Business Day

EOH de­fies weak econ­omy with 34% profit hike

- THABISO MOCHIKO In­for­ma­tion Tech­nol­ogy Writer mochikot@bdlive.co.za Business · Finance · Investing · Technology Industry · Industries

TECH­NOL­OGY group EOH has recorded another strong ful­lyear per­for­mance, with the com­pany’s net profit soar­ing to al­most R1bn, de­spite the weak eco­nomic en­vi­ron­ment.

Rev­enue for the year through to July 31 rose 31% to R12.7bn and net profit grew 34% to R930m, lifted by ac­qui­si­tions and or­ganic growth.

But not­with­stand­ing the ef­fect of the 2016 ac­qui­si­tions, EOH still grew its rev­enue from ex­ist­ing busi­ness by 18%, com­pared with an es­ti­mated 6% in­crease in the in­for­ma­tion tech­nol­ogy in­dus­try’s spend­ing in 2015 and 2016, said Mer­gence In­vest­ment Man­agers’ port­fo­lio man­ager Peter Takaen­desa.

“A very in­ter­est­ing ob­ser­va­tion is that the re­ported 31% growth in group rev­enue marks the 10th con­sec­u­tive year of grow­ing rev­enue by 30% or more,” he said.

EOH pro­vides a wide range of tech­nol­ogy prod­ucts and ser­vices in­clud­ing soft­ware, con­sult­ing and out­sourc­ing. It is ac­tive in more than 50 coun­tries out­side SA.

Head­line earn­ings per share rose 25% to 719c. Cash in­creased by 17% to R1.9bn.

Dur­ing the year to July 31, EOH ac­quired a num­ber of busi­nesses that ex­panded its foot­print in the rest of Africa and in the Mid­dle East.

In ad­di­tion, the busi­nesses en­hanced EOH’s tech­nol­ogy ca­pa­bil­i­ties, aug­mented its out­sourc­ing busi­nesses and bol­stered its tech­nol­ogy ser­vices and in­fra­struc­ture busi­nesses.

CEO Asher Bo­hbot said EOH planned to add new prod­ucts and ser­vices, con­tinue its ag­gres­sive ex­pan­sion into the Mid­dle East and the rest of Africa, as well as to fur­ther grow the dis­tri­bu­tion of its own niche soft­ware prod­ucts in­ter­na­tion­ally.

The group will also in­crease its in­volve­ment in the pub­lic sec­tor, which con­trib­utes 14% to to­tal rev­enue.

Bo­hbot be­lieves that EOH’s range of tech­nol­ogy so­lu­tions could con­trib­ute to im­prov­ing ser­vice de­liv­ery.

Takaen­desa said the com­pany’s man­age­ment was con­tin­u­ing to ex­e­cute “very well” on their strat­egy and growth was ex­pected to re­main strong as the group had a solid bal­ance sheet to fund fur­ther growth in Africa and the Mid­dle East.

“There is al­ways a risk in boost­ing growth by ac­quir­ing other com­pa­nies, but the EOH man­age­ment team has ex­e­cuted very well in this re­gard for over a decade.”

Bo­hbot ex­pects EOH’s growth mo­men­tum to con­tinue from every busi­ness within the group. “Every busi­ness has its own re­spon­si­bil­ity and in that way, growth is spread across the or­gan­i­sa­tion,” he said.

Ka­plan Eq­uity An­a­lysts MD Irnest Ka­plan ex­pects growth to be above av­er­age for a while, con­sid­er­ing its healthy bal­ance sheet. He said EOH’s steady growth and good track record over the years had po­si­tioned it strongly in the mar­ket.

“About six years ago or more, no­body cared about EOH. But now peo­ple are start­ing to take no­tice,” Ka­plan said.

“They (EOH) are be­com­ing lead­ers and are now seen as to be set­ting the trend in­stead of fol­low­ing it.”

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