| Mon 12 Sep 2011, 8:14 | | EOH - EOH Holdings Limited - Reviewed Condensed Consolidated Resultsfor the year |
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EOH
EOH
EOH - EOH Holdings Limited - Reviewed Condensed Consolidated Resultsfor the year
ended 31 July 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 Resultsfor the year ended 31 July 2011
Revenue up 43,5%
PBT up 56,5%
EPS up 35,4%
HEPS up 35,2%
Dividend up 33,3%
Cash up 20,5%
Condensed Consolidated Statement of Comprehensive Income
Reviewed Restated Restated
R`000 2011 % change 2010 2009
Revenue 2 428 973 43,5 1 692 421 1 235 568
Cost of sales (1 528 392) (1 085 309) (797 421)
Gross margin 900 581 607 112 438 147
Results from operating 232 879 147 899 97 893
activities
Investment income 9 157 8 213 10 602
Finance costs (7 646) (6 353) (4 026)
Impairment of - - (353)
investment/loss on
disposal of associated
companies
Profit before taxation 234 390 56,5 149 759 104 116
Taxation (85 986) (51 980) (36 528)
Profit for the period 148 404 51,8 97 779 67 588
Other comprehensive
income:
Foreign currency 1 742 (3 821) 613
translation differences
for foreign operations
Total comprehensive 150 146 93 958 68 201
income for the period
Profit attributable to:
Owners of the parent 147 273 97 511 68 891
Non-controlling interest 1 131 268 (1 303)
Profit for the period 148 404 97 779 67 588
Total comprehensive
income attributable to:
Owners of the parent 149 015 93 690 69 504
Non-controlling interest 1 131 268 (1 303)
Total comprehensive 150 146 93 958 68 201
income for the period
Total number of shares in 95 389 79 737 75 817
issue (000`s)
Weighted average number 74 985 66 686 64 477
of shares in issue
(000`s)
Diluted number of shares 85 342 73 486 74 221
(000`s)
Earnings per share 197,9 35,4 146,2 106,8
(cents)
Diluted earnings per 173,8 31,0 132,7 92,8
share (cents)
Headline earnings
reconciliation
Profit after taxation
attributable to:
Ordinary shareholders 147 273 97 511 68 891
Profit on disposal of (254) (81) (32)
assets
Net impairment of assets - - 424
Impairment of - - 353
investment/loss on
disposal of associated
companies
Headline earnings 147 019 97 430 69 636
Headline earnings per 197,6 35,2 146,1 108,0
share (cents)
Diluted headline earnings 173,6 30,9 132,6 93,8
per share (cents)
Condensed Consolidated Statement of Financial Position
Reviewed Restated Restated
R`000 2011 2010 2009
ASSETS
Non-current assets
Property, plant and equipment 80 320 52 652 37 170
Goodwill and intangible assets 550 355 324 142 199 228
Other financial assets 23 436 25 061 4 217
Deferred taxation assets 38 427 28 749 26 692
Current assets
Inventory 30 662 10 107 7 873
Trade and other receivables 575 488 394 871 343 455
Cash and cash equivalents 321 507 266 671 206 877
Total assets 1 620 195 1 102 253 825 512
EQUITY AND LIABILITIES
Equity attributable to owners of the 709 940 464 188 319 346
parent
Non-controlling interest 1 131 (259) (527)
Total equity 711 071 463 929 318 819
Non-current liabilities
Finance lease obligation 3 714 174 71
Other financial liabilities 145 988 21 314 20 182
Deferred taxation liabilities 618 4 714 4 703
Current liabilities
Trade and other liabilities 677 226 521 141 399 353
Deferred revenue 68 261 49 571 41 066
Taxation payable 13 317 41 410 41 318
Total equity and liabilities 1 620 195 1 102 253 825 512
Net asset value per share (cents) 744,3 582,2 421,2
Net tangible asset value per share 167,3 175,6 158,4
(cents)
Condensed Consolidated Statement of Cash Flows
Reviewed Restated Restated
R`000 2011 2010 2009
Net income before tax and separately 234 391 149 758 104 116
disclosed items
Non-cash items 84 496 31 838 19 531
Working capital changes (53 612) 32 534 8 854
Cash generated by operating 265 275 214 130 132 501
activities
Investment income 9 157 8 213 10 602
Finance costs (7 646) (6 353) (4 026)
Taxation paid (129 687) (55 837) (22 495)
Dividend paid (25 223) (19 109) (15 253)
Net cash inflow from operating 111 876 141 044 101 329
activities
Net cash inflow/(outflow) from 10 284 (20 567) 19 311
investing activities
Net cash outflow from financing (67 324) (60 683) (32 902)
activities
Net movement in cash and cash 54 836 59 794 87 738
equivalents
Cash and cash equivalents at 266 671 206 877 119 139
beginning of period
Cash and cash equivalents at end of 321 507 266 671 206 877
period
Condensed Consolidated Statement of Changes in Equity
Share
capital and Retained
R`000 premium Reserves Earnings
Restated balance at 1 August 47 051 6 759 188 197
2008
Total comprehensive income for - 613 68 891
the period
Dividends paid - - (15 253)
Share based payment - 11 790 -
Shares to be issued 19 220 - -
Other transactions with owners 13 450 (16 216) (5 156)
Restated balance at 31 July 2009 79 721 2 946 236 679
Total comprehensive income for - (3 821) 97 511
the period
Dividends paid - - (19 109)
Share based payment - 15 573 -
Shares to be issued 13 916 - -
Other transactions with owners 29 324 11 448 -
Restated balance at 31 July 2010 122 961 26 146 315 081
Total comprehensive income for - 1 742 147 273
the period
Dividends paid - - (25 223)
Share based payment - 12 699 -
Minorities acquired - (2 562) -
Shares to be issued (8 725) - -
Other transactions with owners 187 367 (66 819) -
Reviewed balance at 31 July 2011 301 603 (28 794) 437 131
Non-
controlling Total
R`000 interests equity
Restated balance at 1 August 776 242 783
2008
Total comprehensive income for (1 303) 68 201
the period
Dividends paid - (15 253)
Share based payment - 11 790
Shares to be issued - 19 220
Other transactions with owners - (7 922)
Restated balance at 31 July 2009 (527) 318 819
Total comprehensive income for 268 93 958
the period
Dividends paid - (19 109)
Share based payment - 15 573
Shares to be issued - 13 916
Other transactions with owners - 40 772
Restated balance at 31 July 2010 (259) 463 929
Total comprehensive income for 1 131 150 146
the period
Dividends paid - (25 223)
Share based payment - 12 699
Minorities acquired 259 (2 303)
Shares to be issued - (8 725)
Other transactions with owners - 120 548
Reviewed balance at 31 July 2011 1 131 711 071
Restated of comparatives
The effect of the revision of the application of IFRS has the effect of
increasing net asset value by R17,3 million for the year ended 31 July 2010
(R10,6 million for F2009) and reducing profit for the period by R6,8 million and
R9,2 million (F2009).
IAS32 IFRS3 IAS39
2010 2009 2010 2009 2010 2009
Net profit for - - 4 174 7 588 2 711 1 356
the period
Equity (16 720) (24 831) 2 803 5 611 384 (740)
Goodwill and - - (9 118) (16 708) - -
intangible
Other financial 16 720 24 831 2 539 3 509 - -
liabilities
Loans - - - - (3 095) (616)
receivable
Commentary
About EOH
EOH is a leader in technology and business solutions, the largest implementer of
applications in South Africa and the top IT service provider in the region. It
has an end-to-end solution offering with a strong black economic profile. EOH
operates in South Africa, Africa and the United Kingdom.
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 in all major industries.
EOH was listed on the JSE Limited ("JSE") in 1998 and since then has grown to
over 3 200 people, more than 2 000 clients and has seen steady growth in revenue
over this period of more than 40% per annum.
EOH`s vision is to be the best technology and business solutions company to work
for, partner with and invest in. EOH`s credo is "Systems make it possible...
People make it happen".
EOH is all about its people and its business philosophy is driven through five
focus areas -
Best people To attract, develop and retain the best
people in all our chosen skill sets.
Partner for life To develop lifelong mutually beneficial
partnerships with both our customers and
technology partners.
Right first time To ensure excellent, professional planning
in all we do.
Sustainable transformation To transform and manage diversity.
Profitable growth To grow in a sensible way in the best
interest of our shareholders.
Operating model
The EOH operating model is based on providing professional advice and services
through the full technology lifecycle of its clients. The focus is on designing,
building and operating high-end solutions which will drive and support EOH`s
customers` business strategy. This model is underpinned by the three core skill
sets of Consulting, Technology and Outsourcing and supports business strategy
through to operations.
Consulting
EOH Consulting Services helps clients to understand and excel in a rapidly
changing business environment. EOH helps clients create value and architect
change through its range of consulting offerings. EOH draws from both global
best practice and hands-on experience to craft solutions and drive their
practical implementation. EOH Consulting Services defines IT strategies,
operations and governance. It optimises its clients` use of their existing
assets, reduces costs and leverages new revenue generating opportunities. EOH
aligns IT with business needs to ensure more effectiveness and agility through
cost reduction, standardisation and effective control. EOH sees consulting as a
driver for business change and ensures that at all times its clients maximise
business value through IT.
Technology
Technology has moved from being a back office activity to a source of
competitive advantage and a driver of Business Strategy. The choice of
technologies and the manner in which they are implemented can determine how
organisations perform in their given markets. EOH provides technology services
at a strategic, operational and tactical level. The EOH group is recognized as
leaders in both Business Intelligence ("BI") and Enterprise Resource Planning
("ERP") and is the biggest implementer of ERP systems in South Africa. EOH is
technology agnostic and applies a best of breed approach to all its technology
engagements.
EOH`s technology offerings include -
- Enterprise Systems;
- Information Management;
- Security Management;
- IT Management/Optimisation;
- Vendor representation.
Outsourcing
Outsourcing (Managed Services) has moved up the executive agenda. Now it is
looked on as a service that should be adopted to achieve competitive advantage.
Outsourcing in today`s world refers to a set of services which range from the
most basic to total transformational activities. It is one of the fastest
growing services in the IT sector globally. EOH has a broad outsourcing service
offering. EOH provides outsourcing services for a significant breadth of needs
and it packages its services to suit its clients` requirements. EOH`s
outsourcing services include -
- Managed Services;
- Infrastructure;
- Applications and technical;
- Office.
- Cloud Services;
- Managed applications and off shoring facilities;
- Business Process Outsourcing ("BPO".)
Basis of preparation
The reviewed condensed consolidated results for the year ended 31 July 2011
("year under review") 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 2008 (Act 71 of 2008) and the JSE Listings Requirements. 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
the results for the year under review 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 results for the year ended 31 July 2011 have been
reviewed by the group auditors, PKF (Pta) Inc. and their unmodified review
report is available for inspection at the registered office of EOH.
Financial results
The board of directors of EOH ("the 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 43,5% to R2 428,9 million and
profit before tax is up by 56,5% to R234,4 million. The growth is attributable
to a combination of both organic growth and recent acquisitions. Earnings per
share ("EPS") and Headline earnings per share ("HEPS") have grown significantly
by 35,4% and 35,2% respectively with cash increasing to R321,5 million.
Business combinations
During the year, EOH`s primary focus was to increase its Managed Services,
Microsoft and BPO Health businesses and accordingly the group made several
acquisitions in these areas.
EOH`s Managed Services offering was enhanced with the acquisition of TSS Managed
Services (Proprietary) Limited ("TSSMS") which focuses on delivering services to
the Public Sector. TSSMS was acquired for R130,5 million and their results
incorporated from 14 June 2011.
The group 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 for R55,9 million. Belay`s
results have been included from 3 February 2011.
EOH launched its Health BPO service offerings by acquiring the businesses of
Elixir Group (Proprietary) Limited and Pinnacle Health Solutions (Proprietary)
Limited from the same shareholders for an aggregate purchase consideration of
R72,0 million. The results of these operations have been incorporated with
effect from 1 October 2010.
EOH broadened its resourcing business through the acquisition of Compensation
Technologies Holdings (Proprietary) Limited with effect from 1 August 2010 and
its Legal BPO service offerings by acquiring CLS Consulting Services
(Proprietary) Limited with effect from 1 March 2011. The results of these two
operations have been incorporated from the effective dates.
EOH also acquired several small businesses in line with its cloud strategy, none
of which are regarded as material. No operations were closed off 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 (software sales
and maintenance revenue) and infrastructure products.
Services Software
R000`s 2011 2010 2011 2010
Revenue 1 456 952 876 688 479 171 405 641
Net profit before tax 155 174 92 632 57 752 41 183
Infrastructure Total
R000`s 2011 2010 2011 2010
Revenue 492 850 410 092 2 428 973 1 692 421
Net profit before tax 21 464 15 944 234 390 149 759
All areas of EOH`s businesses have seen growth during the year under review with
a significant shift to services in line with EOH`s strategic intent. Services
revenue has increased by R580,3 million, more than a 66% increase over the
corresponding period last year, with the margins remaining constant at 10,7%.
Software sales have increased by R73,5 million (increase of 18,1%) with an
increase in margins from 10,2% to 12,1%. Infrastructure sales have also
increased by 20,2% with the margins increasing from 3,9% to 4,4%.
Subsequent events and 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 2011.
Transformation
EOH is certified as a Large Enterprise Level 3 Contributor (AA) Rating with BEE
Procurement Recognition of 138% as a Value Adding Vendor. EOH has made
significant contributions to the Maths and Science Centre as part of its CSI
initiatives focused on education projects. This initiative is aimed at providing
technical support for maths and science teachers at a number of schools. EOH has
also been supporting several businesses as part of its Enterprise Development
programme.
EOH`s black shareholding is in excess of 30% of which 5% are black women. 60% of
the board members are black and 53% of EOH`s staff is black.
Future plans
EOH`s growth strategy will continue to be a combination of organic growth and
strategic acquisitions. The main growth areas will be infrastructure and
applications managed services, cloud offerings, enterprise applications,
Business Process Outsourcing ("BPO"), security and facilities management. Major
investments will be made in developing EOH`s offerings in Africa.
EOH feels that as a South African enterprise it has the responsibility to
actively contribute all that it knows and the resources that it has to improving
Public Sector delivery. EOH also believes that the Public Sector represents a
major business opportunity and if done well, could represent a substantial part
of its future growth. In this regard, EOH believes that it is able to add value
and contribute to improving the service delivery in the health sector,
education, municipalities and other government departments.
EOH has the ability, means and the resources to continue to grow aggressively.
Job creation initiative
EOH has embarked on a major job creation initiative to address the issue of the
8 million unemployed people in South Africa and it believes that government
alone cannot shoulder this responsibility. Unemployment is a major business risk
and business needs to provide leadership and do much more. EOH is creating a
team who will work with its top 300 clients and business partners to devise ways
and means of creating more jobs and to generate ideas and meaningful plans to
develop and train young people. A new skill is equivalent to a new job.
EOH will work jointly with existing government departments to mobilise existing
and new job creation initiatives.
Directorate
There have been no changes to the board during the period under review, up to
and including the date of this report.
Dividends
Notice is hereby given that a cash dividend of 48 cents (2010: 36 cents) per
share (the dividend) has been declared and is payable to shareholders recorded
in the books at the close of business on Friday, 28 October 2011. Shareholders
are advised that the last day of trade cum the dividend will be Friday, 21
October 2011. The shares will trade ex the dividend as from Monday, 24 October
2011. Payment will be made on Monday, 31 October 2011. Share certificates may
not be dematerialised or rematerialised during the period Monday, 24 October
2011 to Friday, 28 October 2011, both days inclusive.
Asher Bohbot
Chief Executive Officer
12 September 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
PKF (Pta) Inc.
Date: 12/09/2011 08:14:01 Produced by the JSE SENS Department.
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