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ERP
ERP
ERP.com - 2006 Reviewed Financial Results for the year ended 31 July 2006
ERP.com Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/010017/06)
Share code: ERP
ISIN: ZAE000043493
("ERP.com" or "the Group")
2006 REVIEWED FINANCIAL RESULTS
for the year ended 31 July 2006
CONDENSED INCOME STATEMENT
for the year ended 31 July 2006
31 July 31 July
Percentage 2006 2005
change R"000 R"000
Revenue (4) 164 959 172 022
Earnings before interest,
reorganisation and
retrenchment costs, taxation,
depreciation and amortisation (5) 35 398 37 117
Reorganisation and
retrenchment costs (4 142) -
Depreciation and amortisation (1 795) (1 401)
Profit from operations (18) 29 461 35 716
Interest received 1 769 3 490
Finance costs (5) (13)
Profit before taxation (20) 31 225 39 193
Taxation (15) (11 252) (13 211)
Current 10 942 10 312
Deferred taxation
- current year (1 447) 1 055
Deferred taxation
- tax rate change - 121
STC 1 757 1 723
Net profit for the year
attributable to shareholders (23) 19 973 25 982
Weighted average number of
shares on which earnings
per share is based ("000) 159 124 167 412
Earnings per share (cents) (19) 12,6 15,5
Headline earnings
per share (cents) (19) 12,6 15,5
Dividends per share (cents) (38) 5,0 8,0
Net asset value per
share (cents) (16) 33,0 39,2
Reconciliation between earnings
and headline earnings
Net profit for
the year attributable
to shareholders 19 973 25 982
(Profit)/loss on
disposal of assets (11) 7
Headline earnings 19 962 25 989
CONDENSED GROUP BALANCE SHEET
as at 31 July 2006
31 July 31 July
2006 2005
R"000 R"000
ASSETS
Non-current assets 9 502 9 304
Property, plant and equipment 2 861 4 110
Goodwill 2 726 2 726
Deferred taxation 3 915 2 468
Current assets 81 880 102 927
Inventories and contracts
in progress 8 210 1 211
Trade and other receivables 33 511 31 408
Cash and cash equivalents 40 159 70 308
Total assets 91 382 112 231
EQUITY AND LIABILITIES
Capital and reserves 51 554 64 851
Share capital and premium 159 1 245
Retained income 51 395 63 606
Current liabilities 39 828 47 380
Accounts payable and other provisions 34 653 39 764
South African Revenue Services 5 175 7 616
Total equity and liabilities 91 382 112 231
CONDENSED GROUP CASH FLOW STATEMENT
for the year ended 31 July 2006
31 July 31 July
2006 2005
R"000 R"000
Cash flows from operating
activities (10 400) 7 320
Profit before taxation 31 225 39 193
Adjustments including those
not affecting the flow of funds 21 (2 248)
Operating income before
working capital changes 31 246 36 945
Increase in working capital (14 214) (4 177)
Cash generated from operations 17 032 32 768
Net interest received 1 764 3 477
Taxation paid (15 140) (15 146)
Dividends paid (14 056) (13 779)
Cash flows from investing activities (535) (3 324)
Cash flows from financing activities (19 214) (3 803)
Proceeds from issue of shares 656 609
Share issue expenses (5) (5)
Own shares acquired by subsidiary (19 865) (4 407)
Net (decrease)/increase in cash
and cash equivalents (30 149) 193
Cash and cash equivalents at
beginning of year 70 308 70 115
Cash and cash equivalents at
end of year 40 159 70 308
CONDENSED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 July 2006
31 July 31 July
2006 2005
R"000 R"000
Share capital 159 168
Balance at beginning of year 168 168
Issued during the year 4 3
Own shares acquired
by subsidiary (13) (3)
Share premium - 1 077
Balance at beginning of year 1 077 4 880
Issued during the year 652 606
Share issue expenses written off (5) (5)
Own shares acquired
by subsidiary (1 724) (4 404)
Retained income 51 395 63 606
Balance at beginning of year 63 606 51 403
Net income for the year 19 973 25 982
Dividends declared (14 056) (13 779)
Own shares acquired
by subsidiary (18 128) -
Total capital and reserves 51 554 64 851
SEGMENTAL ANALYSIS
Percentage
Analysis of turnover split change 2006 2005
Information security 3 95 107 92 179
Data and content
management (27) 28 163 38 752
Enterprise applications 1 41 689 41 091
Total (4) 164 959 172 022
COMMENTS
As anticipated 2006 was a challenging year for the Group.
As is evidenced by the segmental analysis provided, the Information Security
and Enterprise Applications divisions achieved modest revenue growth whilst
Data and Content Management contracted severely resulting in the Group"s 4%
revenue decline. Severe cost management within the Security division resulted
in improved profit before tax (PBT) performance but combined losses in other
divisions amounting to R5,5 million (of which R4,1 million was once off
restructuring charges) saw Group PBT and Earnings Per Share decline by 20% and
19% respectively.
Although cash equivalents declined from R70 million to R40 million, the
balance sheet remains strong. The decline in cash may be attributed to the
expenditure of R20 million on the purchase of the Group"s shares in the open
market, R16 million in payment of dividends and STC and an increase of R14
million in working capital. The primary cause of the increase in working
capital was a significant increase in contracts in progress attributable to
the Enterprise Applications division.
STRATEGIC REVIEW
Management and the Board are of the opinion that the core strengths of the
Group lie in the provision of products and services that address Information
Risk Management (IRM). IRM may loosely be defined as the digitisation,
storage, security, distribution and recovery of information. The acquisition
of IRM technologies and services by organisations is driven to a large extent
by regulatory and governance requirements and the continuing, significant
increases in digital information availability and `always on" network
connectivity.
SecureData is already a leading player in the information security and storage
arena and Solutions for Business Intelligence is a solid niche player in
information digitisation, storage and distribution. Both these companies
address IRM requirements and it is intended that they will form the foundation
of the future strategy of the Group.
Negotiations to dispose of those operations which do not support the IRM
strategy have been initiated and further announcements in this regard will be
made in the near future.
It is anticipated that a more focused strategy centered on IRM will enable the
remaining operations to achieve organic growth more in line with historic
trends and will, additionally, allow the Group to be more aggressive in
seeking acquisitions that will complement the Group"s current competence
within the strategic focus.
Prospects
The directors believe that the Group"s strategic focus will offer significant
opportunities for growth and expansion in the future. In the short term,
however, the Group has yet to finalise the disposal of non-strategic and loss
making divisions and until this has been accomplished, these divisions will
continue to be a drain on the Group"s financial and managerial resources.
Black Economic Empowerment
BLITEC (Black Information Technology Empowerment Company Limited) continues to
have a 24,3% shareholding in the Group. The Group and its subsidiaries remain
committed to the transformation process and to compliance with the ICT charter
and its provisions.
Declaration of Dividend and Special Dividend Number 5
In accordance with the Group"s dividend policy, a dividend of 30% of headline
earnings, amounting to 3,8 cents per share, has been declared. A special
dividend of 1,2 cents per share has also been declared bringing the total
dividend declared for the year to 5 cents per share.
In order to comply with the requirements from STRATE the relevant details of
the final and special dividends are:
Event Date
Last day to trade "cum" dividend Friday, 24 November
Shares to commence
trading "ex" dividend Monday, 27 November
Record date Friday, 1 December
Payment date Monday, 4 December
No share certificates may be dematerialised or rematerialised between Monday,
27 November 2006 and Friday, 1 December 2006, both dates inclusive.
Independent review
The financial statements have been reviewed by KPMG Inc., whose audit review
is available for inspection at the Group"s registered address.
BASIS OF PREPARATION
These condensed financial statements have been prepared in accordance
with International Financial Reporting Standards ("IFRS") with the date of
transition to IFRS for the Group being 1 August 2004. Current application of
IFRS may differ from that applied at 31 July 2006 due to ongoing review.
Should the application change, the reported results may also change. These are
the Group"s first financial statements prepared in accordance with IFRS and
therefore in terms of IFRS 1 - First time adoption of IFRS, the Group has
restated the opening reserves at 1 August 2004, the consolidated balance
sheets as at 1 January 2005 and 31 July 2005 and the consolidated income
statements and cash flow statements for the periods then ended.
EFFECT OF THE FIRST TIME ADOPTION OF IFRS
IFRS 2 - Share based payments
In accordance with the transitional provisions, the Group has elected to apply
IFRS 2 to all grants of equity-settled awards granted after 7 November 2002,
which were unvested as of 1 July 2004. Expenses relating to share-based
payments are now recognised in the income statement. The application of this
policy has had no effect on the opening reserves as at 1 August 2004.
IFRS3 - Business combinations
In accordance with the requirements of IFRS 3 the Group discontinued
amortisation of goodwill as of 1 August 2004, which was the beginning of the
first annual accounting period after 31 March 2004. As of 1 August 2004, the
accumulated amortisation on goodwill was netted off against the original cost of
goodwill. In terms of the transitional provisions of IFRS 3, this transition
has had no effect on the opening reserves as at 1 August 2004.
Directorate
Mr. Peter Forsyth resigned as a non-executive director of the Group with
effect from 21 October 2005.
Mr AJ Ritzlmayr was appointed to the Board, as an executive director, with
effect from 7 December 2005.
For and behalf of the board
P Sneddon DTK Brazier
Chairman Chief executive officer
27 September 2006
ERP.com Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/010017/06)
("ERP.com" or "the Group")
Directors:
P Sneddon* (Chairman),
DTK Brazier (Chief Executive Officer),
CJ Lessing*, TN Mali*, YT Moerane*, AJ Ritzlmayr*
* Independent non-executive director
Company secretary:
A Ritzlmayr (e-mail: andreasr@erpcom.co.za)
Registered office:
ERP.com House, Nanyuki Office Park,
69 Nanyuki Drive, Sunninghill, Sandton 2157.
(PO Box 2880, Rivonia 2128)
Transfer secretaries:
Computershare Investor Services 2004 (Proprietary) Limited
Registration number 2004/003647/07
70 Marshall Street, Johannesburg 2001
(PO Box 61051, Marshalltown 2107)
Date: 02/10/2006 02:00:13 PM Produced by the JSE SENS Department
