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ERM
ERM
ERM - Audited results for the year Ended 28 February 2006.
Enterprise Risk Management Limited
(Registration number: 1995/001603/06)
Incorporated in the Republic of South Africa
Share code: ERM
ISIN: ZAE000037701
("ERM" or "the Company")
AUDITED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2006.
Audited Audited restated
12 months to 12 months to
28 February 2006 28 February 2005
(R"000) (R"000)
Income Statement
Turnover - -
Operating loss (2 518) (24 861)
Realised capital gains on sale of
investments 16 031 896
Finance costs (185) -
Investment income 5 021 16 643
Profit/(loss) before taxation 18 349 (7 322)
Taxation (1 874) 7 325
Profit after tax 16 475 3
Weighted average number of shares
(000"s) 53 575 53 575
Earnings per share(cents) 30,8 -
Diluted earnings per share(cents) 30,3 -
Headline earnings per share (cents) 5,2 -
Diluted headline earnings
per share (cents) 5,1 -
Reconciliation of earnings to headline earnings:
Earnings attributable to
shareholders 16 475 3
Realised capital gains on sale of
investments (net of tax) (13 709) -
Headline earnings 2 766 3
28 February 2006 28 February 2005
(R"000) (R"000)
Balance Sheet
Assets
Non-current assets 54 165 72 422
Financial assets 50 217 54 857
Deferred taxation 3 948 7 370
Loan receivable - 10 195
Current assets 44 638 2 516
Accounts receivable 666 1 035
Loan receivable 11 287 -
Cash & cash equivalents 32 685 1 481
Total assets 98 803 74 938
Equity & liabilities
Equity attributable
to equity holders 98 394 74 524
Stated capital 59 001 59 001
Retained earnings 24 197 15 365
Fair value and other reserves 15 196 158
Current liabilities 409 414
Accounts payable 225 255
Financial liabilities 25 -
Shareholders for dividends 159 159
Total equity and liabilities 98 803 74 938
Number of shares in issue ("000) 53 575 53 575
Net asset value per share (cents) 183,7 139,1
12 months to 12 months to
28 February 2006 28 February 2005
(R"000) (R"000)
Statement of Changes in Equity
for the year ended 28 February 2006
Stated Capital
Opening balance 59 001 59 001
Movement - -
Closing balance 59 001 59 001
Distributable reserves
Opening retained earnings
as previously reported 16 686 15 247
Prior year adjustment
- Deferred tax (1 163) 126
Change in accounting policy
as a result of IFRS (158) (45)
Restated balance 15 365 15 328
Transfer to fair value
reserves as a result
of IFRS conversion (7 643) -
Net profit for the period 16 475 3
Dividends written back - 34
Closing balance 24 197 15 365
Fair value reserves
Transfer from distributable reserves
as a result of IFRS conversion 7 643 -
Fair value gains net of tax 20 547 -
Transfer to income statement
on disposal net of tax (13 668) -
Closing balance 14 522 -
Other reserves
Opening balance as
previously reported - -
Change in accounting policy
as a result of IFRS 158 45
Restated balance 158 45
Value of services provided 516 113
Closing balance 674 158
Fair value and other reserves 15 196 158
12 months to 12 months to
28 February 2006 28 February 2005
(R"000) (R"000)
Cash Flow Statement
Cash (utilised in)/generated from
operating activities (2 747) 13 386
Finance costs (185) -
Investment income 1 724 7 294
Dividend income 2 205 603
Taxation refunded 380 -
Net cash flows from
operating activities 1 377 21 283
Net cash flow from
investing activities 29 827 (23 718)
Net cash flow from
financing activities - 34
Increase/(decrease) in cash and cash
equivalents 31 204 (2 401)
Cash and cash equivalents at the
beginning of the year 1 481 3 882
Cash and cash equivalents at the end of
the year 32 685 1 481
Notes to the Financial Statements
1. Accounting policies
1.1 Basis of preparation
The financial statements of the Company have been prepared in
accordance with International Financial Reporting Standards
("IFRS") and are covered by IFRS 1 - First time adoption of
International Financial Reporting Standards.
They have been prepared on a going concern basis.
1.2 Equity-settled share-based payments
The Company has changed its accounting policy with regard to
equity-settled share-based payments to comply with IFRS 2. Costs
associated with share-based awards to employees and non-executive
directors under the share option scheme are now charged to the
income statement over the vesting periods. The cost is determined
by using independent valuations of the share options.
1.3 Financial Instruments
Share and loan 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 recognised through the income
statement.
Financial assets and financial liabilities are offset and the net
amount reported in the balance sheet when the company has 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.
2. Financial assets
As at 28 February 2006 the Company"s investment portfolio
comprised the following:
At 28 February 2006
Market Market
Name of investment Quantity price Value
("000) cents (R"000)
JCI Convertible Debentures - - -
Apex Hi Properties "A" units 1 000 1 441 14 410
Anglo American PLC ordinary shares 30 22 820 6 846
Bidvest Ltd ordinary shares 160 10 400 16 640
Sasol Ltd ordinary shares 15,5 21 100 3 271
Highveld Steel &
Vanadium Ltd ordinary shares 100 9 050 9 050
Pretoria Portland
Cement Ltd ordinary shares - - -
TOTAL 50 217
At 28 February 2005
Market Market
Name of investment Quantity price value
("000) cents (R"000)
JCI Convertible Debentures 3 000 98 2 940
Apex Hi Properties "A" units 2 000 999 19 980
Anglo American PLC ordinary shares 20 14 550 2 910
Bidvest Ltd ordinary shares 244 7 561 18 449
Sasol Ltd ordinary shares 63 14 600 9 198
Highveld Steel &
Vanadium Ltd ordinary shares - - -
Pretoria Portland
Cement Ltd ordinary shares 6 23 010 1 380
TOTAL 54 857
3. Accounts receivable
IAS 39 requires that financial assets are initially measured at
the fair value of the consideration receivable. The Company
estimates that the fair value of the consideration relating to the
payment due from First South Risk Solutions (Proprietary) Limited
in November 2006, on a discounted present value basis, is R11,3
million (2005: R10,2 million). Interest is imputed on the
effective interest rate basis. The amount so recognised this year
is R1,1 million (2005: R1,0 million).
4. Transition to IFRS
The Company"s financial statements for the year ended 28 February
2006 are the first annual financial statements that comply with
IFRS. The Company"s transition date is 1 March 2004. In preparing
these annual financial statements the Company has applied certain
of the optional exemptions from full retrospective application of
IFRS.
The Company has elected:
not to restate comparatives for IAS 32 and IAS 39
not to apply IFRS 2 to share options granted prior to 7
November 2002, that had not yet vested by 1 March 2005.
5. Reconciliation between IFRS and GAAP including other prior
year adjustments
The following reconciliation provides a quantification of the
effect of the transition to IFRS on equity and net income in terms
of the items referred to in paragraph 4 above, as well as the
effect of other prior year adjustments:
1 March 28 February
Reconciliation of equity as at: 2004 2005
(R"000) (R"000)
Equity as previously reported 74 248 75 687
IFRS reconciling items
- Share-based payment reserves 45 158
- Distributable reserves - (158)
Other prior year adjustments not related to IFRS
- Change in accounting policy in respect of
share-based payments 45 -
- Deferred tax 126 (1 163)
Equity as reported in terms of IFRS 74 374 74 524
Reconciliation of net income:
Net income as previously reported in terms of
GAAP - 1 405
IFRS reconciling items
- Share-based payments - (113)
Other prior year adjustments not related to IFRS
- Deferred tax - (1 289)
Net income as reported in terms of IFRS - 3
6. Auditors" report
These results have been audited by Grant Thornton, who were
appointed auditors of the Company with effect from 1 August 2005.
Their report, which is available for inspection at the Company"s
registered office, has been qualified on the basis of a lack of
evidence to support the recoverability of an amount of R11,3
million owing to the Company at 28 February 2006 and receivable in
November 2006.
Commentary on the Results
Earnings of 30,8 cents (2005: 0,0 cents) per share and headline
earnings of 5,2 cents (2005: 0,0 cents) per share and a net asset
value of 183,7 cents (2005: 139,1 cents) per share were reported.
The increase in the net asset value of the Company resulted mainly
from income from investments as well as realised and unrealised
capital gains on the listed investments.
As previously reported, arising from the arbitrated reduction in
income of the prior years, the Company believes an amount of R9,27
million is refundable by SARS. SARS is of the opinion that the
amount gives rise to an assessed loss, not a refund. The Company
has lodged an appeal and the amount has been included in the
deferred tax asset.
The utilisation of the deferred tax asset is dependant on future
taxable profits in excess of the profits arising from the reversal
of existing taxable temporary differences.
The Company did not provide for deferred tax on the realised and
unrealised capital gains on its investment portfolio for the year
ended 28 February 2005 in the amount R1,3 million. The comparative
figures have been restated accordingly. The effect of this
adjustment is a reduction in the net asset value of the Company as
at 28 February 2005 of 2,2 cents.
Contingent liability
The Company continues to vigorously defend claims of approximately
R1 million from three former executive employees relating to their
service agreements with the Company.
Dividend
The board has resolved not to declare any dividend to shareholders
for the period under review.
Future direction
By virtue of a number of changes to the Board and a change in one
of our major shareholders, the Company is embarking on a new
strategic direction in the area of property development. To
facilitate the proposed new strategic direction, towards the end
of the period under review the Company decreased its listed
investment portfolio in anticipation of investing in the property
development market.
Annual General Meeting
The Company"s annual financial statements will be posted to
shareholders on Wednesday, 26 April 2006. The annual general
meeting of members of the Company will be held at 11:00 on
Thursday, 18 May 2006 at 25 St. John Road, Houghton, Johannesburg.
By order of the Board
C de Beer CA (SA)
Company Secretary
Randburg
21 April 2006
Directors: SA Slom (Chairman)*, HP Joffe (Acting CEO)*, Dr DE
Baloyi*, BHL Macdonald*, BL Gruzd*, DD Golan*
* non-executive
Registered office: 25 St. John Road, Houghton, Johannesburg, 2106
Email: enquiries.erm@mweb.co.za
Sponsor: Merchant Sponsors (Proprietary) Limited
Transfer secretaries: Computershare Investor Services 2004
(Proprietary) Limited
Date: 21/04/2006 10:55:16 AM Produced by the JSE SENS Department
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