| Wed 22 Sep 2004, 17:25 | | REVIEWED RESULTS FOR THE SIX MONTHS ENDED |
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ENTERPRISE RISK MANAGEMENT LIMITED - REVIEWED RESULTS FOR THE SIX MONTHS ENDED
31 AUGUST 2004
ENTERPRISE RISK MANAGEMENT LIMITED
Registration number 1995/001603/06
Share code: ERM ISIN: ZAE000037701
(the `Company` or `ERM`)
REVIEWED RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2004
INCOME STATEMENT
Reviewed Reviewed Audited
Group & Group & Group &
Company Company Company
six months six months 12 months
to August to August to February
2004 2003 2004
R000`s R000`s R000`s
Turnover - 9 951 12 020
Operating (loss)
from operations (21 906) (987) (3 793)
Profit from disposal of businesses - 10 818 9 972
Investment income 6 034 1 607 4 822
(Loss)/profit before taxation (15 872) 11 438 11 001
Deferred taxation - prior period 9 268 - -
South African nor mal taxation (53) (2 283) (2 499)
(Loss)/profit after tax (6 657) 9 155 8 502
Reconciliation of
headline earnings
(Loss)/profit after taxation
adjusted for:
Profit on sale of business
undertaking - (7 372) (7 372)
Profit on sale of foreign
exchange business - (3 000) (2 600)
Headline (loss) for the period (6 657) (1 217) (1 470)
Weighted average number of
shares (000`s) 53 569 53 569 53 569
(Loss)/earnings per share (cents) (12,43) 17,09 15,87
Headline (loss) per share (cents) (12,43) (2,27) (2,74)
CASH FLOW STATEMENT
Group & Group & Group &
Company Company Company
six months six months 12 months
to August to August to February
2004 2003 2004
R000`s R000`s R000`s
Cash generated from operations (22 635) (1 468) (4 566)
Cash generated from
movements in working capital 31 886 27 186 14 842
Decrease in accounts receivable 29 290 26 618 18 458
Increase/(Decrease) in
accounts payable 2 596 568 (3 616)
Cash generated from
operating activities 9 251 25 718 10 276
Taxation paid - (1 375) (2 418)
Investment income 5 867 1 607 2 672
Dividend income 167 - 281
Net cash flow from
operating activities 15 285 25 950 10 811
Net cash flow from
financing activities - (9 098) -
Net cash flow from
investing activities (16 459) 3 000 (17 065)
(Decrease)/Increase in
cash and cash equivalents (1 174) 19 852 (6 254)
Cash and cash equivalents
at beginning of period 3 882 10 136 10 136
Cash and cash equivalents
at end of period 2 708 29 988 3 882
BALANCE SHEET
Group & Group & Group &
Company Company Company
six months six months 12 months
as at as at as at
August August February
2004 2003 2004
R000`s R000`s R000`s
ASSETS
Non-current assets 59 335 9 701 32 845
Investments 39 228 - 22 543
Deferred taxation 9 268 - -
Property, plant and equipment - 1 -
Loans receivable 10 839 9 700 10 302
Current assets 12 942 70 396 43 406
Accounts receivable 10 234 40 408 39 524
Cash and cash equivalents 2 708 29 988 3 882
Total assets 72 277 80 097 76 251
EQUITY AND LIABILITIES
Capital and reserves 67 625 74 901 74 248
Stated capital 59 001 59 001 59 001
Distributable reserves 8 624 15 900 15 247
Current liabilities 4 652 5 196 2 003
Accounts payable 4 359 4 129 1 763
Taxation 134 908 81
Shareholders for dividend 159 159 159
Total equity & liabilities 72 277 80 097 76 251
Number of shares in issue
(`000) 53 576 53 576 53 576
Net asset value per share
(cents) 126,22 139,80 138,59
STATEMENT OF CHANGES IN EQUITY
Group & Group & Group &
Company Company Company
six months six months 12 months
to August to August to February
2004 2003 2004
R000`s R000`s R000`s
Stated capital
Opening balance 59 001 59 001 59 001
Closing balance 59 001 59 001 59 001
Distributable reserves
Opening balance 15 247 6 745 6 745
Net (loss)/profit for period (6 657) 9 155 8 502
Dividends 34 - -
Closing balance 8 624 15 900 15 247
Notes to the Interim Financial Statements
1. 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 29 February 2004 have been used in these
interim financial statements.
2. Accounts and loans receivable
Accounts receivable are recognised and carried at original invoice values
less an allowance for any doubtful amounts. An estimate for doubtful debts
is made when an indication of impairment has occurred and collection of the
full amount is no longer probable. The amount of the probable loss is the
difference between the carrying amount of the assets and the present value
of expected cash flows, discounted at the financial instruments original
effective interest rate.
Generally Accepted Accounting Practice Statement AC 133, Financial
Instruments: Recognition and Measurement, also requires that financial
assets be initially measured at the fair value of the consideration given.
The Company estimates that the fair value of the consideration, relating to
the deferred payment of R12 million due from Newshelf 716 (Proprietary)
Limited, on a discounted present value basis is R10,8 million (2003: R10,3
million). The difference between the present value and future value will be
recognised on the effective interest rate basis over the life of the
financial asset. The amount so recognised in this period is R536 000 (2003:
R602 000).
3. Change in accounting estimates
The dispute with the City of Johannesburg (`COJ`) has been resolved.
As a consequence of the arbitration award, an error in the preparation of
the financial statements for the 2001 financial year occurred. In terms of
Generally Accepted Accounting Practice Statement AC 103, Net profit or loss
for the period, fundamental errors and changes in accounting policies, it is
required to reflect the error in the results of the current financial
period. Revenue in an amount of R31 million was recognised in the 2001
financial year. This was subsequently disputed by the COJ and culminated in
an arbitration hearing in accordance with the original agreement. In terms
of the arbitration award the arbitrator dismissed the claim by the Company
for liquidity risk management in the amount of R19 million (excluding VAT).
The Company was ordered to repay to the COJ in respect of its counterclaim
in relation to services rendered by the Company pertaining to the general
insurance fund of the COJ, in the amount of R11,9 million (excluding VAT).
The Company provided against these amounts in prior periods an amount of
R12,4 million. The effect of the aforesaid is a reduction in net profit from
operations of R18,5 million and the recognition of a deferred tax asset in
an amount of R9,3 million relating to this error.
4. Investment income and profit from operations
Included in investment income is an amount of R4,2 million, being the net
interest received from the COJ inter ms of the arbitration award.
The remaining dispute with the COJ, which was not resolved by the arbitration
proceeding has now also been resolved. The amount receivable from the COJ is
R909 000. Furthermore, the outstanding disputes with the South African Post
Office (`SAPO`) and PSG Treasury Outsourcing (Pty) Ltd (`PSG`) have now also
been settled. As a result of these settlements an amount of R1,9 million is
receivable from the SAPO (including interest of R231 000) and an amount R550
000 has been released from the escrow account relating to the sale of the
foreign exchange business to PSG. The Company received this latter amount
subsequent to 31 August 2004.
Included in profit from operations for the period ended 31 August 2004 is a net
charge in an amount of R736 000 pursuant to these settlements.
5. Auditors` review report
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 and future business
A loss of 12,43 cents per share (2003: 17,09 cents), headline loss of 12,43
cents per share (2003: loss of 2,27 cents) and a net asset value of 126,22
cents per share (2003: 139,80 cents) were reported.
The Company is currently pursuing the possible recovery of taxes paid by it to
the South African Revenue Services in an amount of approximately R9,3 million
in relation to the COJ Arbitration currently reflected as a deferred tax asset.
Refer to note 3 to the Interim Financial Statements.
As previously reported the Company is vigorously defending claims of
approximately R1 million from three former executive employees relating to
their service agreements with the Company.
Listing on the JSE
Shareholders are referred to previous communication in this regard. The Company
is currently listed in the `Financial - Speciality and Other Finance
- Other Financial` sector of the Johannesburg Securities Exchange South Africa
(`JSE`).
As a result of the arbitration proceedings against the COJ, the Company was not
in a position to furnish the JSE with a business plan in relation to its future
business prior to the conclusion of such arbitration proceedings. As previously
announced the arbitration award was only delivered on 28 July 2004.
The Company has submitted a business plan to the JSE for the purpose of
assessing the suitability of the Company`s continued listing on the JSE.
Further particulars on this matter will be made available to shareholders as
soon as the JSE has considered the business plan.
Dividend
The Board has resolved not to declare any dividend to shareholders for the
period under review.
By order of the Board
C de Beer, CA(SA)
Company secretary
Randburg
22 September 2004
Directors: J B Zwart (Chairman) (ne), H Joffe (Acting CEO (ne),
Dr D E Baloyi (ne), B H L Macdonald (ne), C D Stein (ne).
Sponsor: Exchange Sponsors (Proprietary) Limited
Transfer secretaries: Computershare Investor Services 2004 (Proprietary)
Limited
Registered office: 25 St. John Road
Houghton Estate
Houghton, 2198
Email: enquiries.erm@mweb.co.za
Date: 22/09/2004 05:22:19 PM Produced by the JSE SENS Department
