EOH focuses on own IP, Africa and Middle East for growth

JSE-listed information technology (IT) firm EOH is growing its own software, services and solutions, while gradually expanding its presence in the rest of Africa and the Middle East.

At a presentation of the group's financial results for the year ended June 30, on Tuesday, CEO Zunaid Mayet highlighted the resilience of the IT sector and said that spend on information and communication technology in South Africa is growing by about 5.6% a year.

Revenue grew by 21% year-on-year to R15.49-billion, while profit increased by 29% to R1.80-billion. Cash on hand increased by 29% to R2.51-billion. The company achieved 63% of its revenue growth from organic growth, and this accounted for 68% of profit before tax.

“Revenue has increased in all areas of the business owing to strong organic growth, complemented by strategic acquisitions. The effective tax rate has decreased to 28.3% from 29.7% owing to the use of tax deductions associated with our learnership and internship programmes," EOH CFO John King said.

Headline earnings a share increased by 16% year-on-year to R8.32 a share and dividends increased by 16% to R2.15 a share.

The firm was continuing its investments in businesses in Africa and the Middle East, with it taking a minority or equal stake in businesses as it expanded in these markets. 

Cash generated by operations increased to R2.30-billion and was used primarily to fund operations and organic growth.

The company divides its business into three main segments, namely services (which include IT services, industrial technology services and business process outsourcing services), software sales and IT infrastructure.

Revenue from services accounted for more than 77% of total revenue at R11.86-billion, while revenue from software sales reached R2.34-billion and constituted 15% of revenue. Revenue from its IT infrastructure grew to R1.29-billion and 8% of total revenue.

Ninety per cent of EOH's revenue was derived from South Africa. The group's strategy is to increase its margins by developing its own customised and niche software; growing its IT infrastructure, which provides cloud platforms and business service platforms; and distributing its own intellectual property solutions throughout its existing footprint in more than 50 countries.

Mayet, who succeeded former CEO Asher Bohbot in May, highlighted that the group's industrial technology solutions were also suitable for Africa, the Middle East and emerging markets and represented significant opportunities for growth.

EOH will consolidate and complement its existing offerings with strategic acquisitions in South Africa and investments in companies in the rest of Africa, the Middle East and other emerging markets. 

Businesses are integrated into its management structure, operating model and ecosystem to improve efficiencies and share overheads. This enabled EOH to quickly and seamlessly complement and enhance its solution offerings to customers, said Mayet.