| Fri 30 Nov 2007, 17:11 | | ERM - Enterprise Risk Management - Unaudited Consolidated Results For The Six |
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ERM
ERM
ERM - Enterprise Risk Management - Unaudited Consolidated Results For The Six
Months Ended 31 August 2007
Enterprise Risk Management Limited
(Incorporated in the Republic of South Africa)
(Registration number 1995/001603/06)
Share code: ERM & ISIN: ZAE000037701
("the company" or "the group")
Unaudited consolidated results for the six months ended 31 August 2007
Income statement
Unaudited Reviewed Audited
Six months Six months Twelve months
to 31 August to 31 August to 28 February
2007 2006 2007
(R`000) (R`000) (R`000)
Turnover - - -
Operating loss (1 770) (3 150) (5 830)
Realised capital gains on - 5 353 21 282
sale of investments
Net investment income 2 642 3 990 10 654
Share of (losses)/profits (45) - 150
from associates
Profit before taxation 827 6 193 26 256
Taxation (78) (1 101) (4 325)
Profit for the period 749 5 092 21 931
Weighted average number 54 563 54 568 54 562
of shares (000`s)
Earnings per share 1,4 9,3 40,2
(cents)
Diluted earnings per 1,4 9,3 40,1
share (cents)
Reconciliation of
headline earnings:
Earnings attributable to 749 5 092 21 931
shareholders
Realised capital gains on - (4 577) (18 196)
sale of investments (net
of tax)
Fair value movement of 383 - -
investment properties -
associates
Headline earnings 1 132 515 3 735
Headline earnings per 2,1 0,9 6,8
share (cents)
Diluted headline earnings 2,1 0,9 6,8
per share (cents)
Balance sheet
31 August 31 August 28 February
2007 2006 2007
Note (R`000) (R`000) (R`000)
Assets
Non-current assets 121 929 40 180 36 094
Financial assets 2 22 157 36 534 19 748
Deferred taxation - 3 646 -
Investment in associate 8 47 691 - 16 346
Loans to associate 52 081 - -
Current assets 28 834 60 679 81 203
Accounts receivable 433 122 220
Financial assets 714 - 5 886
Loan receivable - 2 000 -
Taxation receivable 3 12 728 - 12 728
Cash and cash equivalents 14 959 58 557 62 369
Total assets 150 763 100 859 117 297
Equity and liabilities
Equity attributable to 112 006 99 342 109 024
equity holders
Stated capital 59 340 59 537 59 250
Retained earnings 46 877 29 289 46 128
Fair value and other 5 789 10 516 3 646
reserves
Non-current liabilities 32 934 - 404
Deferred tax 693 - 404
Loan from associate 8 32 241 - -
Current liabilities 5 823 1 517 7 869
Accounts payable 338 158 167
Current tax payable 3 5 326 - 7 543
Financial liabilities - 1 200 -
Shareholders for dividend 159 159 159
Total equity and liabilities 150 763 100 859 117 297
Number of shares in issue 54 568 54 633 54 471
(`000)
Net asset value per share 205,3 181,8 200,2
(cents)
Cash flow statement
Six months Six months Twelve months
to 31 August to 31 August to 28 February
2007 2006 2007
(R`000) (R`000) (R`000)
Cash (utilised (1 782) 7 126 5 669
in)/generated from
operating activities
Net investment income 2 321 2 371 5 473
Dividend income 321 980 1 360
Taxation paid (2 356) - -
Net cash flows from (1 496) 10 477 12 502
operating activities
Net cash flows from (26 164) 13 532 16 933
investing activities
Net cash flows from (19 750) 1 863 249
financing activities
(Decrease)/increase in (47 410) 25 872 29 684
cash and cash equivalents
Cash and cash equivalents 62 369 32 685 32 685
at the beginning of the
period
Cash and cash equivalents 14 959 58 557 62 369
at the end of the period
Statement of changes in equity
Six months Six months Twelve months
to 31 August to 31 August to 28 February
2007 2006 2007
(R`000) (R`000) (R`000)
Stated capital
Opening balance 59 250 59 001 59 001
- Share options exercised 90 1 722 1 722
- Treasury shares bought - (1 186) (1 473)
back (at cost)
Closing balance 59 340 59 537 59 250
Distributable reserves
Opening balance 46 128 24 197 24 197
Net profit for the period 749 5 092 21 931
Closing balance 46 877 29 289 46 128
Fair value reserves
Opening balance 2 876 14 522 14 522
Fair value gains/(losses) 2 064 (130) 6 550
net of tax
Transfer to income - (4 577) (18 196)
statement on disposal net
of tax
Closing balance 4 940 9 815 2 876
Other reserves
Opening balance 770 674 674
Value of services 79 27 96
provided
Closing balance 849 701 770
Fair value and other 5 789 10 516 3 646
reserves
Notes to the interim financial statements
1. Basis of preparation and accounting policies
The unaudited consolidated results of the group for the six months ended 31
August 2007 have been prepared in accordance with the group`s accounting
policies, which comply with International Financial Reporting Standards and
are consistent with those of the previous year. This interim report
complies with International Accounting Standard 34 - Interim Financial
Reporting.
2. Investments
At 31 August 2007 the company`s investment portfolio comprised the
following:
At 31 August 2007
Name of Market Market
investment Quantity price value
(`000) (cents) (R`000)
Apex Hi Properties A" units - - -
Anglo American PLC ordinary shares - - -
Bidvest Limited ordinary shares - - -
Sasol Limited ordinary shares 12,5 28 900 3 613
Highveld Steel & Vanadium Limited 47,9 10 100 4 838
ordinary shares
Sable Holdings Limited ordinary 344,8 3 975 13 706
shares
TOTAL 22 157
At 31 August 2006
Name of Market Market
investment Quantity price value
(`000) (cents) (R`000)
Apex Hi Properties A" units 800 1 330 10 640
Anglo American PLC ordinary shares 30 31 075 9 323
Bidvest Limited ordinary shares 60 10 910 6 546
Sasol Limited ordinary shares 15,5 25 000 3 875
Highveld Steel & Vanadium Limited 100 6 150 6 150
ordinary shares
Sable Holdings Limited ordinary - - -
shares
TOTAL 36 534
3. Taxation
At 31 August 2007 the company had a net tax asset of R7,402 million being
the difference between the tax asset recognised in relation to the
arbitrated reduction in income of prior years and the tax liability raised
on taxable income of prior years previously offset against the assessed
loss brought forward from the 2001 tax year. On 18 October 2007 the company
received its tax refund plus interest and it settled all the outstanding
tax liabilities that were raised in relation to taxable income of previous
years.
4. Comments on the results
Earnings and diluted earnings of 1,4 cents (2006: 9,3 cents) per share,
headline and diluted headline earnings of 2,1 cents (2006: 0,9 cents) per
share and a net asset value of 205,3 cents (2006: 181,8 cents) per share
were achieved. The main reason for the reduction in earnings and the
increase in headline earnings is a decrease in realised capital gains on
the sale of investments. The increase in headline earnings is also
attributable to the exclusion of fair value movement of investment
properties of associates.
During the period under review the share traded between a high of 230 cents
(2006: 190 cents) per share and a low of 155 cents (2006: 140 cents) per
share. The volume of shares traded during the period was 16,713 million
(2006: 50,816 million) shares at an average price of 162,2 cents (2006:
154,4 cents) per share. This represents 30,1% of the company`s total issued
shares (2006: 91,8%).
5. Stated capital
During the period under review 96 667 share options were exercised,
bringing the total number of shares in issue to 54,568 million shares net
of 900 000 treasury shares.
6. Share buy back
At the last annual general meeting held on 29 August 2007, shareholders
voted to renew the general authority granted to the company to purchase its
own shares. To date the company has bought back 900 000 shares at an
average price of 162,9 cents per share. These shares are housed as treasury
shares in a wholly owned subsidiary of the company, Risk Outsourcing
(Proprietary) Limited.
7. Dividend
The board has resolved not to declare any dividend to shareholders for the
period under review.
8. Joint venture with Sable
Acquisition of a property portfolio
As reported in November 2006, ERM and Sable Holdings Limited ("Sable")
formed a new entity, Amrich 58 Properties (Proprietary) Limited ("Amrich")
which focuses on income producing properties and property development. At
31 August 2007 ERM and Sable each held 50% of the issued capital of Amrich
("joint venture").
Subsequent to the formation of the joint venture and as previously
reported, Amrich acquired 100% of the issued capital of Rotaflex
Investments (Proprietary) Limited ("Rotaflex") a company with a diversified
portfolio of retail, commercial, industrial and residential properties.
This acquisition is subject to ERM shareholders` approval at a general
meeting.
Simultaneous with the conclusion of the Rotaflex acquisition ERM agreed to
sell its 50% shareholding in Amrich to Sable ("the sale of shares
agreement") for 1 187 500 Sable shares at a price of R40 per share. Sable
will, in addition to this, issue a further 392 500 ordinary shares at a
price of R40 per share to ERM ("subscription agreement"), for cash. These
allotments will increase ERM`s shareholding in Sable from its current
holding of 4,97% to 21,49%.
On 14 May 2007, Sable granted an option to ERM to subscribe for 3 948 822
new shares in Sable, at a price of R40 per share, or so many newly issued
shares in Sable as will bring the total holding of ERM equal to the total
number of shares held by Isdale Holdings BV ("Isdale"); the major
shareholder of Sable currently holding 5 873 643 Sable shares. The shares
so issued will rank pari passu in all respects with the shares held by
Isdale and will increase ERM`s holding in Sable to 45,1% prior to any offer
to minorities. The option may be exercised at any time prior to 16:00 on 30
November 2007.
9. Lapse of option agreement between ERM and Sable and further cautionary
announcement
Further to the previous announcements regarding the sale of shares
agreement, the subscription agreement and the option mentioned above
between ERM and Sable, the last of which was released on SENS on 31 October
2007, shareholders are advised that ERM and Sable are at an advanced stage
of discussions as regards an alternative proposal for effecting a merger of
ERM and Sable. In consequence, it has been agreed between ERM and Sable
that ERM will not exercise the option to subscribe for new shares in Sable
(on the terms of the option agreement detailed in the announcement
published by ERM dated 15 May 2007). As these discussions may have a
material effect on the price at which ERM shares trade, ERM shareholders
are advised to continue to exercise caution in dealing with their shares
until a further announcement is made in this regard.
10. Future direction
Through the acquisition of a property portfolio with Sable, the company has
embarked on a new strategic direction in the area of real estate
acquisition and development. The company wishes to change its structure to
be in line with that of the great majority of listed property companies in
South Africa. Management believes that it will, through its association
with Sable, be able to expand and grow its property interests throughout
South Africa as well as internationally.
For and on behalf of the board
C de Beer CA (SA)
Company secretary
Bryanston
30 November 2007
Directors
BL Gruzd (Chairman)*, MA Stein (CEO), E Gerber*, BA Linde*
*non-executive
Sponsor
Sasfin Capital - a division of Sasfin Bank Limited
Transfer secretaries
Computershare Investor Services 2004 (Proprietary) Limited
Registered office
1st Floor, Sable Place, Fairway Office Park
52 Grosvenor Road, Bryanston, 2021
Email enquiries.erm@mweb.co.za
Date: 30/11/2007 17:11:49 Produced by the JSE SENS Department.
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