Wrap Text
Reviewed Condensed Consolidated Results for the year ended 31 July 2013
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 2013
Revenue R5 086 million UP 40%
PAT R331 million UP 49%
Cash R653 million UP 45%
EPS 344 cents UP 35%
HEPS 339 cents UP 34%
Dividend 95 cents UP 36%
Best People
Partner For Life
Right 1st Time
Sustainable Transformation
Profitable Growth
Condensed Consolidated Statement of
Comprehensive Income for the year ended 31 July 2013
Reviewed Audited
2013 2012
R'000 % change R'000
Revenue 5 085 979 40 3 642 915
Cost of sales (3 075 359) (2 086 082)
Gross margin 2 010 620 1 556 833
Operating profit 495 723 356 622
Investment income 18 483 12 676
Finance costs (47 502) (27 429)
Share of loss of equity accounted investment (43)
Net impairment of assets (6) (1 907)
Profit before taxation 466 698 339 919
Taxation (135 339) (116 831)
Profit for the year 331 359 49 223 088
Other comprehensive income:
Foreign currency translation differences for foreign operations 1 500 1 206
Total comprehensive income for the year 332 859 48 224 294
Profit attributable to:
Owners of the parent 331 509 222 577
Non-controlling interest (150) 511
Profit for the year 331 359 223 088
Total comprehensive income attributable to:
Owners of the parent 333 009 223 783
Non-controlling interest (150) 511
Total comprehensive income for the year 332 859 224 294
Total number of shares in issue (000's) 110 848 100 866
Weighted average number of shares in issue (000's) 96 453 87 312
Diluted number of shares (000's) 107 007 98 416
Earnings per share (cents) 343,7 35 254,9
Diluted earnings per share (cents) 309,8 37 226,2
Headline earnings reconciliation
Profit after taxation attributable to:
Ordinary shareholders 331 509 222 577
Profit on disposal of assets (128) (4 414)
Gain on bargain purchase (4 387)
Net impairment of assets 6 1 907
Total tax effect of adjustments 36 940
Headline earnings 327 036 221 010
Headline earnings per share (cents) 339,1 34 253,1
Diluted headline earnings per share (cents) 305,6 36 224,6
Condensed Consolidated Statement of
Financial Position as at 31 July 2013
Reviewed Audited
2013 2012
R'000 R'000
ASSETS
Non-current assets
Investment property 2 872 2 872
Property, plant and equipment 226 324 183 856
Goodwill and intangible assets 1 031 945 801 497
Finance lease receivables 74 894 36 447
Other financial assets 26 551 16 203
Deferred taxation assets 103 544 90 008
Current assets
Inventories 66 479 39 401
Finance lease receivables 46 595 26 360
Other financial assets 12 401 15 625
Taxation receivable 27 265 37 493
Trade and other receivables 1 185 075 809 429
Cash and cash equivalents 653 007 451 867
Total assets 3 456 952 2 511 058
EQUITY AND LIABILITIES
Equity attributable to owners of the parent 1 620 332 1 128 438
Non-controlling interest 403 1 400
Total equity 1 620 735 1 129 838
Non-current liabilities
Finance lease obligations 1 793 2 748
Other financial liabilities 351 416 271 768
Deferred taxation liabilities 53 398 50 786
Current liabilities
Trade and other liabilities 1 239 562 906 750
Deferred revenue 159 868 107 565
Taxation payable 30 180 41 603
Total equity and liabilities 3 456 952 2 511 058
Net asset value per share (cents) 1 461,8 1 118,7
Net tangible asset value per share (cents) 530,8 324,1
Condensed Consolidated Statement of
Cash Flows for the year ended 31 July 2013
Reviewed Audited
2013 2012
R'000 R'000
Cash generated by operating activities 533 623 442 538
Investment income 18 483 12 676
Finance costs (47 502) (27 429)
Taxation paid (154 769) (141 478)
Net cash inflow from operating activities 349 835 286 307
Net cash outflow from investing activities (113 057) (163 808)
Net cash (outflow)/inflow from financing activities (35 638) 7 861
Net movement in cash and cash equivalents 201 140 130 360
Cash and cash equivalents at beginning of year 451 867 321 507
Cash and cash equivalents at end of year 653 007 451 867
Condensed Consolidated Statement of
Changes in Equity for the year ended 31 July 2013
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 2011 301 602 (28 797) 437 124 1 131 711 060
Total comprehensive income for the period 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 shares 65 408 65 408
Movement in treasury shares (45 916) 86 185 40 269
The effect of consolidating the
Mthombo Trust (11 129) 36 017 24 888
Audited balance at 31 July 2012 398 486 111 390 618 562 1 400 1 129 838
Total comprehensive income for the period 1 500 331 509 (150) 332 859
Dividends paid (66 892) (66 892)
Share-based payment 16 134 16 134
Minorities acquired 47 (847) (800)
Shares to be issued 54 593 54 593
Issue of shares 194 455 194 455
Movement in treasury shares (66 440) 41 647 (24 793)
The effect of consolidating the
Mthombo Trust (14 659) (14 659)
Reviewed balance at 31 July 2013 566 435 170 718 883 179 403 1 620 735
Commentary
About EOH
EOH is one of the largest ICT services providers in South Africa and provides the technology,
knowledge, skills and organisational ability critical to Africa's development and growth.
EOH has been listed on the JSE Limited ("JSE") since 1998 and has consistently delivered
strong financial results.
EOH provides a full range of end-to-end service offerings. EOH is the largest implementer
of enterprise applications solutions and has a wide range of Outsourcing, Cloud, Managed
Services and Business Process Outsourcing ('BPO') solutions. EOH's 6 000 staff members
deliver these services to customers across all major industries with a focus on the Financial
Services, Telecommunications, Public Sector, Mining, Manufacturing and Retail sectors.
EOH operates in South Africa and Africa and has 120 points of presence in South Africa.
EOH is a Level 2 contributor and has the highest BBBEE rating of its peers on the JSE.
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 society, beyond
normal business.
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 nurture lifelong partnerships with our customers and
business partners.
- Right 1st time To ensure professional planning and execution
and have pride in all we do.
- Sustainable transformation To transform and celebrate diversity.
- Profitable growth To grow our top and bottom line aggressively and
remain entrepreneurial.
Operating model
The EOH operating model is based on a two dimensional approach: lines of business and
industry verticals.
Lines of business
Knowledge and industry-based services
These services include consulting, knowledge and industry based solutions, operational
improvement, IT strategy, IT architecture, project management and change management.
Information Technology
- Enterprise applications
- Information management
- Enterprise content management
- IT management, optimisation and security
- Software development and integration
- Knowledge risk management
- Digital solutions
Outsourcing
- Transformational outsourcing
- Managed services
- Cloud services
- Hosting and networking
- Business process outsourcing
- Human capital solutions
Industrial Technologies (IT)
These include services and solutions both of a technology and industrial nature that focus
on the mining, manufacturing, energy and utility sectors.
Industry verticals
EOH operates in all industries with a focus on the following:
- Financial services
- Telecommunications
- Public Sector
- Mining and manufacturing
- Retail
Basis of preparation
The reviewed condensed consolidated results for the year ended 31 July 2013 have
been prepared by the Financial Director, John King, CA (SA), in accordance with
International Financial Reporting Standards ('IFRS'), IAS 34 Interim Financial Reporting,
the SAICA Reporting Guidelines as issued by the Accounting Practices Committee,
the South African Companies Act 2008, (Act 71 of 2008) 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 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 2012.
Review opinion
The condensed consolidated results for the year ended 31 July 2013 have been reviewed by the
group 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 year ended
31 July 2013. Revenue increased by 40% to R5 086 million and profit before tax is up by 37%
to R467 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 35% and 34% respectively with cash increasing to R653 million.
Business combinations
During the year under review, EOH's primary focus was to consolidate and complement its
existing service offerings in its consulting, managed services, human capital solutions and
industrial technology businesses. Accordingly, the group made several acquisitions in these
areas. Other than previously reported, there were no further individually material business
combinations during this period. The total consideration paid for these acquisitions amounted
to R358 million of which R203 million is payable in cash and the balance through the
issue of equity instruments. The goodwill associated therewith is R253 million.
The cumulative non-current and current assets acquired were R58 million and R448 million
respectively. The cumulative non-current and current liabilities acquired were R6 million and
R391 million respectively. The aggregate revenue of these businesses included in these results
is R604 million resulting in profit before tax of R61 million.
Segmental reporting
EOH's revenue for the year ended 31 July 2013 is derived from the provision of services
(consulting systems implementation, systems integration and managed services), software
(software sales and maintenance revenue) and infrastructure products.
Services Software Infrastructure Total
R millions 2013 2012 2013 2012 2013 2012 2013 2012
Revenue 3 627 2 345 687 615 772 683 5 086 3 643
Profit before tax 341 234 72 65 54 41 467 340
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 by 55%, software revenue by 12% and infrastructure revenue by 13%. The gross profit
margin is 40% and the operating margin is 9,7%.
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 2013.
Transformation
EOH is certified as a Large Enterprise Level 2 Contributor with BEE Procurement Recognition
of 156% as a Value Adding Vendor.
EOH's current black shareholding is 35%. 53% of EOH's staff and 60% of its board members
are black.
EOH's Corporate Social Investment initiatives are focused around education, particularly
in the fields of maths and science.
EOH's 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 spent R41 million on its CSI, Enterprise Development and Job Creation initiatives.
Job creation initiative
During the past year EOH intensified its efforts on the 'EOH Youth Job Creation Initiative'. We
have invested in media campaigns and interacted with customers and business partners with
the aim of encouraging them to recruit significant numbers of people on intern and learnership
programmes. We have seen many initiating and participating in these programmes and making
a difference in the lives of many young people.
At EOH, 620 young people participated in EOH's learnership and intern programmes of which
most were placed or employed directly by EOH. EOH has embarked on a similar programme for
the coming year.
Future plans
EOH will continue to expand its solutions and service offerings and strengthen its knowledge-
based industry services. This will be achieved through organic growth complemented by
acquisitions. EOH expects to grow its Managed Services, Cloud, Enterprise Applications,
Information Management, Business Process Outsourcing, Human Capital Solutions, Security
Solutions and Industrial Technology businesses.
EOH will continue to contribute its knowledge and organisational ability to improve service
delivery in the Public Sector. EOH is recognised for its delivery capability and expects to expand
the business it does in this Sector.
During the year, EOH has made significant strides into Africa with plans to increase its presence
on the continent. EOH now has the structures and processes in place to be far more strategic
and proactive in its approach to doing business in Africa.
EOH's offerings in the outsourcing, managed services and cloud arenas have grown significantly
having secured major contracts in the past year. We expect to be a leading player in this field.
EOH is well positioned to continue to grow aggressively. It has the people, the size, the
financial resources, the agility and the knowledge to do so. EOH's internal strength, strong
entrepreneurial culture and great execution ability bodes well for similar growth in the future.
Directorate
Sandile Zungu has been appointed as the Chairman effective 1 October 2013. We are
delighted to have a person of this calibre to chair our board. This appointment follows
the resignation of Nakedi Mathews Phosa on 1 November 2012. Thoko Mnyango was
appointed as a Non-Executive Director with effect from 18 June 2013.
Dividends
Notice is hereby given that a gross dividend of 95 cents (2012: 70 cents) per ordinary share
('the dividend') has been declared in respect of the year ended 31 July 2013 and is payable
to shareholders recorded in the books at the close of business on Friday, 25 October 2013.
Shareholders are advised that the last day of trade cum the dividend will be Friday,
18 October 2013. The shares will trade ex the dividend as from Monday, 21 October
2013. Payment will be made on Monday, 28 October 2013. Share certificates may not be
dematerialised or rematerialised during the period Monday, 21 October 2013 to Friday,
25 October 2013, both days inclusive.
- The dividend should be treated as an income payment and is being paid out of income reserves.
- The local dividend tax rate is 15%.
- There are no Secondary Tax credits utilised against the dividend.
- The gross local dividend is 95 cents per share for shareholders exempt from paying Dividend Tax.
- The net local dividend amount is 80,75 cents per share for shareholders liable to pay Dividend Tax.
- EOH's tax reference number is 9248321847.
- There are 110 847 868 ordinary shares in issue.
Asher Bohbot
Chief Executive Officer
11 September 2013
Registered office
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
Executive directors
Asher Bohbot (Chief Executive Officer)
Pumeza Bam
John King
Dion Ramoo
Jane Thomson
Non-executive directors
Rob Sporen (Dutch) Lead Director/Acting Chairman
Lucky Khumalo
Prof Tshilidzi Marwala
Thoko Mnyango (effective 18 June 2013)
Tebogo Skwambane
Sandile Zungu Chairman elect (effective 1 October 2013)
Company secretary
Adri Els
Sponsor
Merchantec Capital
Auditors
PKF (Gauteng) Inc.
Johannesburg: +27 11 607 8100
Cape Town: +21 21 525 7200
Durban: +27 86 183 5364
Port Elizabeth +27 41 393 0700
East London: +27 43 705 5500
UK: +44 12 4970 0551
Date: 11/09/2013 07:10:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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