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EOH
EOH
EOH - EOH Holdings Limited - Interim results for the six months ended 31 January
2009
EOH HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Company registration no: 1998/014669/06)
Share code: EOH
ISIN: ZAE000071072
("EOH" or "the Group")
Interim results
for the six months ended 31 January 2009
Revenue up 28,3%
PBT up 27,2%
EPS up 27,7%
HEPS up 28,4%
GROUP INCOME STATEMENT
Six months Six months Twelve
to to months to
31 January 31 January 31 July
R`000 2009 % change 2008 2008
Revenue 559 742 28,3 436 282 950 934
Cost of sales (355 317) (291 393) (625 737)
Gross margin 204 425 144 889 325 197
Profit before
separately disclosed
items 47 788 39 353 88 768
Interest received 6 774 2 822 5 141
Finance costs (1 212) (768) (1 776)
Share of
(losses)/profits of
associated companies (66) 250 120
Loss on
disposal/impairment
of investment in
associated company (303) - (777)
Profit before
taxation 52 981 27,2 41 657 91 476
Taxation (19 724) (14 786) (29 990)
Profit after taxation 33 257 23,8 26 871 61 486
Attributable to:
Ordinary
shareholders 34 531 26 763 60 988
Minority interests (1 274) 108 498
33 257 26 871 61 486
Total shares in issue 74 295 73 255 73 659
Weighted average
number of shares in
issue 64 047 63 403 63 382
Diluted number of
shares 72 203 70 892 71 160
Earnings per share
(cents) 53,9 27,7 42,2 96,2
Diluted earnings per
share (cents) 47,8 26,5 37,8 85,7
Headline earnings
reconciliation
Profit after
taxation attributable
to ordinary
shareholders 34 531 26 763 60 988
Profit on disposal
of assets (102) - (457)
Impairment of
assets - - 40
Loss on
disposal/impairment
of investment in
associated company 303 - 777
Headline earnings 34 732 26 763 61 348
Headline earnings per
share (cents) 54,2 28,4 42,2 96,8
Diluted headline
earnings per share
(cents) 48,1 27,2 37,8 86,2
GROUP CASH FLOW STATEMENT
31 January 31 January 31 July
R`000 2009 2008 2008
Net income before tax and
separately disclosed items 52 981 39 603 91 476
Non-cash items 3 280 6 824 10 492
Working capital changes 12 373 (32 070) (23 558)
Cash generated by operating
activities 68 634 14 357 78 410
Interest received 6 774 2 822 5 141
Finance costs (1 212) (768) (1 776)
Taxation paid (8 516) (2 738) (25 218)
Dividend paid (15 568) (12 659) (12 655)
Net cash inflow from operating
activities 50 112 1 014 43 902
Net cash inflow from investing
activities 26 524 (14 466) (21 567)
Net cash inflow from financing
activities (12 381) (5 658) (17 331)
Net movement in cash and cash
equivalents 64 255 (19 110) 5 004
Cash and cash equivalents at
beginning of period 119 140 114 136 114 136
Cash and cash equivalents at
end of period 183 395 95 026 119 140
GROUP BALANCE SHEET
31 January 31 January 31 July
R`000 2009 2008 2008
ASSETS
Non-current assets
Property, plant and equipment 33 876 16 745 29 764
Intangible assets 173 960 102 893 109 527
Investment in associate
companies - 1 275 353
Loans receivable 4 636 3 354 5 712
Deferred taxation assets 18 230 12 557 11 809
Current assets
Inventory 8 426 6 910 7 821
Trade and other receivables 233 429 195 052 223 721
Trade receivables 227 744 187 294 217 849
Other receivables 5 685 7 758 5 872
Bank balances and cash 183 395 95 970 119 140
Total assets 655 952 434 756 507 847
EQUITIES AND LIABILITIES
Ordinary shareholders` interest 257 889 214 463 242 007
Minority interests (498) 386 776
Total equity 257 391 214 849 242 783
Non-current liabilities
Long-term loans 2 257 750 1 115
Vendors for acquisition 23 333 6 986 2 600
Deferred taxation liabilities 4 414 3 925 4 667
Current liabilities
Trade and other liabilities 301 516 154 058 208 955
Deferred revenue 34 127 29 386 32 658
Taxation payable 32 914 23 858 15 069
Bank overdraft - 944 -
Total equity and liabilities 655 952 434 756 507 847
Net asset value per share 347,1 292,8 328,5
GROUP STATEMENT OF CHANGES IN EQUITY
Share Share
R`000 capital premium Reserves
Audited balance at 1 August 2007 633 45 842 12 354
Movement in treasury shares 1 642 (3 786)
Currency translation - - -
Profit for the period - - 3 967
Dividends - - -
Issue of share capital 7 690 -
Balance at
31 January 2008 641 47 174 12 535
Movement in treasury shares (17) (1 336) (8 120)
Adjustment to prior period
profit - IFRS leases - - -
Currency translation - - 976
Profit for the period 2 025
Dividends - - -
Issue of share capital 4 585 -
Balance at 31 July 2008 628 46 423 7 416
Movement in treasury shares (6) (495) (3 189)
Post acquisition adjustment (1 665)
Currency translation - - (824)
Profit for the period 3 291
Dividends - - -
Issue of share capital 6 1 075 -
Balance at
31 January 2009 628 47 003 5 029
Retained Minority Total
R`000 earnings interests equity
Audited balance at 1 August 2007 140 009 278 199 116
Movement in treasury shares - - (3 143)
Currency translation - - -
Profit for the period 26 763 108 30 838
Dividends (12 659) - (12 659)
Issue of share capital - - 697
Balance at
31 January 2008 154 113 386 214 849
Movement in treasury shares - - (9 473)
Adjustment to prior period
profit - IFRS leases (798) - (798)
Currency translation - - 976
Profit for the period 34 225 390 36 640
Dividends - - -
Issue of share capital - - 589
Balance at 31 July 2008 187 540 776 242 783
Movement in treasury shares - - (3 690)
Post acquisition adjustment - - (1 665)
Currency translation - - (824)
Profit for the period 33 257 (1 274) 35 274
Dividends (15 568) (15 568)
Issue of share capital - - 1 081
Balance at
31 January 2009 205 229 (498) 257 391
COMMENTARY
GROUP PROFILE
EOH`s vision is "to be the best technology and business solutions
company to work for, partner with and invest in". EOH is a technology and
business solutions provider creating lifelong partnerships by developing
business and IT strategies, supplying and implementing solutions and
managing enterprise-wide business systems and processes for medium to large
clients.
EOH operates as a fully integrated business in three broad areas of
business - consulting, technology and outsourcing. The products and services
which it offers can be clustered into three broad categories:
Technology Services: EOH offers consulting services to the private and
public sector ranging from IT strategy, enterprise architecture to project
services. Through a number of businesses, EOH implements, integrates and
supports world-class business applications both remotely and onsite. EOH
also offers a comprehensive range of managed services which includes full
IT Outsourcing, IT infrastructure maintenance and support, hosting and
network management and desktop support.
Software: EOH sells, maintains and supports a broad range of business
applications including: ERP, CRM, Business Intelligence, Advanced Planning
and Scheduling, e-Commerce, Manufacturing Execution Systems (MES) and IT
Performance Management Solutions. EOH represents major software vendors in
South Africa and partners with other vendors operating in the country.
Infrastructure: EOH sells and supports the infrastructure requirements
of its clients. The product range includes storage, servers and network
enhancement and monitoring technologies.
EOH has a presence in all major centres in South Africa and also
operates elsewhere in Africa and in the United Kingdom.
BASIS OF PREPARATION
These interim financial results have been prepared in accordance with
IAS 34. The accounting policies of the Group comply with International
Financial Reporting Standards and the Companies Act, 1973 (Act 61 of 1973),
as amended ("Act") and are based on appropriate accounting policies,
consistently applied with those in the prior year, which are supported by
reasonable and prudent judgements and estimates. These interim financial
results have not been reviewed.
SEGMENTAL REPORTING
EOH`s revenue is derived primarily from the provision of technology
services (consulting, systems implementation and integration and managed
services), software licence and maintenance revenue and the sale of
infrastructure products. Annuity business accounts for 43% of revenue.
Technology
services Software Infrastructure Total
Revenue 332 289 140 550 86 903 559 742
Net profit before
tax 30 581 18 482 3 918 52 981
FINANCIAL RESULTS
The board of directors is satisfied with the performance for the period
under review. The growth for the period is largely organic complemented by
recent acquisitions. The balance sheet is strong with no debt and substantial
cash resources to support future growth and sustainability.
BUSINESS COMBINATIONS
During the six months EOH acquired the business of Highveld PFS ("Highveld")
with effect from 1 August 2008. Highveld is a contract management business
and registered labour broker. EOH also acquired REO Consulting (Proprietary)
Limited, a company providing remote technology support services, with effect
from 1 October 2008.
FUTURE PLANS
EOH has recently been appointed as the sole representative of CA in
Southern Africa which will further entrench EOH`s ability to offer a
complete range of technology solutions and products to its customers. CA is
the 4th largest software vendor in the world, with its software installed in
all major corporates across the globe. EOH intends not only to extend the
reach of CA products into EOH`s existing client base but also to sell new
products and solutions to CA`s vast customer base.
EOH is a major player in the technology, consulting and outsourcing space
and these offerings are enhanced by its ability to deliver effective `end
to end` solutions enabling EOH to form long-term strategic partnerships
with existing and new customers.
EOH continues to intensify its drive to increase its annuity business in
many existing and innovative ways including hosting and networking, software
support contracts, call centre, service desks and managed services. The
introduction of Application Managed Services, complemented by the
acquisition of REO Consulting, will further enhance EOH`s annuity income.
With the recent acquisition of Highveld, EOH`s Global Resourcing business
has been significantly enhanced enabling it to place more skills into the
market place. Highveld also provides a resource base of contractors for other
EOH businesses and the opportunity to further skill resources through EOH`s
training facility, EOH Academy.
EOH sees the micro environment as challenging but believes that it is well
positioned to take advantage of opportunities that present themselves, enabled
by its track record, reputation, strong balance sheet and cash reserves.
TRANSFORMATION
EOH has 34,3% broad-based effective black ownership. Of the Group`s over
1 600 employees, 47,5% are black as is 55% of EOH`s board of directors.
EOH has an AA Black Economic Empowerment rating (Level 3 contributor) and
has progressed its Enterprise Development initiative. EOH is committed to
inclusive transformation involving all its people and stakeholders.
DIVIDENDS
It is the Group`s practice to consider the declaration of dividends only at
the end of each financial year. A dividend of 25 cents per share was paid
during November 2008.
Asher Bohbot
Chief Executive Officer
18 March 2009
REGISTERED OFFICE
Block D, Gillooly`s View, 1 Osborne Lane, Bedfordview, 2008
Tel: (011) 607 8100
Fax: (011) 616 9929
Website: www.eoh.co.za
E-mail: info@eoh.co.za
EXECUTIVE DIRECTORS
Asher Bohbot (Chief Executive Officer)
Lucky Khumalo (Deputy Chief Executive Officer)
John King
Dion Ramoo
Jane Thomson
NON-EXECUTIVE DIRECTORS
Dr Mathews Phosa (Chairman)
Prof. Tshilidzi Marwala
Tebogo Skwambane
Rob Sporen (Dutch)
COMPANY SECRETARY
Adri Els
SPONSOR
Merchantec (Proprietary) Limited
Date: 18/03/2009 08:30:04 Produced by the JSE SENS Department.
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