Wrap Text
Reviewed Condensed Consolidated Results for the year ended 31 July 2012
EOH Holdings Limited
Incorporated in the Republic of South Africa
Registration number 1998/014669/06
Share code: EOH
ISIN: ZAE000071072
Reviewed Condensed
Consolidated Results
for the year ended 31 July 2012
Revenue 50,0% to R3 643 m
PBT 45,0% to R341 m
EPS 29,8% to 254,9 cents
HEPS 29,1% to 253,1 cents
Dividend 32,6% to 70 cents
Cash 40,5% to R452 m
Condensed Consolidated Statement of
Comprehensive Income for the year ended 31 July 2012
Reviewed Audited
2012 2011
R'000 % change R'000
Revenue 3 642 915 50,0 2 428 973
Cost of sales (2 086 082) (1 528 392)
Gross margin 1 556 833 900 581
Operating profit 356 622 233 011
Investment income 12 676 9 157
Finance costs (27 429) (7 646)
Share of losses of equity accounted investees (43)
Net impairment of assets (1 907) (132)
Profit before taxation 339 919 45,0 234 390
Taxation (116 831) (85 986)
Profit for the period 223 088 50,3 148 404
Other comprehensive income:
Foreign currency translation differences for foreign operations 1 206 1 742
Total comprehensive income for the period 224 294 49,4 150 146
Profit attributable to:
Owners of the parent 222 577 147 273
Non-controlling interest 511 1 131
Profit for the period 223 088 148 404
Total comprehensive income attributable to:
Owners of the parent 223 783 149 015
Non-controlling interest 511 1 131
Total comprehensive income for the period 224 294 150 146
Total number of shares in issue (000's) 100 866 95 389
Weighted average number of shares in issue (000's) 87 312 74 986
Diluted number of shares (000's) 98 416 85 342
Earnings per share (cents) 254.9 29,8 196,4
Diluted earnings per share (cents) 226.2 31,1 172,6
Headline earnings reconciliation
Profit after taxation attributable to:
Ordinary shareholders 222 577 147 273
Profit on disposal of assets (4 414) (254)
Net impairment of assets 1 907
Total tax effect of adjustments 940
Headline earnings 221 010 147 019
Headline earnings per share (cents) 253,1 29,1 196,1
Diluted headline earnings per share (cents) 224,6 30,4 172,3
Condensed Consolidated Statement of
Financial Position for the year ended 31 July 2012
Reviewed Audited
2012 2011
R'000 R'000
ASSETS
Non-current assets
Investment properties 2 872
Property, plant and equipment 183 856 80 325
Goodwill and intangible assets 801 497 550 355
Finance lease receivables 36 447
Other financial assets 16 203 23 436
Deferred taxation assets 90 008 38 427
Current assets
Inventories 39 401 30 662
Finance lease receivables 26 360
Other financial assets 15 625 5 671
Taxation receivable 37 493 17 846
Trade and other receivables 809 429 569 817
Trade receivables 783 470 545 629
Other receivables 25 959 24 188
Cash and cash equivalents 451 867 321 507
Total assets 2 511 058 1 638 046
EQUITY AND LIABILITIES
Equity attributable to owners of the parent 1 128 435 709 926
Non-controlling interest 1 400 1 131
Total equity 1 129 835 711 057
Non-current liabilities
Finance lease obligations 2 748 3 714
Other financial liabilities 271 768 145 988
Deferred taxation liabilities 50 786 618
Current liabilities
Trade and other liabilities 906 753 677 245
Deferred revenue 107 565 68 261
Taxation payable 41 603 31 163
Total equity and liabilities 2 511 058 1 638 046
Net asset value per share (cents) 1 118,7 744,2
Net tangible asset value per share (cents) 324,1 167,3
Condensed Consolidated Statement of
Cash Flows for the year ended 31 July 2012
Reviewed Audited
2012 2011
R'000 R'000
Net income before tax and separately disclosed items 339 919 234 390
Non-cash items 118 329 80 965
Working capital changes (15 710) (165 572)
Cash generated by operating activities 442 538 149 783
Investment income 12 676 9 157
Finance costs (27 429) (7 646)
Taxation paid (141 477) (129 609)
Net cash inflow from operating activities 286 308 21 685
Net cash outflow from investing activities (163 808) (52 436)
Net cash inflow from financing activities 7 860 85 587
Net movement in cash and cash equivalents 130 360 54 836
Cash and cash equivalents at beginning of year 321 507 266 671
Cash and cash equivalents at end of year 451 867 321 507
Condensed Consolidated Statement of
Changes in Equity for the year ended 31 July 2012
Non-
Stated Retained controlling Total
capital Reserves earnings interest Equity
R'000 R'000 R'000 R'000 R'000
Audited balance at 1 August 2010 122 962 26 147 315 083 (259) 463 933
Total comprehensive income for the year 1 742 147 273 1 131 150 146
Dividends paid (25 232) (25 232)
Share-based payment 12 699 12 699
Minorities acquired (2 566) 259 (2 307)
Shares to be issued (8 726) (8 726)
Issue of share capital 191 985 191 985
Movements in treasury shares (4 622) (57 436) (62 058)
The effect of consolidating the
Mthombo Trust (9 383) (9 383)
Audited balance at 31 July 2011 301 599 (28 797) 437 124 1 131 711 057
Total comprehensive income for the year 1 206 222 577 511 224 294
Dividends paid (41 139) (41 139)
Share-based payment 15 892 15 892
Minorities acquired 887 (242) 645
Shares to be issued 88 521 88 521
Issue of share capital 65 408 65 408
Movements in treasury shares (45 916) 86 185 40 269
The effect of consolidating the
Mthombo Trust (11 129) 36 017 24 888
Reviewed balance at 31 July 2012 398 483 111 390 618 562 1 400 1 129 835
Commentary
About EOH
EOH is a leader in technology and business services, the largest implementer of business 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 profile.
EOH was listed on the JSE Limited ('JSE') in 1998 and since then has grown to over 4 700 people and
more than 3 500 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; and
- To be an ethical and relevant force for good and to play a positive role in society, beyond normal
business.
EOH's vision
To be the best technology and knowledge service provider in Africa to:
- workfor;
- partner with; and
- 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 its clients
and partners.
- Right 1st time To ensure professional planning and execution and to have pride in
all that we do.
- Sustainable transformation To transform and to manage diversity.
- Profitable growth To grow the top and bottom lines 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, technology outsourcing and
business process outsourcing.
Consulting
EOH Consulting Services helps clients create value and architect change in a rapidly changing
environment. These services include:
- Business operations improvement;
- IT strategy;
- IT architecture;
- Project management; and
- Change management.
Technology
Over the years, EOH has earned widespread regard 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;
- Enterprise content management;
- Information risk management;
- IT management and optimisation;
- Software development and integration;
- IT infrastructure; and
- Intelligent infrastructure.
Technology outsourcing
EOH offers a range of technology oursourcing services:
- Transformational outsourcing;
- Managed services;
- Cloud services; and
- Hosting and networking.
Business Process Outsourcing ('BPO')
EOH derives maximum value for its clients by outsourcing specific business processes. These include:
finance and accounting, corporate legal services, customer services, human capital solutions and
procurement.
Industries
The industries in which EOH operates include:
- Financial Services;
- Telecommunications;
- Manufacturing and Logistics;
- Central and Local Government;
- State-owned entities;
- Mining; and
- Health.
Basis of preparation
The reviewed condensed consolidated results for the year ended 31 July 2012 ('year under review')
have been prepared in accordance with IAS 34 Interim Financial Reporting, the South African
Companies Act, 2008 (Act 71 of 2008), as amended, the Listings Requirements of the JSE and the
AC 500 Standards as issued by the Accounting Practices Board. The accounting policies have been
consistently applied with those in the prior year, which are supported by reasonable and prudent
judgments and estimates.
These reviewed condensed consolidated results have been prepared under the supervision of
John King, CA(SA), the Financial Director of EOH.
Accounting policies
The accounting policies and methods of computation applied in the preparation of these reviewed
condensed consolidated results for the year 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. The amendments to IFRS 3
and IFRS 7 have been accounted for in the results.
Review opinion
The condensed consolidated results for the year ended 31 July 2012 have been reviewed by the group
auditors, PKF (Gauteng) 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 ensure sustainability and
to support future growth. Revenue increased by 50,0% to R3 642,9 million and profit before tax is up by
45,0% to R339,9 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 29,8% and 29,1%, respectively, with cash increasing to R451,9 million.
Business combinations
During the year under review, EOH's primary focus was to increase its Managed Services, Intelligent
Infrastructure and Business Process Outsourcing businesses and, accordingly, the group made several
acquisitions in these areas. Total goodwill increased by R259,0 million as a result of the following
acquisitions.
- Stanley Security Solutions (Proprietary) Limited ('Stanley Security')
The group acquired 100% of the share capital of Stanley Security, a company specialising in security
equipment for a cash consideration of R83,2 million on 3 November 2011. The company was
acquired to enhance EOH's intelligent infrastructure capability. A related property-owning company
was also acquired during this transaction for R6,3 million in cash. The non-current and
current assets acquired were R49,0 million and R68,6 million respectively. The non-current
and current liabilities acquired were R8,2 million and R22,9 million respectively.
- Dental Information Systems Holdings (Proprietary) Limited ('DISH')
The group acquired the entire share capital of DISH with effect from 25 April 2012 for a
consideration of R138,1 million, consisting of R49,8 million in cash and R88,3 million in equity
instruments. DISH specialises in dental managed healthcare BPO services. The non-current and
current assets acquired were R67,8 million and R23,5 million respectively. The non-current
and current liabilities acquired were R23,7 million and R45,0 million respectively.
- Individually immaterial acquisitions made during the year under review
The group acquired a number of smaller businesses to complement EOH's existing service offerings.
The total purchase consideration for these acquisitions is R220,0 million, consisting of R138,4 million
in cash and R81,6 million in equity instruments. The cumulative non-current and current assets
acquired at the respective dates were R45,3 million and R106,3 million. The cumulative non-current
and current liabilities acquired were R8,4 million and R63,9 million.
The aggregated revenue of businesses acquired consolidated into the results for the period under review
amounted to R626,2 million which contributed R47,1 million to profit before tax.
Segmental reporting
EOH's revenue for the year ended 31 July 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 Infrastructure Total
R'000 2012 2011 2012 2011 2012 2011 2012 2011
Revenue 2 344 641 1 456 953 614 971 479 172 683 303 492 848 3 642 915 2 428 973
Operating profit 245 781 153 475 69 364 58 747 41 477 20 789 356 622 233 011
All areas of EOH's business operations have seen growth during the year under review with the revenue
from services being the most significant generator of revenue. Services revenue has increased to
R2 344,6 million, a 61% increase over the previous period. Software sales have increased to
R614,9 million (increase of 28%). Infrastructure sales have also increased by 39% to R683,3 million.
Overall margins are 9,8% compared with 9,6% the previous year.
Subsequent events and capital commitments
There have been no significant events since the end of the year under review. No significant capital
expenditure was authorised as at 31 July 2012.
Transformation
EOH is certified as a Large Enterprise Level 3 Contributor with BEE Procurement Recognition of 138% as
a Value Adding Vendor.
EOH's current black shareholding is 37,47%. 57% of EOH's staff and 60% of its board members
are black.
EOH's Corporate Social Investment initiatives are focused around education and wellness. One of our
community involvement projects is the Maths Centre Programme which has its primary objective to equip
teachers with skills to develop learner competency in maths. We have also given our support to The Child
and Youth Development Programme of Afrika Tikkun. This programme provides support to youth during
their school career and assists them in finding employment in the workplace. During this year EOH has
spent R3,7 million on CSI initiatives.
Our Enterprise Development initiatives are aimed at developing black-owned ICT companies through
financial and non-financial support which includes the transfer of business skills. EOH has spent
R12,1 million in the form of loans and training on Enterprise Development.
EOH has 620 trainees participating in a year long graduate and school leavers' programme and has spent
R8,4 million on this programme so far and is committed to spending a further R7,8 million over the next
six months.
Future plans
EOH will continue to grow both organically and acquisitively to meet the needs of its current and future
clients. The organic growth will be propelled through the introduction of EOH's industry vertical approach.
At the same time EOH will develop and/or acquire businesses in order to enhance its service offering.
EOH sees its main areas of growth in infrastructure and application managed services, cloud offerings,
enterprise applications, information management, BPO, security and intelligent infrastructure.
EOH will continue its drive into the Public Sector to improve Public Sector delivery. Currently a quarter
of EOH's revenue is derived from the Public Sector, from all tiers of government and from State Owned
Entities. The Public Sector represents a major business opportunity and will continue to form a part of
EOH's future growth.
EOH views Africa as a growth area in the medium term and will continue to cautiously pursue opportunities
in identified countries.
EOH is well positioned to take advantage of the growing demands of its clients in a sector which grows at a
faster pace than the rest of the economy. EOH has the resources, track record, know-how and capability to
continue to grow aggressively.
Job creation initiative
EOH's job creation initiative launched in September 2011 is gaining momentum.
Government has created the platform for job creation and EOH's view is that business can and should do
more. Business can actively assist in alleviating unemployment in several ways:
- Invest in business to create more jobs.
- Keep jobs in South Africa. Large international IT companies and large enterprises in South Africa must
not offshore services to overseas companies. These jobs must remain in South Africa and they should
bring back services that have already been offshored.
- Invest in the development and training of young trainees through well structured learnership and
internship programmes.
EOH's own contribution to this initiative is the employment of 620 trainees as part of its learnership and
internship programmes. If every eighth person throughout business was a trainee, as is the case at EOH,
the unemployment challenge could be eradicated in no time.
EOH is working with its international technology partners and clients to reduce unemployment in
South Africa.
Directorate
There have been no changes to the board during the year under review. At the AGM held on
6 March 2012, directors who were eligible for re-election in terms of the policy of rotation,
were re-elected.
Dividends
Notice is hereby given that a gross cash dividend of 70 cents (2011: 48 cents after deduction of
secondary tax on dividends of 10%) per share ('the dividend') has been declared and is payable
to shareholders recorded in the books at the close of business on Friday, 26 October 2012.
This represents a 32,6% increase of the cost of dividends to the company. Shareholders are
advised that the last day of trade cum the dividend will be Friday, 19 October 2012. The shares
will trade ex the dividend as from Monday, 22 October 2012. Payment will be made on
Monday, 29 October 2012. Share certificates may not be dematerialised or rematerialised during the
period Monday, 22 October 2012 to Friday, 26 October 2012, both days inclusive.
Shareholders are advised that the company will withhold the Dividend Tax and pay over the required
amount to SARS on their behalf.
- The dividend should be treated as an income payment.
- The local dividend tax rate is 15%.
- There are no Secondary Tax on Companies credits utilised against the dividend.
- The gross local dividend is 70 cents per share for shareholders exempt from paying the new
Dividend Tax.
- The net local dividend amount is 59,5 cents per share for shareholders liable to pay the new
Dividend Tax.
- EOH's tax reference number is 9248321847.
Asher Bohbot
Chief Executive Officer
12 September 2012
EOH Holdings Limited
Incorporated in the Republic of South Africa
Registration number 1998/014669/06
Share code: EOH
ISIN: ZAE000071072
Registered office
Block D, EOH Business Park, Gillooly's View, Osborne Lane, Bedfordview, 2007
Tel: (011) 607 8100
Fax: (011) 616 9929
Website: www.eoh.co.za
Email: info@eoh.co.za
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)
Company secretary
Adri Els
Sponsor
Merchantec Capital
Auditors
PKF (Gauteng) Inc.
Please contact us:
Tel: +27 (11) 607 8100
EOH Business Park, Gillooly's View,
Osborne Lane, Bedfordview, 2007
www.eoh.co.za
Date: 12/09/2012 08:06:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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