed as directors during the year and Ms HH Hickey was appointed as a director subsequent to the year end of the company and they accordingly stand for election in accordance with the Articles of Association. Their abridged curriculum vitae appear on pages 103 to 106 of the annual report. The election of each director will be carried out in separate ordinary resolutions.

Ordinary Resolution Number 3This resolution is to re-appoint Mr NG Payne and Mr G Whitcher who retire by rotation in terms of the company’s Articles of Association and offer themselves for re-election. Abridged curriculum vitae appear on pages 103 to 106 of the annual report. The re-election of each director will be carried out in separate ordinary resolutions.

Ordinary Resolution Number 4In line with King II you are asked to approve the fees for the non-executive directors for financial 2010. The proposed fees have been approved by the board. These fees are unchanged from those fees approved by shareholders in respect of the year ended 30 June 2009.

Ordinary Resolution Number 5The company’s auditors, KPMG Inc, have indicated their willingness to continue in office and the audit, risk and compliance committee has recommended their re-appointment as auditors of the company. The audit, risk and compliance committee has also recommended the appointment of Mr D Read as the designated auditor.

Ordinary Resolution Number 6This resolution proposes amendments to the Glenmib Employee Scheme as detailed in Appendix 1 to the Notice of Annual General Meeting.

Ordinary Resolution Number 7This resolution proposes that the unissued shares in the capital of the company be placed under the control of the directors, for allotment and issue as the directors deem fit. The issuing of shares granted under this authority will be limited to Glenrand M·I·B’s existing contractual obligations to issue shares, including for purposes of Glenrand M·I·B’s BEE transaction approved in 2006, any capitalisation share award and shares required to be issued to the Glenmib Employee Scheme for the purpose of carrying out the terms of the share incentive scheme.

Special ResolutionThis resolution proposes that the company and/or its subsidiaries be granted a general authority to acquire its own issued shares on such terms, conditions and such amounts determined from time to time by the directors of the company, subject to the Articles of Association of the company, the provisions of the Act and the JSE Listings Requirements.


Glenmib Employee Scheme (the Scheme) Appendix 1

Salient Features of Proposed Amendments

1. Words and expressions defined in the Scheme shall bear the same meanings in this document. Clause references are to clause references in the Amended and Re-stated Glenmib Employee Scheme.

2. It is proposed: 2.1 to re-state the Scheme in order to incorporate past amendments which were effected by deeds of amendment dated

22 June 1999 and 29 November 1999 (which past amendments have previously been duly approved and registered); and

2.2 to further amend the Scheme in certain respects, as set out below (which further amendments have been approved by the JSE and the trustees, but will need to be approved by the company in general meeting and registered with the Master of the High Court).

3. The salient features of the further amendments referred to above are: 3.1 the definition of Acceptance Date is amended to provide that once a Participant has accepted an offer for Scheme Shares

or Share Options, the Acceptance Date shall be deemed to be the date on which such offer is made to the Participant [clause 2.1.1 of the Scheme];

3.2 various provisions are amended to cater for the fact that the company’s shares are now dematerialised. References to share certificates are removed, and replaced with corresponding provisions relating to Central Securities Depository Participants (CSDPs). This amendment includes changes to the provisions relating to Scheme Shares being pledged as security for a Share Debt. Such pledges will now be electronically noted on the company’s relevant sub-register [clauses 16.2.1.4 and 18 of the Scheme];

3.3 a provision is inserted to provide that non-executive directors may be Trustees of the Scheme, but only if they do not obtain benefits under the Scheme [clause 3.3 of the Scheme];

3.4 the number of Shares which may be acquired by Participants is amended to 45 000 000 Shares (an increase from 15% to 15,4% of the company’s issued shares). The Scheme previously enabled the board to adjust such number to take account of a rights offer of Shares, a capitalisation issue, a sub-division or consolidation of Shares or a reduction of capital, and this is amended to clarify that a reduction of capital refers to a share buy-back or other reduction of capital affecting the number of Shares in issue. The Scheme previously excluded an adjustment to such number to cater for a new issue of Shares for an acquisition, and this is amended to extend such exclusion to a new issue of Shares by way of an “issue for cash” or as part of a vendor “consideration placing” (as such terms are described or defined in the JSE Listings Requirements). The proviso that the auditors of the company shall confirm to the JSE that any such adjustment has been properly calculated is amended to provide that the auditors shall confirm to the board that any such adjustment has been properly calculated and shall confirm to the JSE that any such adjustment has been made in accordance with the Scheme [clauses 5.1 and 5.2 of the Scheme];

3.5 the number of Scheme Shares and/or Share Options which may be acquired by Eligible Applicants is amended to 5 000 000 (an increase from 1% to 1,7% of the company’s issued shares) [clause 5.3 of the Scheme];

3.6 new provisions are inserted to provide that the remuneration committee may recommend performance conditions which will need to be fulfilled by Eligible Applicants before the relevant Share Options may be exercised or the relevant Scheme Shares may be acquired and that offers to Eligible Applicants may contain such performance conditions. These provisions will only be applicable to offers made after the amendments have been approved [clauses 10.2, 10.4.1.3, 14.2 and 14.4.1.5 of the Scheme];

3.7 new provisions are inserted to provide that, where the company that employs a Participant ceases to be a member of the group or the business of that member is transferred to a third party, the remuneration committee may recommend that Share Options become exercisable (notwithstanding the exercise dates of such Share Options) and/or that the outstanding Share Debt relating to Scheme Shares becomes payable (notwithstanding the dates on which such Share Debt becomes payable). Such recommendations are subject to board approval. Alternatively, if the Participant is offered the right by the new controlling shareholders or new owners of the business to participate in a new scheme conferring substantially similar benefits, the board may determine that the Share Options of such Participant shall lapse. This amendment improves the position of Participants, as their entitlements would previously have lapsed upon their employer ceasing to be a member of the group [clauses 12.5 and 15.6 of the Scheme];



Glenmib Employee Scheme (the Scheme) Appendix 1

Salient Features of Proposed Amendments(continued)

3.8 the provisions relating to the acquisition of Scheme Shares are amended to accord with the equivalent provisions relating to Share Options. These amendments comprise essentially that the remuneration committee may recommend that Eligible Applicants be entitled to subscribe for Scheme Shares, that the remuneration committee may further recommend performance conditions (as set out in 3.6 above) and that offers to Eligible Applicants may contain such performance conditions [clauses 14.1, 14.2 and 14.4.1.5 of the Scheme];

3.9 the provisions relating to payment for Scheme Shares are amended to accord with the equivalent provisions relating to Share Options. These amendments comprise essentially that;

3.9.1 where the company that employs a Participant ceases to be a member of the group or the business of that member is transferred to a third party, the remuneration committee may recommend that the Share Debt relating to Scheme Shares becomes payable (as set out in 3.7 above) [clause 15.6 of the Scheme];

3.9.2 where an offer is made to shareholders of the Company in terms of the Securities Regulation Code on Takeovers and Mergers, or the rules of any stock exchange on which the Shares may be listed and/or section 440 of the Act, the remuneration committee may recommend that the outstanding Share Debt becomes payable (notwithstanding the dates on which such Share Debt becomes payable and so as to enable the holders of such Scheme Shares to participate in the offer to shareholders). Such recommendation is subject to Board approval [clause 15.7 of the Scheme];

3.10 the concept of “closed periods” is introduced into the Scheme (as such term is defined in the JSE Listings Requirements). No share options may be offered, accepted or exercised and no Scheme Shares may be offered or accepted during a “closed period”. This amendment has the effect of extending any time period or date for acceptance or exercise by a period equal to that for which such period or date coincided with or falls within a “closed period”, thereby effectively restoring the time periods initially contemplated in the Scheme [clause 24 of the Scheme]; and

3.11 various minor and/or stylistic changes are included in the amendments.


Form of Proxyfor certificated ordinary shareholders or dematerialised shareholders with “own name” registration

GLENRAND M·I·B LIMITEDRegistration No. 1997/008001/06(Incorporated in the Republic of South Africa)Share code: GMB ISIN: ZAE000078010(“Glenrand M·I·B”) or (“the company”)

For use by the company’s certificated ordinary shareholders and dematerialised Glenrand M·I·B ordinary shareholders with “own name” registration at the twelfth Annual General Meeting of ordinary shareholders of the company to be held at 08h30 on Wednesday, 18 November 2009 in the Boardroom, Ground Floor, 288 Kent Avenue, Ferndale, Randburg and at any adjournment thereof.

Holders of dematerialised ordinary shares, other than with “own name” registration, must inform their Central Securities Depository Participant (CSDP) or broker of their intention to attend the Annual General Meeting of ordinary shareholders and request their CSDP or broker to issue them with the necessary letter of representation to attend in person and vote or provide their CSDP or broker with their voting instructions should they not wish to attend the Annual General Meeting of Glenrand M·I·B ordinary shareholders but wish to be represented thereat.

I/We (names in block letters) of (address)

being the holder/s of shares in the issued share capital of the company do hereby

appoint of or failing him

of or failing him the Chairman of the company or failing him the Chairman of the meeting asmy/our proxy to vote for me/us and on my/our behalf at the Annual General Meeting of the company to be held at 288 Kent Avenue, Ferndale, Randburg on Wednesday, 18 November 2009 at 08h30 and at any adjournment thereof.

I/We desire to vote as follows:

Number of votes (one vote per share)

* In favour * Against * Abstain

Ordinary Resolution Number 1To receive and adopt the annual financial statements for the year ended 30 June 2009, together with the reports of the directors and independent auditors

Ordinary Resolution Number 22.1 To elect as an independent non-executive director Dr I Abedian

2.2 To elect as a non-executive director Mr AP du Preez

2.3 To elect as a non-executive director Ms TN Mgoduso

2.4 To elect as an independent non-executive director Ms HH Hickey

Ordinary Resolution Number 33.1 To re-elect as an independent non-executive director Mr NG Payne who is retiring by rotation

3.2 To re-elect as an executive director Mr G Whitcher who is retiring by rotation

Ordinary Resolution Number 4To approve the non-executive directors’ fees for financial year 2010:

4.1 Chairman

4.2 Non-executive director

4.3 Chairman of audit, risk and compliance committee

Member of audit, risk and compliance committee

4.4 Chairman of remuneration and nominations committee

Member of remuneration and nominations committee

4.5 Chairman of risk committee

Member of risk committee

Ordinary Resolution Number 5To appoint KPMG Inc. as auditors of the company and to appoint Mr D Read as the designated auditor

Ordinary Resolution Number 6To approve amendments to the Glenmib Employee Scheme

Ordinary Resolution Number 7To place the unissued shares under the control of the directors subject to the limits as set out in the Notice of Meeting

Special ResolutionTo give a general authority to the directors to repurchase the company’s own shares

*Mark with an X whichever is applicable. Unless otherwise directed, the proxy will vote or abstain as he thinks fit in respect of the member’s total holding.

Any member entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy or proxies to attend, speak and to vote in his stead. The proxy so appointed need not also be a member.

Signed at on 2009

Signature

Forms of proxy must be posted to the transfer secretary of the company, Computershare Investor Services (Pty) Limited, Ground Floor, 70 Marshall Street, Johannesburg or PO Box 61051, Marshalltown, 2107 to reach them by no later than 08h30 on Monday, 16 November 2009.


Notes

1. A deletion of any printed matter and the completion of any blank spaces need not be signed or initialled. An alteration must be signed, not initialled.

2. The chairman shall be entitled to decline the acceptance of the authority of the signatory(a) under a power of attorney, or(b) on behalf of a company

unless the power of attorney or authority is deposited at the office of the transfer secretary or the registered office at the company by no later than 08h30 on Monday, 16 November 2009.

3. The signatory may insert the name of any person(s) whom the signatory wishes to appoint as his/her proxy in the blank spaces provided for that purpose.

4. When there are joint holders of shares and if more than one of such holders be present or represented, then the person whose name stands first in the register or his proxy, as the case may be, shall be entitled to vote alone in respect thereof.

5. The completion and lodging of this form of proxy will not preclude the signatory from attending the meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms thereof should such signatory wish to do so.

6. If the signatory does not indicate how he wishes to vote in the appropriate place on the face hereof in respect of any resolution, his/her proxy shall be entitled to vote as he/she deems fit in respect of that resolution.

7. The chairman of the meeting may reject or accept any form of proxy which is completed other than in accordance with these instructions, provided that he is satisfied as to the manner in which a member wishes to vote.

8. If the shareholding is not indicated on the form of proxy, the proxy will be deemed to be authorised to vote the total shareholding.

9. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form of proxy unless previously recorded by the company or waived by the chairman.

10. All beneficial owners of ordinary shares who have dematerialised their shares through a CSDP or broker, other than those shareholders who have elected to dematerialise their shares in “own name” registrations, must provide their CSDP or broker with their voting instructions. We recommend that you contact your CSDP or broker to ascertain their deadline date for submission.

If you have dematerialised your shares and wish to attend the meeting in person, you may do so by requesting your CSDP or broker to issue you with a letter of representation in terms of the custody agreement entered into with your CSDP or broker. We recommend that you contact your CSDP or broker to ascertain their deadline date for submission.

Shareholders who hold certificated shares and shareholders who have dematerialised their shares in “own name” registrations must lodge their completed forms of proxy with the company’s transfer secretaries by not later than 08h30 on Monday, 16 November 2009.

Administration

Details of companyGlenrand M·I·B Limited(Incorporated in the Republic of South Africa)Registration number 1997/008001/06Share code GMBISIN ZAE000078010

Company secretaryElva [email protected]

Registered office288 Kent AvenueFerndaleRandburg2194PO Box 2544Randburg2125Telephone (27 11) 329-1111Facsimile (27 11) 329-1333

Transfer secretariesComputershare Investor Services (Pty) LimitedGround Floor70 Marshall StreetJohannesburg2001

Postal addressPO Box 61051Marshalltown2107Telephone (27 11) 370-7700Facsimile (27 11) 688-7721

Website addresshttp://www.glenrandmib.co.za

Promotion of Access to Information ActDesignated Head of Body – Elva Price

AuditorsKPMG Inc.KPMG Crescent85 Empire RoadParktown2193

JSE Limited sponsorNedbank Capital135 Rivonia RoadSandown2196Telephone (27 11) 294-3532Facsimile (27 11) 294-8602

Principal bankersNedbank Limited FirstRand Limited

HEAD OFFICE288 Kent Avenue, Randburg, 2194

PO Box 2544, Randburg, 2125Tel: (27 11) 329 1111Fax: (27 11) 329 1333

E-mail: [email protected]: www.glenrandmib.co.za

REGIONAL OFFICES

Bloemfontein, Cape Town, Durban, East London, George, Mafikeng, Nelspruit, Paarl, Pietermaritzburg, Polokwane, Port Elizabeth, Pretoria, Gaborone, Harare, Manzini, Maputo and Windhoek

annual report 2009 - sharedata

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