| Wed 15 Sep 2010, 8:00 | | EOH - EOH Holdings Limited - Reviewed Condensed Consolidated Results for the |
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EOH
EOH
EOH - EOH Holdings Limited - Reviewed Condensed Consolidated Results for the
year ended 31 July 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 Results for the year ended 31 July 2010
- Revenue up 38,1%
- PBT up 36,6%
- EPS up 29,7%
- HEPS up 28,3%
- Cash up 28,9%
- Dividend up 20,0%
Condensed Consolidated Statement of Comprehensive Income
Reviewed Audited
R`000 2010 % change 2009
Revenue 1 733 361 38,1 1 255 067
Cost of sales (1 111 451) (797 421)
Gross margin 621 910 457 646
Results from operating activities 154 104 109 456
Investment income 8 213 10 602
Finance costs (3 149) (2 788)
Share of profit of equity accounted - -
investments
Net impairment of assets - (424)
Impairment of investment/loss on - (353)
disposal of associated companies
Profit before taxation 159 168 36,6 116 493
Taxation (54 504) (39 961)
Profit for the year 104 664 36,8 76 532
Other comprehensive income:
Foreign currency translation 237 (934)
differences for foreign operations
Net change in fair value of cash (3 674) 807
flow hedges transferred to profit
or loss
Total comprehensive income for the 101 227 32,5 76 405
year
Profit attributable to:
Owners of the parent 104 396 77 835
Non-controlling interest 268 (1 303)
Profit for the year 104 664 76 532
Total comprehensive income
attributable to:
Owners of the parent 100 959 77 708
Non-controlling interest 268 (1 303)
Total comprehensive income for the 101 227 76 405
year
Total shares in issue (000`s) 79 737 75 817
Weighted average number of shares 66 686 64 477
in issue (000`s)
Diluted number of shares (000`s) 73 486 74 221
Earnings per share (cents) 156,5 29,7 120,7
Diluted earnings per share (cents) 142,1 35,5 104,9
Headline earnings reconciliation
Profit after taxation attributable
to
Ordinary shareholders 104 396 77 835
Profit on disposal of assets (80) (32)
Net impairment of assets - 424
Impairment of investment/loss on - 353
disposal of associated companies
Headline earnings 104 316 78 580
Headline earnings per share (cents) 156,4 28,3 121,9
Diluted headline earnings per share 142,0 34,1 105,9
(cents)
Condensed Consolidated Statement of Financial Position
Reviewed Audited
R`000 2010 2009
ASSETS
Non-current assets
Property, plant and equipment 52 652 37 170
Goodwill and intangible assets 349 968 215 936
Investment in associate companies - -
Loans receivable 28 771 4 833
Deferred taxation assets 28 749 26 424
Current assets
Inventory 10 107 7 872
Trade and other receivables 394 871 343 455
Trade receivables 374 561 333 048
Other receivables 20 310 10 407
Cash and cash equivalents 266 671 206 877
Total assets 1 131 789 842 567
EQUITY AND LIABILITIES
Equity attributable to owners of the parent 446 525 308 330
Non-controlling interest (259) (527)
Total equity 446 266 307 803
Non-current liabilities
Finance lease obligation 174 71
Other financial liabilities 33 414 33 333
Deferred taxation liabilities 4 714 4 434
Current liabilities
Trade and other liabilities 556 240 414 542
Deferred revenue 49 571 41 066
Taxation payable 41 410 41 318
Total equity and liabilities 1 131 789 842 567
Net asset value per share (cents) 560,0 406,7
Net tangible asset value per share (cents) 121,1 121,9
Condensed Consolidated Statement of Cash Flows
Reviewed Audited
R`000 2010 2009
Net income before tax and separately 159 168 116 493
disclosed items
Non-cash items 26 646 16 664
Working capital changes 27 635 1 537
Cash generated by operating activities 213 449 134 694
Investment income 8 213 10 602
Finance costs (3 149) (2 788)
Taxation paid (58 361) (25 927)
Dividend paid (19 109) (15 253)
Net cash inflow from operating activities 141 043 101 328
Net cash inflow/(outflow) from investing (20 566) 19 312
activities
Net cash outflow from financing activities (60 683) (32 903)
Net movement in cash and cash equivalents 59 794 87 737
Cash and cash equivalents at beginning of 206 877 119 140
period
Cash and cash equivalents at end of period 266 671 206 877
Condensed Consolidated Statement of Changes in Equity
Share Share
R`000 capital premium Reserves
Audited balance at 1 August 2008 628 46 423 7 416
Total comprehensive income for the - - (127)
year
Dividends paid - - -
Movement in treasury shares (22) (2 165) (11 154)
The effect of consolidating the - - (3 397)
Mthombo Trust
IFRS 2 adjustment* - - 11 790
Post acquisition adjustment - - (1 665)
Reclassification adjustment** - 5 156 -
Issue of share capital 22 10 459 -
Audited balance at 31 July 2009 628 59 873 2 863
Total comprehensive income for the - - (3 437)
year
Dividends paid - - -
Movement in treasury shares 30 2 962 9 438
The effect of consolidating the - - 2 010
Mthombo Trust
IFRS 2 adjustment* - - 15 573
Issue of share capital 39 26 293 -
Reviewed balance at 31 July 2010 697 89 128 26 447
Non-
Retained controlling Total
R`000 earnings interests equity
Audited balance at 1 August 2008 187 540 776 242 783
Total comprehensive income for the 77 835 (1 303) 76 405
year
Dividends paid (15 253) - (15 253)
Movement in treasury shares - - (13 341)
The effect of consolidating the - - (3 397)
Mthombo Trust
IFRS 2 adjustment* - - 11 790
Post acquisition adjustment - - (1 665)
Reclassification adjustment** (5 156) - -
Issue of share capital - - 10 481
Audited balance at 31 July 2009 244 966 (527) 307 803
Total comprehensive income for the 104 396 268 101 227
year
Dividends paid (19 109) - (19 109)
Movement in treasury shares - - 12 430
The effect of consolidating the - - 2 010
Mthombo Trust
IFRS 2 adjustment* - - 15 573
Issue of share capital - - 26 332
Reviewed balance at 31 July 2010 330 253 (259) 446 266
* Adjustment required in terms of share option schemes.
** Adjustment to account for the reclassification of reserves in a subsidiary
company.
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 lifelong
partnerships by developing business and IT strategies, supplying and
implementing solutions and managing enterprise-wide systems and processes for
medium and 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 five IT service providers in the region.
EOH operates in South Africa, Africa and in the United Kingdom.
Key objectives
EOH`s business philosophy is driven by five focus areas -
Best people Attract, develop and retain the best people.
Partner for life Develop lifelong mutually beneficial partnerships
with both clients and technology partners.
Right first time Professional planning and excellence in all that
it does.
Transformation Transform and manage diversity.
Profitable growth Grow the business while ensuring growth in the
bottom line.
Operating model
EOH operates as an integrated business in the areas of consultancy, technology
and outsourcing and offers a wide range of solutions across all major industry
verticals.
Consulting
EOH Consulting services include -
- Diagnostics 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;
- Business Intelligence and Enterprise Performance Management;
- Enterprise Security Management;
- Service Management;
- Project and Portfolio Management;
- Software Testing, Monitoring 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:
- Hosting and Networking;
- Infrastructure Managed Services;
- Technical and Application Managed Services;
- Desktop Managed Services;
- Software as a Service (SaaS);
- Resourcing; and
- Business Process Outsourcing.
Basis of preparation
The reviewed condensed consolidated results have been prepared in accordance
with International Financial Reporting Standards ("IFRS"), IAS 1 -
Presentation of Financial Statements, IAS 34 - Interim Financial Reporting,
the South African Companies Act 1973 (Act 61 of 1973) as amended (`Act`) and
the Listings Requirements of JSE Limited. The accounting policies have been
consistently applied with those in the prior year, except for the changes as
noted below, which are supported by reasonable and prudent judgments and
estimates.
Accounting policies
The accounting policies and methods of computation applied in the preparation
of these results are consistent with those applied in the preparation of the
group`s annual financial statements for the year ended 31 July 2009, except
that during the year under review, the group adopted the revised IAS 1 -
Presentation of Financial Statements. Such adoptions did not have any material
effect on the 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 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 results for the year ended 31 July 2010 have been
reviewed by the group auditors, IAPA Johannesburg Chartered Accountants Inc.
and their unmodified review report is available for inspection at the
registered office of EOH.
Financial results
The board of directors (`board`) is satisfied with the performance for the
year under review. The statement of financial position is strong with
substantial cash resources to support future growth and sustainability. The
board thanks its people, clients and technology partners for their
contribution during the year under review.
Revenue increased by 38,1% to R1 733,4 million and profit before tax is up by
36,6% to R159,2 million. The growth is attributable to a combination of both
organic growth and recent acquisitions. EPS and HEPS have grown significantly
by 29,7% and 28,3% respectively with cash increasing to R266,7 million.
Business combinations
During the year under review, EOH increased its skills and resource base in
infrastructure sales, development and infrastructure managed services through
the acquisition of the operations of businesses trading as Glacier Consulting,
Think iT, Connection 42 and BT Cape. EOH further enhanced its recruitment
capability through the acquisition of the skills and resources of Abacus
Recruitment.
Whilst these acquisitions collectively enhance EOH`s service offering to its
clients and contribute to EOH`s profitability, none of the acquisitions were
material. No operations were either closed or disposed of during the year
under review.
Segmental reporting
EOH`s revenue is derived from the provision of services (consulting, systems
implementation and integration and managed services), software (includes new
software sales and maintenance revenue) and infrastructure products.
Services Software
(R000`s) 2010 2009 2010 2009
Revenue 917 628 645 052 405 641 380 932
Net profit before tax 102 042 56 987 41 182 52 685
Infrastructure Total
(R000`s) 2010 2009 2010 2009
Revenue 410 092 229 083 1 733 361 1 255 067
Net profit before tax 15 944 6 821 159 168 116 493
Capital commitments
There have been no significant events since the end of the year under review
and the date of this report. There was no significant capital expenditure
authorised as at 31 July 2010.
Transformation
EOH has 34,8% broad-based effective black ownership. Of the group`s over 1 900
employees, 48,1% are black as is 55% of the board. 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 both organically and by strategic acquisitions which
complement its business.
EOH is increasing its managed services business - in both infrastructure and
applications, such services being provided onsite at the client and remotely
through its hosting and network offerings. EOH is also expanding its Business
Process Automation, Storage and Virtualisation, Application Testing and
Monitoring, and its IT security solutions.
EOH has a solid client base of over 2 500 clients in all major industry
verticals. EOH`s end-to-end offerings enables it to craft comprehensive
solutions for its large strategic clients.
EOH has the ability, the management, the track record and the resources to
continue to grow aggressively.
Dividends
Notice is hereby given that a cash dividend of 36 cents (2009: 30 cents) per
share (the dividends) has been declared and is payable to shareholders
recorded in the books at the close of business on Friday, 29 October 2010.
Shareholders are advised that the last day of trade cum the dividend will be
Friday, 22 October 2010. The shares will trade ex the dividend as from Monday,
25 October 2010. Payment will be made on Monday, 1 November 2010. Share
certificates may not be dematerialised or rematerialised during the period
Monday, 25 October 2010 to Friday, 29 October 2010, both days inclusive.
Asher Bohbot
Chief Executive Officer
15 September 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, John King, Dion Ramoo, Jane Thomson
Non-executive directors
Dr Mathews Phosa (Chairman), Lucky Khumalo
Prof. Tshilidzi MarwalaTebogo Skwambane, Rob Sporen (Dutch)
Company secretary
Adri Els
Sponsor
Merchantec Capital
Auditors
IAPA Johannesburg Chartered Accountants Inc.
Systems make it possible...
People make it happen
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