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EOH
EOH
EOH - EOH Holdings Limited - Reviewed Condensed Consolidated Interim Results for
the six months ended 31 January 2011
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 2011
Revenue up 44,8%
PBT up 49,5%
EPS up 37,1%
HEPS up 37,4%
Condensed Consolidated Statement of Comprehensive Income
Reviewed Reviewed Audited
six months six months twelve months
to to to
31 January % 31 January 31 July
R`000 2011 change 2010 2010
Revenue 1 139 746 44,8 787 265 1 733 361
Cost of sales (672 235) (511 571) (1 111 451)
Gross margin 467 511 275 694 621 910
Results from operating 107 186 70 534 154 104
activities
Investment income 4 500 4 112 8 213
Finance costs (2 614) (1 670) (3 149)
Profit before taxation 109 072 49,5 72 976 159 168
Taxation (38 913) (27 602) (54 504)
Profit for the period 70 159 54,6 45 374 104 664
Profit attributable to:
Owners of the parent 69 809 44 886 104 396
Non-controlling interest 350 488 268
Profit for the period 70 159 45 374 104 664
Other comprehensive
income:
Foreign currency (867) (1 961) (3 821)
translation differences
for foreign operations
Net change in fair value - 384 384
of cash flow hedges
transferred to profit or
loss
Total comprehensive 69 292 58,2 43 797 101 227
income for the period
Total comprehensive
income attributable to:
Owners of the parent 68 942 43 309 100 959
Non-controlling interest 350 488 268
Total comprehensive 69 292 58,2 43 797 101 227
income for the period
Total number of shares in 83 228 75 817 79 737
issue (000`s)
Weighted average number 72 446 63 848 66 686
of shares in issue
(000`s)
Diluted number of shares 81 296 73 170 73 486
(000`s)
Earnings per share 96,4 37,1 70,3 156,5
(cents)
Diluted earnings per 85,9 40,1 61,3 142,1
share (cents)
Headline earnings
reconciliation
Profit after taxation
attributable to:
Ordinary shareholders 69 809 44 886 104 396
Net profit on disposal of (93) (199) (81)
assets
Headline earnings 69 716 44 687 104 315
Headline earnings per 96,2 37,4 70,0 156,4
share (cents)
Diluted headline earnings 85,8 40,4 61,1 142,0
per share (cents)
Condensed Consolidated Statement of Financial Position
Reviewed Reviewed Audited
six months six months twelve months
to to to
31 January 31 January 31 July
R`000 2011 2010 2010
ASSETS
Non-current assets
Property, plant and equipment 65 186 40 859 52 652
Goodwill and intangible assets 418 693 244 031 350 368
Loans receivable 30 801 2 932 28 771
Deferred taxation assets 30 863 25 704 28 749
Current assets
Inventory 9 978 9 149 10 107
Trade and other receivables 424 038 330 382 394 871
Trade receivables 403 657 302 712 377 448
Other receivables 20 381 27 670 17 423
Cash and cash equivalents 228 383 212 954 266 671
Total assets 1 207 942 866 011 1 132 189
EQUITY AND LIABILITIES
Equity attributable to owners of 495 268 347 251 446 525
the parent
Non-controlling interest (1 690) (39) (259)
Total equity 493 578 347 212 446 266
Non-current liabilities
Finance lease obligations 82 13 174
Other financial liabilities 43 917 24 400 33 414
Deferred taxation liabilities 3 577 5 246 4 714
Current liabilities
Trade and other liabilities 614 883 423 021 556 640
Deferred revenue 45 833 40 986 49 571
Taxation payable 6 072 25 133 41 410
Total equity and liabilities 1 207 942 866 011 1 132 189
Net asset value per share 593,0 458,0 560,0
(cents)
Net tangible asset value per 90,0 136,1 120,3
share (cents)
Condensed Consolidated Statement of Cash Flows
Reviewed Reviewed Audited
six months six months twelve months
to to to
31 January 31 January 31 July
R`000 2011 2010 2010
Net income before tax and 109 072 72 976 159 168
separately disclosed items
Non-cash items 23 360 15 092 26 646
Working capital changes (14 738) 20 022 27 635
Cash generated by operating 117 694 108 090 213 449
activities
Investment income 4 500 4 112 8 213
Finance costs (2 614) (1 670) (3 149)
Taxation paid (73 785) (42 093) (58 361)
Dividends paid (25 553) (19 180) (19 109)
Net cash inflow from operating 20 242 49 259 141 043
activities
Net cash inflow/(outflow) from 2 091 11 524 (20 566)
investing activities
Net cash outflow from financing (60 621) (54 706) (60 683)
activities
Net movement in cash and cash (38 288) 6 077 59 794
equivalents
Cash and cash equivalents at 266 671 206 877 206 877
beginning of the period
Cash and cash equivalents at end 228 383 212 954 266 671
of the period
Condensed Consolidated Statement of Changes in Equity
Share Share
R`000 capital premium Reserves
Audited balance at 1 August 2009 628 59 873 2 863
Total comprehensive income for the - - (1 577)
period
Dividends paid - - -
Share based payments - - 8 859
Other transactions with owners 9 889 5 035
Reviewed balance at 31 January 2010 637 60 762 15 180
Total comprehensive income for the - - (1 860)
period
Dividends paid - - -
Share based payments - - 6 714
Other transactions with owners 60 28 366 6 413
Audited balance at 31 July 2010 697 89 128 26 447
Total comprehensive income for the - - (867)
period
Dividends paid - - -
Share based payments - - 8 793
Acquisition of minority interest - - -
Movement in treasury shares (36) (3 299) (32 180)
Issue of share capital 35 29 765 -
The effect of consolidating The - - 1 946
Mthombo Trust
Reviewed balance at 31 January 2011 696 115 594 4 139
Non-con-
Retained trolling Total
R`000 earnings interests equity
Audited balance at 1 August 2009 244 966 (527) 307 803
Total comprehensive income for the 44 886 488 43 797
period
Dividends paid (19 180) - (19 180)
Share based payments - - 8 859
Other transactions with owners - - 5 933
Reviewed balance at 31 January 2010 270 672 (39) 347 212
Total comprehensive income for the 59 510 (220) 57 430
period
Dividends paid 71 - 71
Share based payments - - 6 714
Other transactions with owners - - 34 839
Audited balance at 31 July 2010 330 253 (259) 446 266
Total comprehensive income for the 69 809 350 69 292
period
Dividends paid (25 223) - (25 223)
Share based payments - - 8 793
Acquisition of minority interest - (1 781) (1 781)
Movement in treasury shares - - (35 515)
Issue of share capital - - 29 800
The effect of consolidating The - - 1 946
Mthombo Trust
Reviewed balance at 31 January 2011 374 839 (1 690) 493 578
Commentary
EOH VISION
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 three IT service
providers in the region. EOH operates in South Africa, Africa and the United
Kingdom.
KEY OBJECTIVES
EOH`s business philosophy is driven in five focus areas -
Best people Attract, develop and retain the best people.
Partner for life Develop lifelong mutually beneficial partnerships
with clients and technology partners.
Right first time Professionalism and excellence in all that we do.
Transformation Transform and manage diversity.
Profitable growth Grow the business while ensuring corresponding
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
We help clients create value and architect change through our range of
consulting services -
- Diagnosis and Analysis;
- IT Strategy and Architecture;
- Business Operations Optimisation;
- Technology Selection;
- Change Management;
- Project Management.
Technology
EOH provides technology services at a strategic, operational and tactical level.
We are technology agnostic and apply a best of breed approach to all our
technology engagements -
- Enterprise Applications;
- Business Intelligence;
- Enterprise Security Management;
- Systems Integration;
- Enterprise Content Management;
- Software Testing and Quality Management;
- Business Technology Optimisation;
- Network Solutions and Optimisation;
- Infrastructure.
Outsourcing
EOH has a broad range of IT outsourcing and business processing outsourcing
service offerings. We provide outsourcing services for a broad range of needs
and we package our services to suit our clients` needs -
- Infrastructure Managed Services;
- Technical and Application Managed Services;
- Software as a Service (SaaS);
- Business Process Outsourcing;
- Resourcing;
- Cloud Computing;
- Infrastructure as a Service (IaaS).
BASIS OF PREPARATION
These reviewed condensed consolidated interim results have been prepared in
accordance with 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 (`JSE`). The accounting policies have been
consistently applied with those in the prior year.
ACCOUNTING POLICIES
The accounting policies and methods of computation applied in the preparation of
these reviewed condensed consolidated interim results are consistent with those
applied in the preparation of the group`s annual financial statements for the
year ended 31 July 2010.
REVIEW OPINION
The condensed consolidated interim results for the six months ended 31 January
2011 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 of EOH (`board`) is satisfied with the performance for
the six months 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 period under review. Revenue increased by 44,8% to R1 139,7 million
and profit before tax is up by 49,5% to R109,1 million. The growth is
attributable to a combination of both organic growth (66%) and recent
acquisitions (34%). EPS and HEPS have grown significantly by 37,1% and 37,4%
respectively with cash on hand of R228,4 million.
BUSINESS COMBINATIONS
During the period under review, EOH broadened its Business Process Outsourcing
activities through the acquisition of the businesses of Elixir Group
(Proprietary) Limited, Pinnacle Health Solutions (Proprietary) Limited and
Compensation Technologies Holdings (Proprietary) Limited. It further expanded
its services in the Microsoft infrastructure, applications and development space
with the acquisition of the business of Belay Solutions (Proprietary) Limited
and its subsidiaries. Whilst these acquisitions collectively enhance EOH`s
service offerings and contribute to its profitability, none of these
acquisitions on their own were significant. The purchase price paid over and
above the net asset value of these businesses amounting to R73 million has been
taken to goodwill. Businesses acquired during the period under review are
subject to profit warranties relating to periods ending after January 2012.
Should these be met, an additional R61 million will be paid to the vendors. No
operations were closed or disposed of during the six months under review.
SEGMENTAL REPORTING
EOH`s revenue is derived from the provision of services (consulting, systems
implementation, systems integration and managed services), software (software
sales and maintenance revenue) and infrastructure products.
Services Software
(R000`s) 2011 2010 2011 2010
Revenue 649 971 400 644 230 646 190 107
Net profit before tax 63 471 35 431 30 991 26 936
Infrastructure Total
(R000`s) 2011 2010 2011 2010
Revenue 259 129 196 514 1 139 746 787 265
Net profit before tax 14 610 10 609 109 072 72 976
SUBSEQUENT EVENTS AND CAPITAL COMMITMENTS
There have been no significant events since the end of the six months under
review and the date of this report. There was no significant capital expenditure
authorised as at 31 January 2011.
TRANSFORMATION
EOH has 30,7% broad-based effective black ownership. Of the group`s over 2 300
employees, 44,4% are black as is 60,0% of the board. EOH has an `AA` BEE rating
(Level 3 contributor). 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 will grow its managed services and expand its IT and Business Process
Outsourcing and applications businesses.
EOH is well positioned to provide cloud computing services - it has its own
infrastructure, all the major applications, IT management technology and
security skills. We see this as a major growth area.
EOH is driving its service offering into the Public Sector, particularly in the
areas of Health, Education and Local Government. EOH is also looking to offer
its services into Africa and to further extend its off-shoring offerings to
Europe.
EOH has the ability, the management, the people, the track record and the
financial resources to continue to grow aggressively.
DIRECTORATE
There have been no changes to the board during the period under review, up to
and including the date of this report.
DIVIDENDS
It is EOH`s practice to declare dividends at the end of each financial year. A
dividend of 36 cents per share was paid on 1 November 2010.
Asher Bohbot
Chief Executive Officer
15 March 2011
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 Marwala
Tebogo Skwambane
Rob Sporen (Dutch)
Company secretary
Adri Els
Sponsor
Merchantec Capital
Auditors
IAPA Johannesburg Chartered Accountants Inc.
Date: 15/03/2011 08:00:01 Produced by the JSE SENS Department.
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