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Enterprise Risk Management Limited - Audited Preliminary Financial Results
Release Date: 13/06/2003 15:50:55 Code(s): ERM
Enterprise Risk Management Limited - Audited Preliminary Financial Results
for the Fourteen months to 28 February 2003
Enterprise Risk Management Limited
Registration number 1995/001603/06
JSE Code : ERM
ISIN Code : ZAE000037701
(The "Company" or "ERM")
Audited Preliminary Financial Results for the Fourteen months to 28
February 2003
Group & Group &
Company Company
Period Year
ended ended
Feb 2003 Dec 2001
R 000"s R 000"s
>>Income Statement
Turnover 15,818 75,113
Operating (Loss) / (13,217) 43,598
Profit
After charging
- Depreciation 1,412 1,655
- Interest paid 503 -
Investment Income 8,818 10,873
Net (Loss) / Profit (4,399) 54,471
before taxation
Taxation (Note 3) (9,864) (19,308)
Net (Loss) / Profit
attributable to (14,263) 35,163
ordinary shareholders
Weighted Average 53,569 53,497
number of Shares in
issue (000"s)
(Loss) / Earnings Per (26,63) 65,73
Share (cents)
Headline (Loss) / (26,63) 65,73
Earnings per Share
(cents)
Dividends per share - 175,00
(cents)
Group & Group &
Company Company
Period Year
ended ended
Feb 2003 Dec 2001
R 000"s R 000"s
>>Balance Sheet
Assets
Non Current Assets 1,002 2,278
Property, Plant & 1,002 2,278
Equipment
Current Assets 68,464 153,487
Accounts Receivable 58,328 61,121
(Note 4)
Cash & Cash 10,136 92,366
Equivalents
Total Assets 69,466 155,765
Equity & Liabilities
Capital and reserves 65,746 147,016
Stated Capital 59,001 59,039
Distributable 6,745 87,977
Reserves
Current Liabilities 3,720 8,749
Accounts Payable 3,561 7,802
Taxation - 887
Shareholders for 159 60
Dividend
Total Equity & 69,466 155,765
Liabilities
Shares in issue 53,575 53,562
(`000) 122,72 274,48
NAV per Share (cents)
Group & Group &
Company Company
Period Year
ended ended
Feb 2003 Dec 2001
R 000"s R 000"s
>>Cash Flow
Statement
Net profit
adjusted for non (3,033) 56,126
cash items
(Increase)/Decrea
se in Accounts 2,793 (46,469)
Receivable
(Decrease) in
Accounts Payable (4,242) (3,381)
Net Cash from (4,482) 6,276
Operations
Dividends Paid (66,870) (38,698)
Taxation Paid (10,750) (9,353)
Net Cash Flows
from Investing (136) (1,385)
activities
Net Cash Flows
from Financing 8 97
Activities
(Decrease) in
Cash and Cash (82,230) (43,063)
Equivalents
Cash and Cash
Equivalents at
the beginning of 92,366 135,429
the Period
Cash and Cash
Equivalents at
the end of the 10,136 92,366
Period
Group & Group &
Company Company
Period Year
ended ended
Feb 2003 Dec 2001
R 000"s R 000"s
>>Statement of
Changes in Equity
Stated Capital
Opening Balance 59,039 58,942
Share Options 8 97
exercised
Share Options (46) -
cancelled
Closing Balance 59,001 59,039
Distributable
reserves
Opening Balance 87,977 90,253
Net (loss)/profit
for the period (14,263) 35,163
Dividends paid (66,969) (37,439)
Closing Balance 6,745 87,977
>> Notes to the Financial Results
1. Accounting policies
The Audited Annual Financial Results for the 14 months ended 28 February 2003
have been prepared with reference to and in compliance with South African
Statements of Generally Accepted Accounting Practice and the Companies Act.
The accounting policies, which have been applied in these financial results,
are consistent with those of the previous year.
2. Audit opinion
The results for the 14 months ended 28 February 2003 have been audited. Ernst
& Young"s unqualified audit report on these Financial Results and the
Summarised Financial Results contain an emphasis of matter modification (see
below), and are available at the registered office of the Company.
The emphasis of matter modification to the audit reports of the Financial
Results and the Summarised Financial Results is with reference to an
agreement entered into between the Company and a third party on 13 June 2003,
as detailed in paragraph 5 below, to dispose of the whole or substantially
the whole of the undertaking of the Company. This event indicates a possible
material curtailment to the scale of the operations. Such a disposal
requires the approval by shareholders in the general meeting of the Company
in terms of Section 228 of the Companies Act, 1973.
3. Taxation
The income statement charge for taxation relates to Secondary Tax on
Companies (STC) of R8, 371 K (2001:R3, 744 K) relating to a dividend declared
in February 2002, as well as a prior period adjustment to SA normal tax in
respect of an underprovision for taxation of R1, 493 K. (2001:SA Normal Tax
of R8, 780 K and Deferred Tax of R6, 784 K).
Tax assessed losses to the extent of R 11,345K exist at year-end. No net
deferred tax asset was created due to the possible sale of the business and
the uncertainty of future taxable profits being available against which this
unused tax loss can be utilised.
4. Accounts receivable
Included in debtors are amounts in respect of the City of Johannesburg of
R45, 619 K (2001: R57, 507 K) and Umgeni Water Board of R21, 500 K (2001:
Rnil). The former debtor amount is the subject of ongoing arbitration, which
is not expected to be finalised before December 2003. The Company received
the latter amount after the balance sheet date (refer note 5.1).
The Company, and in concurrence with its legal advisors, remain confident
that there is a high probability that the entire amount owing by The City of
Johannesburg, that is currently the subject of arbitration could be
recovered.
Notwithstanding this, and to highlight to the users of our Financial
Statements the risks inherent in any legal proceeding, the Board has raised a
25% provision against debtors" balances. The amount so raised and charged
against the income statement is
R12, 076 K (2001: Rnil).
5. Events after balance sheet date
After the balance sheet date certain significant events occurred which have a
direct bearing on the financial results for the 14 months ended 28 February
2003.
5.1 Umgeni Water Board settlement
The matter with Umgeni Water Board was settled on 20 March 2003. Umgeni
Water Board made an offer of settlement, which was accepted by the
Board. The amount received by the Company was R21, 500 K inclusive of
VAT. This amount comprised payments for performance fees, fixed fees,
interest and a contribution to legal costs.
As this settlement was further evidence of conditions that existed at
the balance sheet date, South African Statement of Generally Accepted
Accounting Practice (GAAP) AC 107 requires that the financial
results are adjusted to reflect this event. Accordingly, the amount
so received from Umgeni Water is accounted for in the results and
earnings in compliance with GAAP.
5.2 Disposal of the undertaking of the Company
On 13 June 2003, the Company entered into an agreement to dispose of the
whole of its business undertaking to an empowerment group.
This transaction, which is a related party transaction and which is
being conducted by a sub-committee of the Board comprising non-executive
Directors, is subject to approval of the shareholders of the Company in
the general meeting in terms of section 228 of the Companies Act 1973.
In addition it is subject to the fulfillment of certain conditions
including, inter alia, approval by certain regulatory authorities.
The Board of Directors expects to make a further and full announcement
regarding this transaction within 30 days.
5.3 Disposal of the Foreign Exchange business
On 28 May 2003, the Company disposed of its Foreign Exchange business
division as a going concern to PSG Treasury Outsourcing (Pty) Ltd for a
consideration of R3, 500K. As part of this transaction, six support
personnel of this division have transferred to PSG.
>>Commentary on the Results
These results are disappointing and can be firmly ascribed to the inability
of the Company to attract new business. This inability to attract new
business can in turn be ascribed, in the main, to the insufficient BEE (Black
Economic Empowerment) credentials of the enterprise. Despite protracted
endeavours by the Board to introduce a BEE partner into the equity of the
company, this has not materialised.
Costs (other than legal costs) remain tightly controlled and within budget.
Prospects
Shareholders are referred to 5.2 above regarding the disposal of the whole of
the undertaking of the Company. The Company will continue to vigorously
pursue its claim against a former customer through an arbitration process.
Despite the disposal of the undertaking to a third party, the Company has
secured the commitment of management to assist it with this process and the
collection of this debt.
At the date of this report, the cash balance of the company is R30, 452 K.
Included in this amount is the settlement amount received from Umgeni Water
Board.
Once the Company has finalised the arbitration matter the Board will advise
shareholders on the future direction and plans of the Company. It is not
expected that such will occur before 31 December 2003.
Accordingly the Board has resolved not to propose any dividend to
Shareholders for the period ended 28 February 2003.
>>Further cautionary
Until such time as the Company makes a further and full announcement
regarding the disposal of the business, shareholders are advised to continue
exercising caution when trading in the securities of the Company.
By order of the Board
C de Beer CA(SA)
Company secretary
Randburg
13 June 2003
Directors JB Zwart (Chairman) *, H Joffe *, DM McLean (CEO), Dr DE
Baloyi * (Alt IJ Pascal (British)), C Buitendag, WJ Kok *, BHL Macdonald *, G
Magomola *, PW Schneider, CD Stein *, MRC Walker
* Non-executive director
Sponsor Exchange Sponsors (Proprietary) Limited
Transfer secretaries Computershare Services (Proprietary) Limited
Registered office 3rd Floor, Oak Place, 264 Oak Ave, Randburg
Email enquiries@erm.co.za
Date: 13/06/2003 03:51:03 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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