| Fri 30 May 2008, 17:40 | | ERM - ERM - Consolidated Audited Results For The Twelve Months Ended 29 February |
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ERM
ERM
ERM - ERM - Consolidated Audited Results For The Twelve Months Ended 29 February
2008
ENTERPRISE RISK MANAGEMENT LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1995/001603/06)
Share code: ERM & ISIN: ZAE000037701
("ERM" or "the company")
Consolidated audited results for the twelve months ended 29 February 2008
Audited Audited
Twelve months Twelve months
to 29 Feb 2008 to 28 Feb 2007
R 000`s R 000`s
Income statement
Turnover - -
Operating loss -3,754 -5,830
Realised capital gains on sale of
investments - 21,282
Net investment income 5,323 10,654
Share of profits from joint venture 8,399 150
Profit before tax 9,968 26,256
Taxation -532 -4,325
Profit for the year 9,436 21,931
Weighted average number of shares (000`s) 54,611 54,562
Earnings per share (cents) 17.3 40.2
Diluted earnings per share (cents) 17.3 40.1
Reconciliation of headline earnings:
Earnings attributable to shareholders 9,436 21,931
Fair value movement of investment
properties - joint venture -8,606 -
Realised capital gains on sale of
investments (net of tax) - -18,196
Headline earnings 830 3,735
Headline earnings per share (cents) 1.5 6.8
Diluted headline earnings per share
(cents) 1.5 6.8
29 Feb 2008 28 Feb 2007
R 000`s R 000`s
Balance sheet
Assets
Non-current assets 75,938 36,094
Available-for-sale financial assets 19,724 19,748
Investment in joint venture 56,214 16,346
Current assets 43,879 81,203
Accounts receivable 420 220
Financial assets at fair value through profit
and loss 41,183 5,886
Taxation receivable 488 12,728
Cash & cash equivalents 1,788 62,369
Total assets 119,817 117,297
Equity & liabilities
Equity attributable to equity holders 118,736 109,024
Stated capital 59,340 59,250
Retained earnings 55,564 46,128
Fair value and other reserves 3,832 3,646
Non-current liabilities 376 404
Deferred tax 376 404
Current liabilities 705 7,869
Accounts payable 164 167
Taxation payable 385 7,543
Shareholders for dividend 156 159
Total equity & liabilities 119,817 117,297
Number of shares in issue (`000) 54,568 54,471
Net asset value per share (cents) 217.6 200.1
Twelve months Twelve months
To 29 Feb 2007 To 28 Feb 2007
R 000`s R 000`s
Cash flow statement
Cash utilised in operations -3,621 -3,958
Cash (utilised in)generated from
movements in working capital -203 9,627
(Increase)decrease in accounts receivable -200 9,685
Decrease in accounts payable -3 -58
Cash (utilised in)generated from
operating activities -3,824 5,669
Net investment income 4,573 5,473
Dividend income 567 1,360
Taxation refunded 4,544 -
Net cash flows from operating activities 5,860 12,502
Net cash flows from investing activities -66,528 16,933
Net cash flows from financing activities 87 249
Net (decrease)increase in cash and cash
equivalents -60,581 29,684
Cash and cash equivalents at the
beginning of the year 62,369 32,685
Cash and cash equivalents at the end of
the year 1,788 62,369
Twelve months Twelve months
to 29 Feb 2008 to 28 Feb 2007
R 000`s R 000`s
Statement of changes in equity
Stated capital
Opening balance 59,250 59,001
- Share options exercised 90 1,722
- Treasury shares bought back (at cost) - -1,473
Closing balance 59,340 59,250
Distributable reserves
Opening retained earnings 46,128 24,197
Profit for the year 9,436 21,931
Closing balance 55,564 46,128
Fair value reserves
Opening balance 2,876 14,522
Fair value gains net of tax -15 6,550
Reduction in deferred tax liability as a
result of a change in the tax rate 17
Transferred to income statement on
disposal net of tax - -18,196
Closing balance 2,878 2,876
Other reserves
Opening balance 770 674
Value of services provided 184 96
Closing balance 954 770
Fair value and other reserves 3,832 3,646
Notes to the financial statements
1. Accounting policies
1.1 Basis of preparation
The financial statements of the Group have been prepared in accordance with the
group`s accounting policies which comply with International Financial Reporting
Standards ("IFRS") and are consistent with those of the previous year. They
have been prepared on a going concern basis.
1.2 Financial Instruments
Financial instruments carried on the balance sheet include loans, investments,
cash and cash equivalents, derivatives, accounts receivable and accounts
payable. All financial instruments are initially measured at fair value. In the
case of financial instruments not classified as at fair value through profit
and loss, transaction costs that are directly attributable to the acquisition
or issue of the financial instrument are added to the fair value.
Equity investments are classified as available-for-sale financial assets and
are subsequently measured at fair value. The fair values of quoted investments
are based on current bid prices. These investments are included in non-current
assets unless management intends to dispose of the investment within 12 months
of the balance sheet date. In terms of IAS 39, fair value adjustments for the
period on available-for-sale assets are recognised directly in equity, through
the statement of changes in equity.
A deferred tax asset and/or liability is recognised through equity on the
potential unrealised capital gains and/or losses from available-for-sale
financial assets.
Derivative instruments are measured at fair value by reference to the quoted
market prices for similar instruments. Realised and unrealised gains and losses
are recognise d through the income statement.
Financial assets and financial liabilities are offset and the net amount
reported in the balance sheet when the Group has a legal right to set off the
recognised amounts and intends to either settle on a net basis or to realise
the asset and the liability simultaneously.
1.3 Investment in subsidiaries
The group annual financial statements include those of the holding company and
its subsidiaries. The results of the subsidiaries are included from the
effective date of acquisition.
On acquisition the group recognises the subsidiary`s assets, liabilities and
contingent liabilities at fair value, except for assets classified as held-for
-sale, which are recognised at fair value less costs to sell.
1.4 Investment in joint ventures
An investment in a joint venture is accounted for using the equity method,
except when the asset is classified as held-for-sale. Under the equity method,
the investment is initially recognise d at cost and the carrying amount is in
creased or decreased to recognise the group`s share of the profits or losses of
the joint venture after acquisition date. The use of the equity method is
discontinued from the date the group ceases to have joint control over a joint
venture.
Any impairment losses are deducted from the carrying amount of the investment
in joint venture.
Distributions received from the joint venture reduce the carrying amount of the
investment.
2. Financial Assets
As at 29 February 2008 the Group`s long term investment portfolio comprised the
following:
At 29 February 2008
Equity Market Market
investments Quantity Price Value
(`000) (cents) (R`000)
Sasol Limited ordinary shares 12.50 40,250 5,031
Highveld Steel & Vanadium Limited
ordinary shares 47.90 14,838 7,107
Sable Holdings
Limited ordinary shares 344.82 2,200 7,586
TOTAL 19,724
Held for trading at fair value through
profit and loss
Prudential Dividend Income Fund-at
fair value
At 28 February 2007
Equity Market Market
investments Quantity Price value
(`000) (cents) (R`000)
Sasol Limited ordinary shares 12.50 23,300 2,913
Highveld Steel & Vanadium Limited
ordinary shares 47.90 8,150 3,904
Sable Holdings
Limited ordinary shares 344.82 3,750 12,931
TOTAL 19,748
Held for trading at fair value through
profit and loss 2008 2007
Prudential Dividend Income Fund-at fair value 41,183 -
3. Taxation
On 18 October 2007 the company received a tax refund of R12,5 million from
SARS in relation to the judgment given by the Income Tax Court on the appeal
against the 2001 assessment. The Company also paid provisional tax in an amount
of R7,7million in relation to taxable profits of the 2005, 2006 and 2007 tax
years, of which 2005 and 2006 taxable profits have previously been offset
against the assessed loss brought forward from the 2001 tax year. The net
result of the above is a tax asset of R0,488 million owed to the company by
SARS.
4. Auditors report
Grant Thornton has issued an unqualified audit report, which is available for
inspection at the Company`s registered office.
Commentary on results
Earnings of 17.3(2007:40.2) cents and diluted earnings of 17.3(2007:40.1) cents
and headline earnings of 1.5 (2007:6.8) cents and diluted headline earnings of
1.5(2007: 6.8) cents per share and a net asset value of 217.6(2007:200.2)
cents per share were reported. The increase in net asset value of the Group
resulted mainly from income from investments as well as unrealized capital
gains on listed investments.
During the year under review the share traded between a high of 250,0 (2007:
200, 0) cents per share and a low of 125(2007: 140,0) cents per share. The
volume of shares traded during the period was 24,100 (2007:61,470) million
shares at an average price of 192,0(2007: 164,0) cents per share.
Share Option Scheme
The Company offers from time to time, share options to executive directors and
employees. The options are non-transferable and vest with the individual after
3, 4 and 5 years on a one third per anniversary basis. All options not
exercised within 10 years of the option date lapse. 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 0,9 million treasury shares.
Stated Capital
During the period under review 96 667 shares were issued, bringing the total
number of shares in issue to 54,568 million shares net of 0,9 million treasury
shares.
Share buy backs
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. For this reporting period there were no share buy backs.
Dividend
The board has resolved not to declare any dividend to shareholders for this
reporting period.
Future direction
The joint venture between ERM and Sable Holdings Limited ("Sable") being Amrich
58 Properties (Pty) Ltd has acquired a property portfolio comprising of
industrial, retail, commercial and residential properties. The company
continues to pursue real estate opportunities in a challenging market.
Acquisition of a property portfolio
On 18 April 2008 Amrich 58 Properties (Pty) Ltd acquired the remaining 66%
shareholding in Rotaflex Investments (Pty) Ltd. This was approved a t a general
meeting of ERM shareholders on the same date.
Option agreement with Sable
On 14 May 2007, Sable granted an option to ERM to subscribe for 3 948 822 new
shares in Sable, at a price of R40.00 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 would have
ranked pari passu in all respects with the shares held by Isdale and would have
increased ERM`s holding in Sable to 45, 1% prior to any offer to minorities.
The option lapsed on 30 November 2007. ERM and Sable took all necessary steps
as was required to return them to the joint venture, Amrich 58 Properties (Pty)
Ltd, existing prior to the option agreement.
By order of the board
M Pienaar
Company secretary
Kyalami
30 May 2008
Directors
BL Gruzd (Chairman)*, MA Stein (CEO), E Gerber*,
J Kramer* * non-executive
Sponsor
Sasfin Capital - a Division of Sasfin Bank Limited
Transfer secretaries
Computershare Investor Services 2004 (Proprietary) Limited
Registered office
138 Dytchley Road
Unit 1 Tuscan Place
Kyalami
1684
Email
marelise.erm@mweb.co.za
Date: 30/05/2008 17:40:13 Produced by the JSE SENS Department.
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