EOH Holdings has announced its interim results today for the six months ended 31 January 2014. Revenue increased by 38,4% to R3 308-million, profit after tax increased by 49,4% to R244-million, earnings per share (EPS) increased 30,3% to 229,8 cents, headline earnings per share (HEPS) increased 33,9% to 229,6 cents, and cash increased by 47,5% to R785-million.
The strong performance is driven primarily by both organic growth and acquisitions.
During the six months under review, EOH’s acquisitive strategy was to consolidate and complement its existing service offerings in its consulting, managed services, human capital and industrial technology businesses, and to grow in the public sector.
The company focused on strengthening its business in the financial services sector and positioning itself to further grow in Africa. This has seen the company complete a number of acquisitions (including Sybrin), totalling R756-million of which R468-million is payable in cash and the balance through the issue of equity instruments.
Sybrin develops software for the financial services and other industry sectors which include workflow software, payment, imaging and document management solutions and it has completed over 400 product implementations across four industry verticals, with a core focus on financial services.
“Sybrin’s acquisition perfectly aligns with the implementation plan of EOH’s growth strategy of rapid African expansion and enhanced vertical focus” says Frost & Sullivan’s Information and Communication Technologies Research Analyst, Ankit Trivedi.
All areas of EOH’s business operations have seen growth during these six months with the revenue from services being the most significant revenue generator. Revenue from the Services segment increased to R2,357-million, a 42% increase over the previous comparative period, software sales have increased to R423-million (an increase of 20,8%) and infrastructure sales have increased by 39,3% to R527-million.
The overall operating margin stands at 10,1%.
“Services have emerged as the leading revenue contributor as the demand trends have shifted from software and infrastructure products to corresponding services as the latter offers painless upgrades, lower initial costs and customers enjoy the possibility of plugging in and subscribing to services via the Internet,” notes Trivedi. “This is also a welcome trend for service vendors like EOH since the service model enables scalability.”
The company covers a diverse portfolio of industries, including financial services, telecommunications, public sector, mining, and manufacturing and retail, all of which are well represented on the African continent.
“The strong integration of over 2,500 corporate customers in South Africa is a testimony of EOH’s successful business model” states Trivedi. “Outside of South Africa, the outsourcing, technology and consulting firm has offices in West, Central Africa and the UK.”
Going forward, EOH plans to expand its solutions and service offerings, strengthen its knowledge-based industry services and grow all areas of its business.
Major growth areas are expected to be in Managed Services (including cloud, network solutions and mobility solutions), IT Management, Applications (including enterprise applications, information analytics and digitalisation), Industrial technologies and Business Process Outsourcing. With regards to the public sector, EOH plans to increase its revenue from all areas – National, Provincial, Local Authorities and State Owned Entities.
“It will be interesting to observe whether the organisation can exhibit the required business agility and know-how to be successful in a business environment where customers are no longer ignorantly ordering hardware or software and demand the maximum possible return on their investments” concludes Trivedi.
In November 2013 EOH rolled out its own internal programme for the second year, of our youth job creation initiative giving 200 interns and 772 learners the opportunity to enter the formal working sector. All 200 interns and 772 learners have been absorbed in the business after 3 months of work readiness training and orientation.
“If every business in South Africa were to do the same, it would mean the employment of hundreds of thousands of young South Africans” says Asher Bohbot EOH CEO.
“The benefits are immense – for the youth, for society and ultimately for the very businesses that invested time and effort in passing on the skills. “After all, it is easier to run a business in a successful society”, he adds.
EOH Enterprise Development initiatives are aimed at developing black-owned ICT companies through financial and non-financial support, which includes the transfer of business skills.
Bohbot adds: “We plan to continue to grow our public sector activities; EOH has the solutions, knowledge, skills and organisational ability to help improve service delivery in this sector. As a South African enterprise EOH has the responsibility to contribute in this area in any way it can, the Public Sector represents a major business opportunity and will form part of our future.
“We have the people, the financial resources, the agility, the track record, and know-how to continue to grow aggressively in all areas of our business,” he says.