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EOH
EOH
EOH - EOH Holdings Limited - Reviewed Condensed Consolidated Results for the
six months ended 31 January 2012
EOH Holdings Limited
Incorporated in the Republic of South Africa
(Registration number 1998/014669/06)
Share code: EOH ISIN: ZAE000071072
(`EOH` or `group`)
Reviewed Condensed Consolidated Results for the six months ended 31 January
2012
Revenue up 44,1%
PBT up 54,9%
HEPS up 31,6%
Cash up 70,2%
Financial Highlights
Revenue R1 642,3 million up 44,1%
Profit before tax R169,2 million up 54,9%
HEPS 126,9 cents up 31,6%
Cash R388,8 million up 70,2%
Condensed Consolidated Statement of Comprehensive Income
for the period ended 31 January 2012
Reviewed Reviewed Audited
six months six months twelve months
to to to
31 January 31 January 31 July
2012 2011 2011
R`000 % change R`000 R`000
Revenue 1 642 339 44,1 1 139 746 2 428 973
Cost of sales (925 598) (672 235) (1 528 392)
Gross margin 716 741 467 511 900 581
Results from operating 173 571 107 318 232 879
activities
Investment income 7 313 4 500 9 157
Finance costs (11 777) (2 614) (7 646)
Share of profit of 46 - -
equity accounted
investees
Profit before taxation 169 153 54,9 109 204 234 390
Taxation (62 636) (38 913) (85 986)
Profit for the period 106 517 51,5 70 291 148 404
Other comprehensive
income:
Foreign currency 638 (867) 1 742
translation
differences for
foreign operations
Total comprehensive 107 155 54,3 69 424 150 146
income for the period
Profit attributable
to:
Owners of the parent 106 466 69 941 147 273
Non-controlling 51 350 1 131
interest
Profit for the period 106 517 70 291 148 404
Total comprehensive
income attributable
to:
Owners of the parent 107 104 69 074 149 015
Non-controlling 51 350 1 131
interest
Total comprehensive 107 155 69 424 150 146
income for the period
Total number of shares 96 610 83 228 95 389
in issue (000`s)
Weighted average 83 708 72 446 74 985
number of shares in
issue (000`s)
Diluted number of 95 216 81 296 85 342
shares (000`s)
Earnings per share 127,2 31,8 96,5 196,4
(cents)
Diluted earnings per 111,8 30,0 86,0 172,6
share (cents)
Headline earnings
reconciliation
Profit after taxation
attributable to:
Ordinary shareholders 106 466 69 941 147 273
Profit on disposal of (2 162) (93) (254)
assets
Net impairment of 1 907 - -
assets
Headline earnings 106 211 69 848 147 019
Headline earnings per 126,9 31,6 96,4 196,1
share (cents)
Diluted headline 111,5 29,8 85,9 172,3
earnings per share
(cents)
Condensed Consolidated Statement of Financial Position
as at 31 January 2012
Reviewed Reviewed Audited
six months six months twelve months
to to to
31 January 31 January 31 July
2012 2011 2011
R`000 R`000 R`000
ASSETS
Non-current asset
Property, plant and equipment 99 985 65 186 80 325
Goodwill and intangible assets 610 004 377 626 550 355
Investment in associate 1 048 - -
companies
Finance lease receivables 55 695 - -
Other financial assets 15 267 27 958 23 436
Deferred tax 37 000 30 863 38 427
Current assets
Inventories 28 540 9 978 30 662
Trade and other receivables 669 748 424 038 575 488
Trade receivables 640 695 403 657 545 629
Other receivables 29 053 20 381 29 859
Current tax receivable 44 799 33 725 17 846
Cash and cash equivalents 388 754 228 383 321 507
Total assets 1 950 840 1 197 757 1 638 046
EQUITY AND LIABILITIES
Equity attributable to owners 921 256 525 946 709 926
of the parent
Non-controlling interest 51 (1 690) 1 131
Total equity 921 307 524 256 711 057
Non-current liabilities
Finance lease obligation 631 82 3 714
Other financial liabilities 239 161 43 917 145 988
Deferred tax 7 244 3 577 618
Current liabilities
Trade and other liabilities 653 691 540 295 677 245
Deferred income 88 536 45 833 68 261
Current tax payable 40 270 39 797 31 163
Total equity and liabilities 1 950 840 1 197 757 1 638 046
Net asset value per share 953,6 631,9 744,2
(cents)
Net tangible asset value per 322,2 178,2 167,3
share (cents)
Condensed Consolidated Statement of Cash Flows
for the period ended 31 January 2012
Reviewed Reviewed Audited
six months six months twelve months
to to to
31 January 31 January 31 July
2012 2011 2011
R`000 R`000 R`000
Net income before tax and 169 153 109 204 234 390
separately disclosed items
Non-cash items 53 923 23 228 80 963
Working capital changes (56 506) (14 738) (165 570)
Cash generated by operating 166 570 117 694 149 783
activities
Investment income 7 313 4 500 9 157
Finance costs (11 777) (2 614) (7 646)
Taxation paid (78 626) (73 785) (129 609)
Net cash inflow from operating 83 480 45 795 21 685
activities
Net cash (outflow)/inflow from (101 603) 2 091 (52 436)
investing activities
Net cash inflow/(outflow) from 85 370 (86 174) 85 587
financing activities
Net movement in cash and cash 67 247 (38 288) 54 836
equivalents
Cash and cash equivalents at 321 507 266 671 266 671
beginning of period
Cash and cash equivalents at 388 754 228 383 321 507
end of period
Condensed Consolidated Statement of Changes in Equity
for the period ended 31 January 2012
Shares
to be
Share Share issued to
capital premium Reserves vendors
R`000 R`000 R`000 R`000
Audited balance at 1 696 89 128 26 147 33 138
August 2010 as restated
Total comprehensive income - - (867) -
for the period
Dividends paid - - - -
Share-based payment - - 8 793 -
Other transactions with - 26 466 (30 229) 12 882
owners
Reviewed balance at 31 696 115 594 3 844 46 020
January 2011
Total comprehensive income - - 2 609 -
for the period
Dividends paid - - - -
Share-based payment - - 3 906 -
Other transactions with 111 160 789 (39 159) (21 608)
owners
Audited balance at 31 July 807 276 383 (28 800) 24 412
2011
Total comprehensive income - - 638 -
for the period
Dividends paid - - - -
Share-based payment - - 8 952 -
Other transactions with 54 8 105 109 550 18 629
owners
Reviewed balance at 31 861 284 488 90 340 43 041
January 2012
Non-
control-
Retained ling Total
earnings interest equity
R`000 R`000 R`000
Audited balance at 1 315 083 (259) 463 933
August 2010 as restated
Total comprehensive income 69 941 350 69 424
for the period
Dividends paid (25 232) - (25 232)
Share-based payment - - 8 793
Other transactions with - (1 781) 7 338
owners
Reviewed balance at 31 359 792 (1 690) 524 256
January 2011
Total comprehensive income 77 332 781 80 722
for the period
Dividends paid - - -
Share-based payment - - 3 906
Other transactions with - 2 040 102 173
owners
Audited balance at 31 July 437 124 1 131 711 057
2011
Total comprehensive income 106 466 51 107 155
for the period
Dividends paid (41 064) - (41 064)
Share-based payment - - 8 952
Other transactions with - (1 131) 135 207
owners
Reviewed balance at 31 502 526 51 921 307
January 2012
Commentary
About EOH
EOH is a leader in technology and business solutions, the largest implementer
of enterprise applications and a provider of end-to-end solutions. EOH is
active in South Africa, Africa and the United Kingdom and has a strong black
economic empowerment (`BEE`) profile.
EOH was listed on the JSE Limited (`JSE`) in 1998 and since then has grown to
over 3 700 people and more than 2 500 clients across all major industries.
EOH has achieved compounded annual revenue growth in excess of 40% since
inception.
EOH`s purpose
- To provide technology, knowledge, skills and organisational ability
critical to Africa`s development and growth.
- To be an ethical and relevant force for good and to play a positive role in
our society, beyond normal business.
EOH`s vision
To be the best technology and knowledge service provider in Africa: to work
for, to partner with and to invest in.
EOH`s Business Philosophy
EOH is about people and its business philosophy is driven through five areas:
- Best people To attract, develop and retain the best
people.
- Partner for life To develop life-long, mutually beneficial
partnerships with our customers and
partners.
- Right 1st time To ensure professional planning and
execution and to have pride in all we do.
- Sustainable transformation To transform and to manage diversity.
- Profitable growth To grow the top and bottom line similarly
while remaining entrepreneurial.
Operating model
The EOH operating model is based on a two-dimensional approach; lines of
business and industry verticals. The lines of business are clustered around
consulting, technology and business process outsourcing.
Consulting
EOH Consulting Services helps clients to create value and architect change in
a rapidly changing environment. These services include: knowledge services,
business operations improvement, IT strategy, IT architecture, project
management and change management.
Technology
Over the years, EOH has earned widespread recognition for the skill of its
people, the quality of its processes and the calibre of its methodologies.
EOH`s technology offerings include:
- Enterprise applications;
- Information management;
- IT security;
- IT management and optimisation;
- Software development and integration;
- Hosting and networking;
- IT infrastructure;
- Intelligent infrastructure;
- Technology off-shoring;
- Cloud services;
- Managed services; and
- Transformational outsourcing.
Business Process Outsourcing (`BPO`)
EOH`s aim is to help its clients derive maximum value from their operations
by outsourcing specific business processes. These include finance and
accounting, corporate legal services, customer services, procurement and
human capital.
The industries in which EOH operates include:
- Financial Services;
- Telecommunications;
- Manufacturing and Logistics;
- Public Sector;
- Health;
- State-owned entities;
- Retail; and
- Mining.
Basis of preparation
The reviewed condensed consolidated results for the six months ended 31
January 2012 (`period under review`) have been prepared by the financial
director, John King, CA(SA), in accordance with International Financial
Reporting Standards (`IFRS`), IAS 1 - Presentation of Financial Statements,
IAS 34 - Interim Financial Reporting, the AC 500 Standards as issued by the
Accounting Practice Board, the South African Companies Act, 2008 (Act 71 of
2008), as amended, and the JSE Listings Requirements.
Accounting policies
The accounting policies and methods of computation applied in the preparation
of these reviewed condensed consolidated results for the period under review,
which are based on reasonable judgements and estimates, are in accordance
with IFRS and are consistent with those applied in the preparation of the
group`s annual financial statements for the year ended 31 July 2011.
Review opinion
The condensed consolidated results for the six months ended 31 January 2012
have been reviewed by the group`s auditors, PKF (Gauteng) Inc., Registered
Auditors and Chartered Accountants (SA) 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 period under review. The statement of financial position is strong
with substantial cash resources to ensure sustainability to support future
growth. Revenue increased by 44,1% to R1 642,3 million and profit before tax
is up by 54,9% to R169,2 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 by 31,8% and 31,6%,
respectively, with cash increasing to R388,8 million.
Business combinations
During the period under review, EOH`s primary focus was to increase its
Managed Services, Microsoft and BPO businesses and, accordingly, the group
made several acquisitions in these areas.
- Stanley Security Solutions Proprietary Limited (`Stanley Security`)
The group acquired 100% of the issued share capital of Stanley Security, a
company specialising in security equipment, for a cash consideration of R83
million on 7 November 2011.
- Airborne Consulting Proprietary Limited (`Airborne Consulting`)
The group acquired 100% of the issued share capital of Airborne Consulting
with effect from 1 December 2011 for an amount of R33 million. Airborne
Consulting specialises in software development, management consulting,
infrastructure and managed services. The business was acquired to augment
EOH`s existing Microsoft businesses.
- Other smaller add-on acquisitions during the period under review
The group acquired the entire business of Benguela Health Proprietary
Limited, Blue Platinum Consulting Proprietary Limited, Coros Consulting
Services Proprietary Limited, Systems Consulting and Training Services
Proprietary Limited, and LMM Occupational Health Inc.
The aggregated turnover of businesses acquired during the period under review
amounted to R105,6 million contributing R11,2 million to profit before tax.
Further information regarding these acquisitions is contained in EOH`s
Integrated Annual Report 2011, note 36, which can be viewed on EOH`s website:
www.eoh.co.za
Segmental reporting
EOH`s revenue for the six months ended 31 January 2012 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
R`000 2012 2011 2012 2011
Revenue 1 026 919 649 971 264 172 230 646
Net profit before tax 111 904 63 603 36 211 30 991
Infrastructure Total
R`000 2012 2011 2012 2011
Revenue 351 248 259 129 1 642 339 1 139 746
Net profit before tax 21 038 14 610 169 153 109 204
All areas of EOH`s business operations have seen growth during the period
under review, with a shift to services in line with EOH`s strategic intent.
Services revenue has increased to R1 026,9 million, a 58,0% increase over the
previous corresponding period, with the margins increasing from 9,8% to
10,9%. Software sales have increased to R264,2 million (increase of 14,5%)
with an increase in margins from 13,4% to 13,7%. Infrastructure sales have
also increased by 35,6% with the margins increasing from 5,6% to 6,0%.
Subsequent events and capital commitments
There have been no significant events since the end of the period under
review. There was no significant capital expenditure authorised as at 31
January 2012.
Transformation
EOH`s current black shareholding is 37,4%, and 54,0% of EOH`s staff are
black. 60% of the board members are black. EOH`s community involvement is
focused on the Maths Centre programme which has as its primary objective to
equip teachers with programmes to develop learner competency in maths. EOH
also has an extensive graduate and school leavers programme.
EOH is certified as a large enterprise Level 3 contributor (AA) rating with
BEE procurement recognition of 138,0% as a Value Adding Vendor. EOH has a
holistic approach to transformation: ownership; management and control;
employment equity; skills development; preferential procurement; enterprise
development; socio-economic development and employee/or relations.
Future plans
EOH will continue to grow both organically and acquisitively. There are
opportunities to grow EOH`s solutions and service offerings and to strengthen
EOH`s industry verticals. The main areas of growth will be in infrastructure
and application managed services, cloud offerings, enterprise applications,
information management, BPO, security and intelligent infrastructure
management.
EOH feels that as a South African enterprise it has the responsibility to
actively contribute its knowledge and resources to improve Public Sector
effectiveness. The Public Sector represents a major business opportunity and
will form a part of its future growth.
Prospects in the rest of Africa are encouraging and EOH sees opportunities in
this territory.
EOH`s job creation initiative is gaining momentum. With the assumption that
skills equal jobs, EOH has embarked on a learnership development programme
whereby 620 young people will be given the opportunity to participate in year-
long learnership and trainee programmes.
EOH is working with its international partners and large customers on plans
to avoid sending jobs overseas and rather to bring global jobs to South
Africa. EOH is also lobbying government to create regulations and incentives
to keep and bring jobs into South Africa. EOH has initiated an off-shoring
business, as well as created an internal role for job creation.
EOH has the resources, track record, know-how, ability and capability to
continue to grow aggressively.
Directorate
There have been no changes to the board during the period under review. At
the Annual General Meeting held on 6 March 2012, directors who were eligible
for re-election in terms of the policy of rotation, were re-elected.
Asher Bohbot
Chief Executive Officer
14 March 2012
Registered address
Block D, EOH Business Park
Osborne Lane, Bedfordview, 2007
Tel: (011) 607 8100
Fax: (011) 616 9929
Website: www.eoh.co.za
Email: info@eoh.co.za
Company Secretary
Adri Els
Directorate
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)
Sponsor
Merchantec Capital
Auditors
PKF (Gauteng) Inc.
Registered Auditors and Chartered Accountants (SA)
Tel: +27 (11) 607 8100
EOH Business Park, Gillooly`s View
Osborne Lane, Bedfordview, 2007
www.eoh.co.za
Date: 14/03/2012 07:05:08 Produced by the JSE SENS Department.
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