| Mon 18 Feb 2002, 0:00 | | Specialised Outsourcing Limited - Audited Results |
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December 2001
Specialised Outsourcing Limited
("Outsors" or "the Company")
Registration number 1995/001603/06
Audited Results for the Year Ended 31 December 2001
Share code: OUS ISIN code: ZAE000013553
Highlights
Increase in Revenues 16%
Increase in Earnings 20%
INCOME STATEMENTS Group & Group &
Company Company
for the year ended 31 December 2001 2001 2000
R 000's R 000's
Revenue 75,113 64,693
Operating Profit 43,598 8,864
Profit on realisation of - 20,113
Investments
Investment Income 10,873 13,481
Profit Before Taxation 54,471 42,458
S A Normal Taxation 8,780 11,219
Deferred Taxation 6,784 (6,784)
Secondary Tax on companies 3,744 8,670
Profit After Taxation 35,163 29,353
Weighted Average number of Shares 53,497,156 52,948,582
Earnings per Share (EPS) (cents) 65,73 55.44
Earnings adjusted for
Profit on realisation of - (20,113)
Investments
Profit on Sale of Non-Current - (24)
Assets
Headline Earnings 35,163 9,216
Headline earnings per share (HEPS) 65,73 17.41
(cents)
STATEMENTS OF CHANGES IN EQUITY Group & Group &
Company Company
for the year ended 31 December 2001 2001 2000
R 000's R 000's
Stated Capital
Opening Balance 58,942 36,733
Share Options exercised 97 146
Capitalisation Award - 22,477
Share Issue expenses - (414)
Closing Balance 59,039 58,942
Accumulated Profit
Opening Balance 90,253 156,618
Net Profit for the Year 35,163 29,353
Dividends paid (37,439) (95,718)
Closing Balance 87,977 90,253
BALANCE SHEETS Group & Group &
Company Company
At 31 December 2001 2001 2000
R 000's R 000's
Assets
Non Current Assets 2,278 9,333
Property, Plant & Equipment 2,278 2,549
Deferred Taxation - 6,784
Current Assets 153,487 152,364
Accounts Receivable 61,121 14,651
Taxation receivable - 2,284
Cash & Cash Equivalents 92,366 135,429
Total Assets 155,765 161,697
Equity & Liabilities
Capital & Reserves 147,016 149,195
Stated Capital 59,039 58,942
Distributable Reserves 87,977 90,253
Current Liabilities 8,749 12,502
Accounts Payable 7,862 11,243
Taxation 887 -
Shareholders for Dividend - 1,259
Total Capital & Liabilities 155,765 161,697
0
Number of shares at end of year 53,562,073 53,481,773
NAV per Share (cents) 274,48 278,96
CASH FLOW STATEMENTS Group & Group &
Company Company
for the year ended 31 December 2001 2001 2000
R 000's R 000's
Cash Flows from Operating
Activities
Cash Generated from operations
Net Profit before Taxation 54,471 42,458
Adjusted for: (9,218) (32,102)
Depreciation 1,655 1,516
Investment Income (10,873) (13,481)
Profit/(Loss) on Disposal of non- - (24)
current Assets
Profit on Disposal of Investments - (20,113)
Cash Generated from operations 45,253 10,356
Cash Generated from movements in
Working Capital
Decrease/(Increase) in Accounts (46,469) 13,539
Receivable
Increase/(Decrease) in Accounts (3,381) (1,253)
Payable
Cash Generated from movements in (49,850) 12,286
Working Capital
Dividends Paid
Amounts unpaid at the beginning of
the Year
Appropriation (95,718)
Capitalisation Issue 22,477
Amounts unpaid at the end of the 1,259
Year
(71,982)
Taxation Paid
Taxation unpaid at the beginning of (15,782)
the Year
Prior year adjustment - Tax effect
Charge in the Income Statement (11,219)
Secondary Tax on Companies paid (8,670)
Acquisition/disposal of subsidiary
Taxation unpaid at the end of the (558)
Year
(36,229)
Cash Flow
Cash Generated from Operating (4,597) 22,642
Activities
Interest Received 8,449 7,172
Dividends Received 2,424 6,309
Dividends Paid (38,698) (71,982)
Taxation Paid (9,353) (37,955)
Net Cash Generated from Operating (41,775) (73,814)
Activities
Cash Flows from Investing
Activities
Property, Plant and Equipment (1,385) (1,315)
acquired
Proceeds on Disposal of non-current - 98
Assets
Proceeds on Disposal of Investments - 72,199
Investments - (9)
Net Cash Flows from Investing (1,385) 70,973
Activities
Cash Flows from Financing
Activities
Capital raised net of Share issue 97 (268)
expenses
Net Cash Flows from Financing 97 (268)
Activities
(Decrease)/Increase in Cash and (43,063) (3,109)
Cash Equivalents
Cash and Cash Equivalents at the 135,429 138,538
beginning of the Year
Cash and Cash Equivalents at the 92,366 135,429
end of the Year
1. Significant notes to the Financial Statements
Basis of preparation
The financial statements of the Company and the Group have been prepared in
accordance with the South African Statements of Generally Accepted
Accounting Practice, which policies are consistent with those of the prior
year. The disclosure of certain comparative figures has been re-grouped in
order to afford a reasonable comparison with the current year.
1.2 Revenue Recognition
The revenue recognition accounting policy pertaining to performance fees
allows income to be brought to account when it can be demonstrated at the
year-end that the revenue can be reliably measured against agreed
benchmarks, that economic benefits will flow to the enterprise, that the
cost to complete can be measured and that the stage of completion can be
identified. If there is any uncertainty regarding this, the policy of the
Company is to hold open the books of account until certainty can be
achieved. At year-end no work-in-progress was so valued or brought to
account.
1.3 Basis of Consolidation
Where due to the nature and substance of the subsidiaries, the Group and
Company results are the same, disclosure is made under one heading.
2. Dividend
The Board of Directors has proposed a final cash dividend for the year ended
31 December 2001 of not less than 125 cents per share, being an ordinary
final dividend of 37 cents per share and a further dividend of 88 cents per
share. At a meeting of the Board, to be held no later than 22 February
2002, a dividend declaration will be made. Shareholders will be advised of
this by way of a separate notice, which will detail the dividend amount, the
payment details and dates.
3. Change of name
The Board has resolved to change the name of the company to "Enterprise Risk
Management Limited" subject to shareholder approval at the next AGM (Annual
General Meeting) of the Company. The date of the AGM will be advised by way
of separate circular. This name has been reserved with the Registrar of
Companies.
The reasoning for this change of name is that it better describes the
business activities of the Company and its current and future strategic
direction. The UK Turnbull report contemplates that all business managers
adopt enterprise wide risk management principles and techniques. The King
Code on Corporate Governance II has also adopted this concept for managers
in both the public and private sectors. The strategic intent of the Company
is to offer a holistic risk solution to all of its clients to encompass
enterprise wide risk management. Treasury risk management will of course
remain as our "flagship" business. Many of these initiatives, such as
physical risk management, have already been rolled-out and certain others
will be rolled-out during 2002.
4. Other matters to be considered at the next AGM
At the next AGM of the shareholders of the Company, shareholders will
be asked to approve, apart from the proposed change in name of the Company,
the following
An amendment to the Share Incentive Scheme of the Company to allow for a
purchase scheme as well as the current option scheme, to allow for a greater
number of shares under the scheme, and other consequential amendments to the
scheme; and
An extension of the existing mandate for the Company to purchase its own
shares
The Board of Directors has resolved to change the year-end of the Company
from the 31 December each year to the last day of February each year. This
change is to better reflect the business cycle of the Company. Accordingly,
the next year-end of the Company will be for the 14-month period ending on
28 February 2003, and the interim reporting period will be for the 8 months
ended 31 August 2002.
These matters will be fully addressed in the notice of the AGM to be sent to
all shareholders shortly.
5. Commentary on results
We are pleased to report a significant improvement in the results of the
Company for the year ended 31 December 2001.
Revenue for the year has increased by 16% to R75,113 million, and operating
profit has increased by 392% to R43,598 million. Operating costs have been
largely contained, save for the legal and other costs associated with the
litigation against a former client. This has translated to an increase of
282% in Headline Earnings to R35,163 million, and 278 % increase in Headline
Earnings per share to 65,73 cents.
This headline earnings result is also after the effects of Secondary Tax on
Companies (STC) levied as a charge in these results for both the year 2000
final dividend and the year 2001 interim dividend. In terms of GAAP, the STC
on any final 2001 dividend will be charged to the 2002/3 results. The effect
on headline earnings per share as a consequence of this STC so charged is 7
cents per share.
Subsequent to year-end, and to the date of this report, debtors in the
amount R14,56 million have been collected. We expect to convert the balance
of debtors to cash in the near term.
6. Contingent asset / liability
The Company has issued summons against a former client in the amount of
R126 million, being R41 million for work done in terms of the Contract and
not paid for and R85 million for damages in respect of breach of Contract.
The former client is defending the action, and it has been set down for
trial on 6 May 2002. The former client has in turn brought about a counter-
claim in the amount of R27 million relating to alleged past invoicing
errors. We do not agree with their contentions, nor do we see any basis for
this counter-claim. Shareholders will be advised from time to time on the
progress of this matter.
7. Prospects
In order to enhance the marketing effectiveness of the Company and to
create an increased product offering, we have formed an equal joint venture
company styled Trisource (Pty) Ltd between ourselves, Labat Africa Ltd and
Lefika Holdings (Pty) Ltd. With the added service offering of our two
partners, we are able through Trisource, to offer clients the holistic
solutions that they require. Trisource has had only a singular award thus
far, but we expect continued success in the near term.
Outsors of course continues with its own marketing endeavors in both the
public and private sectors. At the end of January 2002, our contract with a
significant client expired naturally. We have entered the new contract
tender process, and at the date o f this report await the outcome of both
the Treasury and Physical risk awards.
In addition to the marketing initiatives that have been taking place, the
Company has continues to measure and examine its business model, and when
and where necessary, it is amended and revised to account for changes in and
to market conditions. The implementation of the Strategic plan is ongoing,
and certain exciting projects and initiatives will be rolled-out during 2002
Our work-in-progress pipeline for 2002 is encouraging, and this together
with being awarded at least one major client should ensure the continued
good performance of the Company.
By order of the Board of Directors
Randburg
15 February 2002
Directors: JB Zwart (Chairman)(ne)(Alt H Joffe), DM McLean (CEO), BH Adams
(ne), Dr DE Baloyi (ne)(Alt IJ Pascal (British)), C Buitendag, GT Magomola
(ne), Dr WJ Kok (ne), PW Schneider, CD Stein (ne), C Walker
Address: 2nd Floor, Oak Place, 264 Oak Avenue, Randburg, 2125
Sponsor: Mettle Limited Transfer Secretaries: Computershare Services
Telephone : +27 11 886-4717 Fax : +27 11 787-2259
Internet: www.outsors.co.za Email: spec@outsors.co.za
