Organic growth lifts EOH’s profit

THE TECHNOLOGY sector remains resilient in a tough economic environment, and this is evident in tech firm EOH’s annual results, where the company reported a 16 percent increase in profits.

EOH said yesterday that it expected continued growth in South Africa, the rest of Africa and the Middle East.

“We will continue to develop, distribute and implement EOH’s niche software and own IP solutions across our existing footprint and into new territories,” it said.

“EOH intends to continue its involvement in all tiers of government and state-owned entities to improve service delivery. EOH sees its involvement in the public sector as both a business opportunity and as a responsibility.”

EOH is the largest tech firm in Africa but still derives more than 90 percent of its revenue from South Africa. EOH’s revenue for the period grew 21 percent to R15.5 billion compared with R12.8bn last year, with contributions from all businesses across the board. Operating profit increased 29 percent to R1.79bn compared with R1.4bn last year.

The company’s operating margins rose from 10.8 percent to 11.5 percent as a result of increased software sales, efficiencies and ongoing cost containment.

“The effective tax rate has decreased from 29.7 percent to 28.3 percent as a result of the utilisation of tax deductions associated with our learnership/intern programmes.”

Earnings before interest, taxes, depreciation and amortisation rose to R2.3bn from R1.8bn last year. Headline earnings a share gained 16 percent and earnings a share rose 17 percent, with cash reserves increasing 29 percent to R2.5bn.

The company declared a gross dividend for the year to July of 215 cents an ordinary share compared with 185c last year. The group said it would continue to develop new services, products and solutions, meet clients’ technology needs and partner with new vendors.

EOH shares dropped 5.27 percent on the JSE yesterday to close at R98.15.