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ERP
ERP
ERP - ERP.Com - Abridged Unaudited Interim Results for the six months ended 31
January 2007
ERP.Com Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/010017/06)
Share code: ERP & ISIN code: ZAE000043493
("ERP.com")
www.erpcom.co.za
2007 ABRIDGED UNAUDITED INTERIM RESULTS for the six months ended 31 January 2007
CONDENSED INCOME STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12
months
ended ended ended
31 Jan 31 Jan 31 July
Percentage 2007 2006 2006
change R`000 R`000 R`000
Revenue (14) 61 755 72 069 164 959
Earnings before 17 15 421 13 135 31 256
interest, taxation,
depreciation and
amortisation (EBITDA)
Depreciation and (43) (521) (917) (1 795)
amortisation
Profit from 22 14 900 12 218 29 461
operations
Interest received (48) 657 1 267 1 769
Finance costs (100) (2) - (5)
Profit before 15 15 555 13 485 31 225
taxation
Taxation 15 (4 511) (3 911) (11 252)
Profit from 15 11 044 9 574 19 973
continuing operations
Discontinued 100 (19 684) - -
operations
Net (loss)/profit for (190) (8 640) 9 574 19 973
the period
attributable to
shareholders
Weighted average (1) 158 945 160 232 159 124
number of shares on
which earnings per
share is based (`000)
Earnings per share 16 6,9 6,0 12,6
(cents)
Headline earnings per 13 6,7 6,0 12,6
share (cents)
Dividends per share - - - 5,0
(cents)
Net asset value per (18) 21,4 26,0 33,0
share (cents)
Reconciliation
between earnings and
headline earnings
Profit from 15 11 044 9 574 19 973
continuing operations
Net profit on 100 (334) - -
disposal of
investments/assets
Headline earnings 12 10 710 9 574 19 973
CONDENSED BALANCE SHEET
Unaudited Unaudited Audited
at at at
31 Jan 31 Jan 31 July
2007 2006 2006
R`000 R`000 R`000
ASSETS
Non-current assets 12 715 8 735 20 334
Property, plant and equipment 1 574 3 541 1 514
Goodwill 7 190 2 726 2 726
Deferred tax 3 951 2 468 2 897
Disposal group held for sale - - 13 197
Current assets 53 258 63 119 71 048
Inventories and contracts in 1 548 10 625 1 484
progress
Trade and other receivables 31 896 25 586 29 408
Cash and cash equivalents 19 814 26 908 40 156
Total assets 65 973 71 854 91 382
EQUITY AND LIABILITIES
Capital and reserves 33 948 40 752 51 554
Share capital and premium 159 157 159
Retained income 33 789 40 595 51 395
Non-current liabilities
Disposal group held for sale - - 4 364
Current liabilities 32 025 31 102 35 464
Accounts payable and other 33 516 26 143 30 408
provisions
South African Revenue Services (1 491) 4 959 5 056
Total equity and liabilities 65 973 71 854 91 382
CONDENSED CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Jan 31 Jan 31 July
2007 2006 2006
R`000 R`000 R`000
Cash flows from operating (14 846) (23 435) (10 400)
activities
Profit before tax 15 555 13 485 29 461
Adjustments including those not 317 (350) 1 784
affecting the flow of funds
Operating income before working 15 872 13 135 31 245
capital changes
Decrease/(increase) in working 556 (17 213) (14 213)
capital
Cash (utilised)/generated from 16 428 (4 078) 17 032
operations
Net interest received 655 1 267 1 764
Taxation paid (11 094) (6 568) (15 140)
Dividends paid (8 966) (14 056) (14 056)
Net cash from continuing (2 977) (23 435) (10 400)
operations
Utilised to discontinue (11 869) - -
operations
Cash flows from investing (5 496) (348) (535)
activities
Cash flows from financing - (19 617) (19 214)
activities
Proceeds from issue of shares - - 656
Share issue expenses - - (5)
Own shares acquired by subsidiary - (19 617) (19 865)
Net decrease in cash and cash (20 342) (43 400) (30 149)
equivalents
Cash and cash equivalents at 40 156 70 308 70 308
beginning of period
Cash and cash equivalents at end 19 814 26 908 40 159
of period
CONDENSED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Jan 31 Jan 31 July
2007 2006 2006
R`000 R`000 R`000
Share capital 159 157 159
Balance at beginning of period 159 168 168
Issued during the period - -
Own shares acquired by subsidiary - (11) (9)
Share premium - - -
Balance at beginning of period 1 724 1 077 1 077
Issued during the period - - 652
Share issue expenses written off - - (5)
Own shares acquired by subsidiary (1 724) (1 077) (1 724)
Retained income 33 789 40 595 51 395
Balance at beginning of period 51 395 63 606 63 606
Net profit for the period (8 640) 9 574 19 973
Dividends declared (8 966) (14 056) (14 056)
Own shares acquired by subsidiary - (18 529) (18 128)
Total capital and reserves 33 948 40 752 51 554
COMMENTS
STRATEGIC REVIEW
As announced previously the group has embarked upon a strategy to become a
dominant provider of products and services that address Information Risk
Management (IRM). The group has made significant inroads into fulfilling
this vision during the period under review.
The group has completed the disposal of businesses not deemed to support an IRM
strategy. The combined effect of the disposal of Customised Solutions
(Pty) Limited and the business of iServe (Pty) Limited amounted to an
operating loss in discontinued operations of R19,6 million and a capital
profit on disposal of R334 000.
The group acquired the business of Value Added Distribution (Pty) Limited (VAD)
and successfully integrated its operations into our information security
operation. VAD provides significant presence and capabilities in the
firewall market as well as additional distribution agencies which we will
be able to leverage.
Brett Parker was appointed Managing Director of the security division with
effect from January 2007. Brett was most recently Vice President,
Territory Sales, EMEA for SAP AG and brings significant executive
management, sales and channel development expertise to the company.
OPERATIONAL REVIEW
The board is satisfied with the performance of the group`s continuing operations
in the first half of the financial year. In accordance with IAS33, the
combined operating loss from discontinued operations, as detailed above,
of R19,6 million has been excluded from the calculation of earnings per
share (EPS) and headline earnings per share (HEPS) for the period, while
the combined capital profit on the disposals of R334 000 has been
excluded from the calculation of HEPS. This, combined with revenue growth
in the continuing operations of 49%, has enabled the group to show EPS of
6,9 cents and HEPS of 6,7 cents, reflecting growth of 16% and 13%
respectively.
In addition to the operating losses incurred in discontinued operations, the
group spent R10,1 million in payment of dividends and STC and R4,0
million on acquisitions. Notwithstanding these disbursements the balance
sheet remains strong with cash and equivalents of R19,6 million.
The security division continues to show strong revenue growth and the content
division made a small, but positive, contribution to earnings for the
period.
PROSPECTS
Historically the group has performed better in the second six months of the
financial year than in the first six. This trend is expected to continue
in the next period. In the short term, therefore, prospects for the group
are positive.
The board is confident that, in the longer term prospects for the group also
remain positive. With the restructuring of the group completed, the group
has a clearly defined and well understood vision for the future.
Initiatives targeted at improving our presence in the rest of Africa and
significantly growing our services offerings are well under way. We
continue to identify new market segments within our strategic focus which
may be satisfied by attracting additional product agencies, providing
additional services, or by making targeted acquisitions.
The group`s strategic focus on an attractive segment within the information
technology industry combined with the new initiatives detailed above and
the group`s historic ability in growing its business organically, leads
the board to the belief that the group is very well positioned to exploit
opportunities within the ICT sector well into the future.
BASIS OF PREPARATION
These condensed interim financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRS).
DIRECTORATE
Mr AJ Ritzlmayr resigned from the board, as an executive director, and as
company secretary, with effect from 28 February 2007. In addition,
shareholders are advised that Mrs A Fox has been appointed as company
secretary of ERP.com with effect from 28 February 2007.
PROPOSED CHANGE OF NAME
Further to ERP.com`s strategy to dispose of operations not supporting its core
business of Information Risk Management, shareholders are advised that
the company intends to change its name in order to more accurately
reflect the nature of its current business. Shareholders will be advised
in due course of developments in this regard.
For and on behalf of the board
P Sneddon DTK Brazier
Chairman Chief Executive Officer
28 February 2007
Directors:
P Sneddon* (Chairman), DTK Brazier (Chief Executive Officer),
TN Mali*, YT Moerane*
* Independent non-executive director
Company secretary:
A Fox CA(SA) (email: ailsaf@securedata.co.za)
Registered office:
Medscheme Building South, Ground Floor, 10 Muswell Road South, Bryanston 2021
(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: 02/03/2007 12:59:59 Produced by the JSE SENS Department.
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