Faulty di­ag­no­sis

The brick wall of Glen­rand’s head of­fice costs

Finweek English Edition - - Companies & markets - BY MICHAEL COUL­SON

LOOK­ING AT THE LATEST in­terim re­port, it’s no sur­prise that well-re­garded CEO Steve von Roretz, who promised to clean up Glen­rand MIB, threw in his cards last Au­gust af­ter only 11 months. Glen­rand MIB con­firms that when things re­ally go wrong at a com­pany, there’s sel­dom a sin­gle cause.

Firstly, share­hold­ers’ eq­uity at De­cem­ber 2005 has been writ­ten down from R173m to R142m. Al­most R22m of the write-down re­lates to the wellpub­li­cised fraud and most of the rest to ac­count­ing ad­just­ments.

Se­condly, there is a stag­ger­ing R50m loss in the past 18 months alone from the em­ployee-ben­e­fits di­vi­sion. How you lose this sort of money ad­min­is­ter­ing pen­sion funds is quite be­yond me – and the com­pany ex­pects the di­vi­sion still to be in loss at the 30 June year-end.

And thirdly, chair­man and act­ing CEO Dudu Kunene is quoted by Busi­ness Day as say­ing plain­tively: “We’ve down­sized [sold off non-core as­sets] con­sid­er­ably, but it doesn’t look like head of­fice costs have come down.”

We do sym­pa­thise, Dudu, even if like me you spent many years work­ing for a group where the main func­tion of the op­er­at­ing di­vi­sions seemed to be to gen­er­ate the max­i­mum cash to be spent on head of­fice re­mu­ner­a­tion; but don’t you think this sug­gests that the ini­tial di­ag­no­sis was faulty?

Per­haps it wasn’t non-core as­sets that were the prob­lem, but the head of­fice, in the first place? And could that have been the im­mov­able ob­ject Von Roretz hit his head against?

Kunene says the hunt for a new CEO con­tin­ues. It’ll be a brave soul who takes up that chal­lenge – that is, as­sum­ing any­one has the op­por­tu­nity. Glen­rand has been trad­ing un­der cau­tion­ary since 11 Jan­uary and it wouldn’t be sur­pris­ing if Rand Mer­chant Bank, which has an ef­fec­tive in­ter­est of 15,8%, is get­ting tired of this peren­nial dis­ap­point­ment.

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