| Tue 16 Mar 2010, 8:00 | | EOH - EOH Holdings - Reviewed Condensed Consolidated Interim Results for |
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EOH
EOH
EOH - EOH Holdings - Reviewed Condensed Consolidated Interim Results for
the six months ended 31 January 2010
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")
Reviewed Condensed Consolidated Interim Results for the six months ended 31
January 2010
- Revenue up 40,6%
- PBT up 37,7%
- EPS up 30,4%
- HEPS up 29,2%
Condensed Consolidated Statement of Comprehensive Income
Reviewed Reviewed Audited
six months six months twelve months
to to to
31 January % 31 January 31 July
2010 change 2009 2009
R`000
Revenue 787 265 40,6 559 742 1 255 067
Cost of sales (511 571) (355 317) (797 421)
Gross margin 275 694 204 425 457 646
Results from
operating activities 70 534 47 788 109 456
Investment income 4 112 6 774 10 602
Finance costs (1 670) (1 212) (2 788)
Share of losses of
equity accounted investees - (66) -
Net impairment of assets - - (424)
Impairment of investment/loss
on disposal of
associated companies - (303) (353)
Profit before taxation 72 976 37,7 52 981 116 493
Taxation (27 602) (19 724) (39 961)
Profit for the period 45 374 36,4 33 257 76 532
Other comprehensive income:
Foreign currency
translation differences for
foreign operations (71) (55) (879)
Net change in fair
value of cash
flow hedges (1 506) (769) 1 576
Taxation on other
comprehensive income - - -
Total comprehensive income
for the period 43 797 32 433 77 229
Profit attributable to:
Owners of the parent 44 886 34 531 77 835
Non-controlling
interest 488 (1 274) (1 303)
Profit for the period 45 374 33 257 76 532
Total comprehensive
income attributable to:
Owners of the parent 43 309 33 707 78 532
Non-controlling interest 488 (1 274) (1 303)
Total comprehensive
income for the period 43 797 32 433 77 229
Total shares in issue 75 817 74 295 75 817
Weighted average
number of
shares in issue 63 848 64 047 64 477
Diluted number of shares 73 170 72 203 74 221
Earnings per share
(cents) 70,3 30,4 53,9 120,7
Diluted earnings per
share (cents) 61,3 28,3 47,8 104,9
Headline earnings
reconciliation
Profit after taxation
attributable to:
Ordinary shareholders 44 886 34 531 77 835
Profit on disposal
of assets (199) (102) (32)
Net impairment of assets - - 424
Impairment of
investment/loss on
disposal of
associated companies - 303 353
Headline earnings 44 687 34 732 78 580
Headline earnings
per share (cents) 70,0 29,2 54,2 121,9
Diluted headline
earnings per share (cents) 61,1 27,0 48,1 105,9
Condensed Consolidated Statement of Financial Position
Reviewed Reviewed Audited
six months six months twelve months
to to to
31 January 31 January 31 July
2010 2009 2009
R`000
ASSETS
Non-current assets
Property, plant and equipment 40 859 33 876 37 170
Goodwill and intangible assets 244 031 173 960 215 936
Loans receivable 2 932 4 636 4 833
Deferred taxation assets 25 704 18 230 26 424
Current assets
Inventory 9 149 8 426 7 872
Trade and other receivables 330 382 233 429 343 455
Trade receivables 302 712 227 744 333 048
Other receivables 27 670 5 685 10 407
Cash and cash equivalents 212 954 183 395 206 877
Total assets 866 011 655 952 842 567
EQUITY AND LIABILITIES
Equity attributable to owners
of the parent 347 251 257 889 308 330
Non-controlling interest (39) (498) (527)
Total equity 347 212 257 391 307 803
Non-current liabilities
Long-term loans 13 2 257 71
Vendors for acquisition 24 400 23 333 33 333
Deferred taxation liabilities 5 246 4 414 4 434
Current liabilities
Trade and other liabilities 423 021 301 516 414 542
Deferred revenue 40 986 34 127 41 066
Taxation payable 25 133 32 914 41 318
Total equity and liabilities 866 011 655 952 842 567
Net asset value per share (cents) 458,0 347,1 406,7
Net tangible asset value per
share (cents) 136,1 113,0 121,9
Condensed Consolidated Statement of Cash Flows
Reviewed Reviewed Audited
six months six months twelve months
to to to
31 January 31 January 31 July
2010 2009 2009
R`000
Net income before tax and
separately disclosed items 72 976 52 981 116 493
Non-cash items 15 092 3 280 16 664
Working capital changes 20 022 12 373 1 537
Cash generated by operating
activities 108 090 68 634 134 694
Investment income 4 112 6 774 10 602
Finance costs (1 670) (1 212) (2 788)
Taxation paid (42 093) (8 516) (25 927)
Dividend paid (19 180) (15 568) (15 253)
Net cash inflow from operating
activities 49 259 50 112 101 328
Net cash inflow from investing
activities 11 524* 26 524 19 312
Net cash outflow from financing
activities (54 706) (12 381) (32 903)
Net movement in cash and cash
equivalents 6 077 64 255 87 737
Cash and cash equivalents at
beginning of the period 206 877 119 140 119 140
Cash and cash equivalents at
end of the period 212 954 183 395 206 877
* Investing activities include additions and negligible disposals of property,
plant and equipment of R9,7 million.
Condensed Consolidated Statement of Changes in Equity
Share Share
capital premium Reserves
R`000
Audited balance at 31 July 2008 628 46 423 7 416
Profit for the period - - 3 291*
Other comprehensive income - - (824)
Total comprehensive income for the period - - 2 467
Dividends - - -
Other transactions with owners - 580 (4 854)
Reviewed balance at 31 January 2009 628 47 003 5 029
Profit for the period - - 8 499*
Other comprehensive income - - 697
Total comprehensive income for the period - - 9 196
Dividends - - -
Other transactions with owners - 12 870 (11 362)
Audited balance at 31 July 2009 628 59 873 2 863
Profit for the period - - 8 859*
Other comprehensive income - - (1 577)
Total comprehensive income for the period - - 7 282
Dividends - -
Other transactions with owners ** 9 889 5 035
Reviewed balance at 31 January 2010 637 60 762 15 180
Non-con-
Retained trolling Total
earnings interests equity
R`000
Audited balance at
31 July 2008 187 540 776 242 783
Profit for the period 33 257 (1 274) 35 274
Other comprehensive income - - (824)
Total comprehensive income
for the period 33 257 (1 274) 34 450
Dividends (15 568) - (15 568)
Other transactions with owners - - (4 274)
Reviewed balance at 31 January 2009 205 229 (498) 257 391
Profit for the period 44 578 (29) 53 048
Other comprehensive income - - 697
Total comprehensive income
for the period 44 578 (29) 53 745
Dividends 315 - 315
Other transactions with owners (5 156) - (3 648)
Audited balance at 31 July 2009 244 966 (527) 307 803
Profit for the period 44 886 488 54 233
Other comprehensive income - - (1 577)
Total comprehensive income for
the period 44 886 488 52 656
Dividends (19 180) - (19 180)
Other transactions with owners ** - - 5 933
Reviewed balance at 31 January 2010 270 672 (39) 347 212
* IFRS 2 adjustment required in terms of share option schemes
** Movement in treasury shares
Commentary
ABOUT EOH
The EOH vision is to be the best technology and business solutions company to
work for, partner with and invest in. EOH endeavours to form life-long
partnerships by developing business and IT strategies, supplying and
implementing solutions and managing enterprise-wide systems and processes for
medium to large clients.
Today EOH is regarded as a leader in technology and business solutions. EOH is
the largest enterprise applications provider in South Africa and is one of the
top 5 IT service providers in the region. EOH has a `Partner for Life`
philosophy which has resulted in excellent relations with its technology
partners and clients.
EOH operates in all the major centres of South Africa and in the United
Kingdom.
KEY OBJECTIVES
EOH`s business philosophy is driven by four key objectives, namely:
Best people - To attract, develop and retain the best people.
Partner for life - To develop lifelong mutually beneficial partnerships with
both its customers and technology partners.
Right first time - Excellent, professional planning and execution in all that
it does.
Profitable growth - Grow the business while ensuring corresponding growth in
the bottom line.
OPERATING MODEL
EOH operates in the areas of consultancy, technology and outsourcing and offers
a wide range of solutions to its clients across all major industry verticals.
Consulting
EOH Consulting services include:
- Diagnostic and Analysis;
- IT Strategy and Architecture;
- Business Operations Optimisation;
- Technology Selection;
- Change Management; and
- Project Management.
Technology
EOH`s technology offerings are based on best in class software processes and
methodologies and include the following:
- Enterprise Applications;
- Enterprise Performance Management;
- Enterprise Security Management;
- Service Management;
- Project and Portfolio Management;
- Software Testing and Quality Management;
- Business Technology Optimisation;
- Network Solutions and Optimisation; and
- Mining and Manufacturing Solutions.
Outsourcing
EOH has a broad range of outsourcing services that it offers to its clients
which include:
- Infrastructure Managed Services;
- Technical and Application Managed Services;
- Desktop Managed Services;
- Business Process Managed Services;
- Resourcing; and
- Software as a Service (SaaS).
BASIS OF PREPARATION
The reviewed condensed consolidated interim results have been prepared in
accordance with International Financial Reporting Standards, IAS 1 -
Presentation of Financial Statements and IAS 34 - Interim Reporting, the South
African Companies Act 1973 (Act 61 of 1973) as amended (`Act`) and the Listings
Requirements of the JSE Limited. The accounting policies have been applied
uniformly throughout the Group and have been consistently applied with those in
the prior year, except for the changes as noted below, which are supported by
reasonable and prudent judgements and estimates.
ACCOUNTING POLICIES
The accounting policies and methods of computation applied in the preparation
of these interim results are consistent with those applied in the preparation
of the Group`s annual financial statements for the period ended 31 July 2009,
except that during the period under review, the Group adopted the revised IAS 1
- Presentation of Financial Statements. Such adoption did not have any material
effect on the financial performance or position of the Group.
The principal effect of this change is as follows:
- The revised standard affects the presentation of owner changes in equity and
comprehensive income.
- The Group Income Statement has been replaced by the Condensed Consolidated
Statement of Comprehensive Income.
- Under the revised standard, all owner changes in equity are presented in the
Condensed Consolidated Statement of Changes in Equity while all non-owner
changes in equity are presented under `Other Comprehensive Income`, a component
of the Condensed Consolidated Statement of Comprehensive Income.
- In addition, the titles `Balance Sheet` and `Cash Flow Statement` are
replaced by `Statement of Financial Position` and `Statement of Cash Flows`
respectively.
As a result of the above, the disclosure changes are as follows:
- The movement in the effective portion of the cash flow hedge and the related
deferred tax is presented under `Other Comprehensive Income` in the Statement
of Comprehensive Income and in the Statement of Changes in Equity, whereas
previously it was only disclosed in the Statement of Changes in Equity.
REVIEW OPINION
The condensed consolidated interim results for the six months ended 31 January
2010 have been reviewed by the Group auditors, IAPA Johannesburg, Chartered
Accountants (SA) and their review report is available for inspection at the
registered office of EOH.
FINANCIAL RESULTS
The board of directors is satisfied with the performance for the period under
review. The balance sheet is strong with no debt and substantial cash resources
to support future growth and sustainability. The EOH board thanks its people,
customers and technology partners for their contribution during the period
under review.
EOH has again put in a strong performance with revenue increasing by 40,6% to
R787 million and profit before tax up by 37,7% to R73 million. The growth is
split between organic growth and growth as a result of recent acquisitions. EPS
and HEPS have grown significantly by about 30% with cash in the business
remaining high at R213 million.
SEGMENTAL REPORTING
EOH`s revenue is derived from the provision of services (consulting, systems
implementation and integration and managed services), software and
infrastructure products.
Services Software
(R000`s) 2010 2009 2010 2009
Revenue 400 644 332 289 190 107 140 550
Net profit before tax 35 431 30 581 26 936 18 482
Infrastructure Total
(R000`s) 2010 2009 2010 2009
Revenue 196 514 86 903 787 265 559 742
Net profit before tax 10 609 3 918 72 976 59 981
BUSINESS COMBINATIONS
EOH acquired the business of Glacier Consulting, an IBM infrastructure and
services business with effect from 1 November 2009. The purchase price of R36
million, to be settled partly in cash and the allocation of EOH shares, has
profit warranties totalling R14,5 million (net profit after tax) over an
eighteen month period. Goodwill and intangible assets of R30,6 million have
been recognised. This acquisition is strategic in nature taking EOH to new
clients and increasing EOH`s range of services.
SUBSEQUENT EVENTS/CAPITAL COMMITMENTS
There have been no significant events since the end of the period under review
and the date of this report. There was no significant capital expenditure
authorised as at 31 January 2010.
TRANSFORMATION
EOH has 34,8% broad-based effective black ownership. 44,6% of EOH`s staff are
black as is 60% of EOH`s board of directors. EOH has an `AA` BEE rating (Level
3 contributor) and has progressed along all seven pillars of transformation.
EOH is committed to inclusive transformation involving all its people and
stakeholders.
FUTURE PLANS
EOH will continue to grow organically and by strategic acquisitions which
complement its business. In line with this, EOH will be increasing its managed
services business - in both infrastructure and application managed services -
such services being provided onsite at the client and remotely through its
hosting and networking facilities. EOH will also be expanding its Business
Process Outsourcing (BPO) suite of offerings and IT security services and
solutions.
The EOH brand is gaining traction and the solution offering to its clients is
expanding. EOH has a solid customer base of over 2500 clients, a wide spread of
offerings, a strong annuity base and a healthy balance sheet. EOH has the
ability, the management, the track record and the resources to do this
effectively.
DIVIDENDS
It is EOH`s practice to consider the declaration of dividends only at the end
of each financial year. A dividend of 30 cents per share was paid on 2 November
2009.
Asher Bohbot
Chief Executive Officer
16 March 2010
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)
Pumeza Bam, Lucky Khumalo, 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 Capital
Auditors
IAPA Johannesburg Chartered Accountants Inc.
Date: 16/03/2010 08:00:03 Produced by the JSE SENS Department.
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