The brick wall of Glenrand’s head office costs
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.