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EOH
EOH
EOH - Audited Financial Report and dividend declaration
EOH Holdings Limited
(formerly Enterprise Outsourcing Holdings Limited)
Incorporated in the Republic of South Africa
Company registration no: 1998/014669/06
Share code: EOH & ISIN: ZAE000071072
("EOH" or "the Group")
AUDITED FINANCIAL REPORT
FOR THE YEAR ended 31 July 2006
- Revenue up 20%
- PBT up 53%
- HEPS up 20%
Partner for life
GROUP INCOME STATEMENT
Audited Audited Audited
New IFRS New IFRS Old SA
GAAP
12 months 12 months 12 months
to 31 July % to 31 to 31 July
July
(R000"s) 2006 change 2005 2005
Revenue 503 292 19,8 420 225 420 225
Operating income 55 207 38 908 38 957
Interest 508 597 597
Income from 123 295 295
associate
Impairment of - (3 348) (3 348)
goodwill
Net income before 55 838 53,2 36 452 36 501
taxation
Taxation (18 381) (13 286) (12 699)
Earnings 37 457 61,7 23 166 23 802
Add back - - 3 348 3 348
Impairment of
goodwill
Headline earnings 37 457 41,3 26 514 27 150
Shares in issue 70 538 51 267 51 267
("000)
Weighted shares in 59 118 50 305 50 305
issue ("000)
Diluted shares in 68 686 62 585 62 585
issue ("000)
Earnings per share 63,4 37,5 46,1 47,3
(cents)
Diluted earnings 54,5 37,0 38,0
per share (cents)
Headline earnings 63,4 20,3 52,7 54,0
per share (cents)
Diluted headline 54,5 42,4 43,4
earnings per share
(cents)
EARNINGS RECONCILIATION
Audited Audited
12 months 12 months
to 31 July to 31 July
(R000"s) 2006 2005
Old SA GAAP 41 245 23 802
IAS 16 Property, plant and 184 (157)
equipment
IFRS 2 Share-based payments (4 617) (1 932)
IAS 38 Intangible assets 1 227 2 040
IAS 17 Leases (243) -
Deferred tax on above (339) (587)
New IFRS 37 457 23 166
Net change (3 788) (636)
GROUP CASH FLOW STATEMENT
Audited Audited Audited
New IFRS New IFRS Old SA GAAP
12 months 12 months 12 months
to 31 July to 31 July to 31 July
(R000"s) 2006 2005 2005
Operating income 55 838 36 452 36 501
Non-cash items 9 361 10 614 10 565
Working capital (11 648) 11 919 11 919
changes
Cash generated by 53 551 58 985 58 985
operations
Taxation paid (20 467) (9 148) (9 148)
Dividend paid (6 622) (5 063) (5 063)
Interest 508 597 597
Cash from operating 26 970 45 371 45 371
activities
Cash effect of (7 430) (17 808) (17 808)
investing activities
Cash effect of (3 390) (20 901) (20 901)
financing activities
Net cash change for 16 150 6 662 6 662
period
Cash at beginning of 68 357 61 695 61 695
period
Cash at end of period 84 507 68 357 68 357
GROUP BALANCE SHEET
Audited Audited Audited
New IFRS New IFRS Old SA GAAP
31 July 31 July 31 July
(R000"s) 2006 2005 2005
ASSETS
Non-current assets
Property, plant and 12 359 8 929 9 291
equipment
Intangible assets 78 700 71 622 76 188
Investment in 848 815 815
associate
Loans receivable 132 132 132
Deferred tax 6 589 4 889 4 240
Current assets
Trade receivables 119 124 82 589 82 589
Other receivables 5 260 4 081 4 081
Inventory 2 460 1 295 1 295
Cash 84 507 69 080 69 080
Total assets 309 979 243 432 247 711
EQUITY AND LIABILITIES
Ordinary shareholders" 150 485 84 759 89 038
interest
Non-current liabilities
Borrowings 4 211 3 653 3 653
Current liabilities
Trade and other 99 379 76 190 76 190
liabilities
Vendors for 11 679 32 864 32 864
acquisition
Bank overdraft - 723 723
Deferred revenue 36 102 36 456 36 456
Taxation 8 123 8 787 8 787
Total equity and 309 979 243 432 247 711
liabilities
Net asset value per 213,3 165,3 173,7
share (cents)
STATEMENT OF CHANGES IN ORDINARY SHAREHOLDERS" INTEREST
Ordinary
share-
Share Share Retained holders"
(R000"s) capital premium Reserves earnings interest
31.7.2004 Audited 471 8 306 471 58 300 67 548
- old GAAP
IAS 16 Property, (206) (206)
plant and
equipment
IFRS 2 Share-based 1 772 (1 772)
payments
IAS 21 Forex 300 (300)
reserve adjustment
IAS 38 Intangible (6 606) (6 606)
assets
Deferred tax on 1 237 1 237
above
31.7.2004 Audited 471 8 306 2 543 50 653 61 973
- new IFRS
Treasury shares - 10 1 089 131 1 230
consolidation
EOH Share Trust - 14 490 272 776
consolidation
Share issues 6 912 918
Currency (169) (169)
translation
Earnings - old 23 802 23 802
GAAP
Earnings - IFRS 1 932 (636) 1 296
adjustments
Dividends (5 067) (5 067)
31.7.2005 Audited 501 10 797 4 709 68 752 84 759
- new IFRS
Treasury shares - (4) (2 671) 269 (2 406)
consolidation
EOH Share Trust - 6 180 (53) 133
consolidation
Currency (10) (10)
translation
Earnings 4 617 37 457 42 074
Dividends (6 652) (6 652)
Share issues 193 55 345 55 538
EOH Mthombo Trust (92) (22 859) (22 951)
- consolidation
31.7.2006 Audited 604 40 792 9 532 99 557 150 485
COMMENTARY
GROUP PROFILE
EOH is a business and technology solutions provider creating lifelong
partnerships by developing business and IT strategies, supplying and
implementing solutions and managing enterprise-wide business systems and
processes for medium to large clients.
EOH operates as a fully integrated business in the following three clusters
of business units:
Consulting - under the EOH Consulting brand are business units offering
services to the public and private sectors ranging from strategic and
business process consulting, programme and project management services,
change management and education. EOH Consulting also develops IT strategy,
advises on enterprise architecture, develops and reviews IT governance and
risk management.
Technology - through a number of business units, EOH is able to sell,
implement and support a range of world-class business applications
including: ERP, CRM, Business Intelligence, Manufacturing Execution Systems
(MES), Technology Performance Management and Business Technology
Optimisation (BTO) solutions.
Outsourcing - EOH offers comprehensive maintenance and support of clients"
IT infrastructure and applications through the rendering of full IT
Outsourcing, Application Hosting and Managed Services.
EOH has a presence in all major centres in South Africa and Botswana and
operates throughout Africa.
BASIS OF PREPARATION
With effect from 31 July 2004 (`the transition date"), the Group has
adopted the International Financial Reporting Standards (`IFRS") making use
of certain exemptions provided for under IFRS 1 (First Time Adoption of
IFRS). These results are prepared in accordance with International
Financial Reporting Standards ("IFRS") and the South African Companies Act,
1973.
The Group"s auditors, IAPA Johannesburg Chartered Accountants (SA), have
audited the financial information for the period to 31 July 2006. Their
unqualified audit report is available for inspection at the registered
office of EOH.
EFFECT OF FIRST TIME ADOPTION OF IFRS
In accordance with the first time adoption of IFRS (per IFRS 1), the Group
has prepared an opening balance sheet at 31 July 2004 (`the transition date
balance sheet"). Changes to the transition date balance sheet are recorded
through the statement of changes in ordinary shareholders" interest.
As reported last year, the effect of implementing IAS 17 (Leases) was not
considered material and no adjustment was made. IAS 17 is now applied to
all new leases entered into after 31 July 2005 and the effect of this
application is shown separately in the results.
IAS 16 (Property, Plant and Equipment) requires that the useful life and
residual values of all assets be reassessed at each balance sheet date.
Under SA GAAP the useful life and residual value of an asset were
determined on recognition of the asset and depreciated accordingly.
IAS 38 (Intangible Assets) requires that the useful life of intangible
assets be reassessed at each balance sheet date. Under SA GAAP the useful
life of an asset was determined on recognition of the intangible asset and
amortised accordingly.
IFRS 2 (Share-based payments) requires that a company expense the cost of
share options granted to employees.
The effect of applying the above statements has been accounted for, where
appropriate, as follows:
* via the statement of changes in ordinary shareholders" interest
*by restating the prior year comparatives and opening retained earnings
* by correctly reporting them in this year"s Income statement
The following exemptions have been applied in preparing the results:
Share-based payments
The Group has elected not to apply the provisions of IFRS 2 to share-based
awards granted either on or before 7 November 2002 or that had not vested
by 1 January 2005 (the effective date of IFRS 2).
Cumulative foreign currency translation differences
The Group has elected to reset the cumulative foreign currency translation
differences on foreign operations to zero at the transition date. From that
date on, all foreign currency translation differences on foreign operations
will be recognised directly to equity.
Business combinations
The Group has elected not to apply the requirements of IFRS 3 (Business
Combinations) retrospectively to acquisitions prior to the transition date.
As a result, the goodwill, net of amortisation, at the transition date
becomes the carrying value of that goodwill thereafter.
FINANCIAL RESULTS
The board is satisfied with the performance for the period under review.
Revenue growth is substantially organic as there were no material
acquisitions in the last two years. The operating margin improvement is
attributable to the continued focus on the operational efficiency and the
implementation of the shared services model. During the year we have
invested in new infrastructure, facilities and technology, as well as in
new business initiatives.
FUTURE PLANS
EOH has achieved critical mass and is considered a leader in the
consulting, technology and outsourcing space. EOH"s position as a major
player in this arena has been further enhanced with business being won
across all spheres of operations. The wide range of solutions offered to
various industries in both the public and private sector, in conjunction
with a well proven business model, strong management and financial
strength, bode well for its future growth.
EOH intends to provide a more complete set of offerings, which will include
technology infrastructure, enabling our clients to select EOH as a single
vendor for their technology needs.
EOH sees the strong market conditions in the technology field continuing
with EOH well positioned to capitalise on these. EOH"s growth strategy
remains focused on organic growth, supplemented by strategic acquisitions.
TRANSFORMATION
The Mthombo Trust is now fully operational. With the implementation of this
PDI employee ownership trust, EOH now has 26% black ownership. 38% of EOH
employees are PDI"s, so is 40% of the board.
In addition to this, EOH continues to make further progress in our seven-
point strategy of equity ownership, management and control, employment
equity, skills development, preferential procurement, enterprise
development and corporate social investment.
We see transformation as an ongoing process which all our people are
committed to and involved in.
DIVIDENDS
Notice is hereby given that a cash dividend of 14 cents per share (`the
dividend") has been declared and is payable to shareholders recorded in the
books at the close of business Friday, 27 October 2006. Shareholders are
advised that the last day to trade "cum" the dividend will be Friday, 20
October 2006. The shares will trade "ex" the dividend as from Monday, 23
October 2006. Payment will be made on Monday, 30 October 2006. Share
certificates may not be dematerialised or rematerialised during the period
Monday, 23 October 2006 to Friday, 27 October 2006 both days inclusive.
Asher Bohbot
Chief Executive Officer
Systems make it possible...
People make it happen!
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
DIRECTORS
Dr Mathews Phosa (Non-executive Chairman), Asher Bohbot (Chief Executive
Officer),
Rob Sporen (Dutch), Lucky Khumalo, Jane Thomson, Ken Cullinan, John King,
Dion Ramoo, Nkosinathi Khumalo, Steven Evans.
COMPANY SECRETARY
Adri Els
For further information, please contact Rob Sporen on the above numbers or
on cell: 082 444 7533
20 September 2006
Sponsor: Merchant Sponsors (Proprietary) Limited
Date: 20/09/2006 08:08:17 AM Produced by the JSE SENS Department
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