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Enterprise Risk Management Limited - Unaudited Interim
Release Date: 27/11/2002 17:15:03 Code(s): ERM
Enterprise Risk Management Limited - Unaudited Interim
Financial Statements for the Eight months to 31 August 2002
Enterprise Risk Management Limited
Registration number 1995/001603/06
(The "Company" or "ERM")
(Share code: ERM ISIN ZAE000037701)
Unaudited Interim Financial Statements for the Eight months to
31 August 2002
Group & Group & Group & Group & Company
Company Company Company Year ended
Eight Six Months Six Months Dec 2001
Months to to to R 000`s
Aug 2002 Jun 2002 Jun 2001
R 000`s R 000`s R 000`s
>>Income
Statement
Revenue 10,078 8,546 31,665 75,113
Operating (6,888) (4,044) 15,945 43,598
(Loss) /
Profit
After
charging 842 651 1,065 1,655
- 395 395 - -
Depreciation
- Interest
paid
Investment 3,488 3,149 6,210 10,873
Income
Net (Loss) / (3,400) (895) 22,155 54,471
Profit
before
taxation
Taxation (9,864) (9,864) (6,456) (19,308)
(Note 1)
Net (Loss) / (13,264) (10,759) 15,699 35,163
Profit for
the period
Weighted 53,568 53,568 53,482 53,497
Average
number of
Shares
(000`s)
(Loss) / (24,76) (20,08) 29,35 65,73
Earnings Per
Share
(cents)
Headline (24,76) (20,08) 29,35 65,73
(Loss) /
Earnings per
Share
(cents)
Group & Group & Group & Group & Company
Company Company Company Year ended
Eight Six Months Six Dec 2001
Months to to Months R 000`s
Aug 2002 Jun 2002 to
R 000`s R 000`s Jun 2001
R 000`s
>>Balance
Sheet
Assets
Non Current 1,489 1,680 10,173 2,278
Assets
Property, 1,489 1,680 2,910 2,278
Plant &
Equipment
Investments 0 0 9 0
Deferred 0 0 7,254 0
Taxation
Current 67,251 69,497 151,893 153,487
Assets
Accounts 48,330 48,566 28,721 61,121
Receivable &
Accruals
Taxation 2,834 2,834 0 0
Receivable
Cash & Cash 16,087 18,097 123,172 92,366
Equivalents
Total Assets 68,740 71,177 162,066 155,765
Equity &
Liabilities
Shareholder 66,791 69,296 154,203 147,016
Funds
Stated 59,047 59,047 58,947 59,039
Capital
Distributabl 7,744 10,249 95,256 87,977
e Reserves
Current 1,949 1,881 7,863 8,749
Liabilities
Accounts 1,822 1,754 3,422 7,802
Payable
Taxation 0 0 4,106 887
Shareholders 127 127 335 60
for Dividend
Total Equity 68,740 71,177 162,066 155,765
&
Liabilities
Shares in 53,576 53,576 53,485 53,562
issue (`000) 124,68 129,34 288.32 274,48
NAV per
Share
(cents)
Group & Group & Group & Group & Company
Company Company Company Year ended
Eight Six Months Six Months Dec 2001
Months to to to R 000`s
Aug 2002 Jun 2002 Jun 2001
R 000`s R 000`s R 000`s
>>Cash
Flow
Statement
Net (Loss) (2,163) 151 22,912 56,126
/ Profit
adjusted
for non
cash items
(Increase) 12,791 12,555 (14,079) (46,469)
/Decrease
in
Accounts
Receivable
(Decrease) (5,980) (6,048) (7,820) (3,381)
in
Accounts
Payable
Net Cash 4,648 6,658 1,013 6,276
from
Operations
Dividends (66,902) (66,902) (11,621) (38,698)
Paid
Taxation (13,980) (13,980) (536) (9,353)
Paid
Net Cash (53) (53) (1,118) (1,385)
Flows from
Investing
activities
Net Cash 8 8 5 97
Flows from
Financing
Activities
(Decrease) (76,279) (74,269) (12,257) (43,063)
in Cash
and Cash
Equivalent
s
Cash and
Cash 92,366 92,366 135,429 135,429
Equivalent
s at the
beginning
of the
Period
Cash and 16,087 18,097 123,172 92,366
Cash
Equivalent
s at the
end of the
Period
Group & Group & Group & Group & Company
Company Company Company Year ended
Eight Six Months Six Months Dec 2001
Months to to to R 000`s
Aug 2002 Jun 2002 Jun 2001
R 000`s R 000`s R 000`s
>>Statemen
t of
Changes
in Equity
Stated
Capital
Opening 59,039 59,039 58,942 58,942
Balance
Share 8 8 5 97
Options
exercised
Closing 59,047 59,047 58,947 59,039
Balance
Distributa
ble
reserves
Opening 87,977 87,977 90,253 90,253
Balance
Net (13,264) (10,759) 15,699 35,163
(Loss)/Pro
fit for
the Period
Dividends (66,969) (66,969) (10,696) (37,439)
paid
Closing 7,744 10,249 95,256 87,977
Balance
>> Notes to the Interim Financial Statements
Taxation
The charge for taxation represents the STC (Secondary Tax on Companies) of
R8,371,183 (2001 : R536,390) relating to the dividend declared early in 2002,
and an adjustment to SA normal tax in respect of an underprovision for
taxation in prior periods of R1,493,000 (2001 : SA Normal Tax of R6,390,000
and Deferred Tax of (R470,000)).
Accordingly, a fair reflection of Earnings Per Share (EPS) and Headline
Earnings Per Share (HEPS) from operations during the current period is (6,35)
cents per share.
Accounting policies
These interim annual financial statements have been prepared with reference
to and in compliance with Generally Accepted Accounting Practice statement AC
127, Interim Financial Reporting.
The same accounting policies and methods of computation used in the audited
annual financial statements at 31 December 2001 have been used in these
interim financial statements.
3. Accounting review
Ernst & Young have issued an unmodified review report on the condensed
Financial statements contained in this interim report which is available
for inspection at the Company`s registered office.
>>Commentary on the Results
These interim results are no reflection on the hard work undertaken by both
management and staff during this difficult trading period. During this
period, costs other than legal fees have been contained within the budget set
by the Board at the beginning of the year. The result is directly
attributable to the inability of the Company to either maintain or grow its
revenue base during the period under review.
No provision has been raised against the City of Johannesburg debtor of some
R45,6 million (including VAT) which is reflected in Accounts Receivable. This
is on the basis that we remain confident that this amount (together with
interest thereon), will be collected as the outcome of the arbitration
hearing. Our legal team concurs with this view. Interest on this outstanding
debtor, which may be material, has not been recognised in these or previous
results.
Prospects
We have continued with an aggressive and extensive marketing programme to
prospective customers in both the public and private sectors. Some progress
in this regard has been made, and is expected to so continue.
The Enterprise Wide Risk Management model has now been fully developed and
implemented for delivery to both existing and prospective clients. The
consumer market has displayed considerable interest in this product, which
incorporates the treasury services of the Company. This service offering is
in line with the recommendations contained in the King Code on Corporate
Governance II, and has been designed to enable clients, both existing and
prospective, to fully comply with the Risk Management requirements required
of all entities contained in such Code.
The Company has not suffered any significant staff turnover, nor does it
expect to grow the staff complement. Operational costs remain tightly
controlled, and other than legal costs, remain within budget.
Significant work in progress, which if completed during the full reporting
period, could result in the Company reporting a profit for the full financial
year ending on 28 February 2003.
Dividend
The Board has resolved not to declare any dividend to Shareholders for this
period and at 31 August 2002.
>>Update on legal issues
Umgeni Water
The Company has during the year 2001 instituted legal proceeding against
Umgeni Water in the amount of some R126 million plus interest plus costs.
This claim represents an amount of R41 million for work performed and not
paid for and R85 million for unlawful cancellation of the Contract
Umgeni have in turn filed a counter-claim of some R26 million.
As was announced to shareholders on 11 September 2002, Umgeni were successful
in having the matter postponed to 2003. The matter has now been set down on
the court roll for 19 March 2003. Our legal team remains confident that we
will be successful with our claims.
City of Johannesburg arbitration
As has been previously advised, this matter went before the Arbitrator on 28
October 2002. It was heard for the week, and was not completed during this
time. It is scheduled to resume on 2 December 2002 for one week, and it is
expected to be completed by then. Only thereafter, will the Arbitrator make
an award.
Our legal team remains confident that there is no basis for this client
denying liability of the amount of some R45,6 million (including VAT). This
claim bears interest at 18% per annum.
Department of Trade and Industry investigation into the affairs of the
Company in terms of Sections 257 and 258 of the Companies Act 1973
As has been previously announced, the Minister of Trade and Industry has
appointed an Inspector as contemplated by the Companies Act. We have no
specific information regarding this investigation.
>>Further Cautionary Announcement
Further to the cautionary announcement dated 7 November 2002, the Board of
Directors of the Company continues to consider various corporate actions,
including the disposal of the underlying business to third parties who may be
able to maximise the value of such business. Accordingly, shareholders are
advised to continue exercising caution when dealing in the Company`s
securities until a further announcement is made.
By order of the Board
C de Beer CA(SA)
Company secretary
Randburg
27 November 2002
Directors JB Zwart (Chairman)(ne)(Alt H Joffe), DM McLean (CEO), Dr DE
Baloyi (ne)(Alt IJ Pascal (British)), C Buitendag, WJ Kok (ne), G Magomola
(ne), PW Schneider, CD Stein (ne), MRC Walker
Sponsor Exchange Sponsors (Proprietary) Limited
Transfer secretaries Computershare Services (Proprietary) Limited
Registered office 2nd Floor, Oak Place, 264 Oak Ave, Randburg
Email enquiries@erm.co.za
Date: 27/11/2002 05:15:00 PM Produced by the JSE SENS Department
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