Technology group EOH Holdings on Wednesday reported an 8% lift in normalised revenue from continuing operations, to R16.28 billion, in results for the year ended July 2018, as a result, it said, of increased activity at existing customers.
EOH noted that the financial year under review was impacted negatively by the first half, which was influenced by challenging market conditions, negative media attention, the unwinding of GCT – a major business unit that no longer fitted the EOH business model and robust customer retention negotiations, which led to margin squeeze in the business.
“With these largely once-off items completed, while they have a negative impact on the overall financial results, EOH said it is pleased that the second half of the year saw a much different business environment, despite the South African macro economy still being under strain.
EOH was able to focus on once again winning major clients at more normalised margins and business contracts, stabilising the business and cementing the growth path under the two distinct businesses – EOH and NEXTEC,” it said.
Revenue from services accounted for 79% of total revenue.
Normalised operating profit totalled R1.19 billion (2017: R1 736 million).
Headline earnings per share (HEPS) and earnings per share (EPS) from continuing operations was 278 cents (2017: 797 cents) and 202 cents (2017: 794 cents) respectively, EOH said.
The group said that cash generated from operations was R1.266 billion.
In March, EOH announced its new strategy, which centred on reconfiguring the group into two distinct and independent businesses, EOH and NEXTEC, each with its own CEO, unique brand and identity, business model, growth and go-to-market strategy.
EOH continues to develop its own IP offerings, new services, products and solutions to enable it to deliver high-value solutions to large enterprise customers, said EOH CEO, Rob Godlonton. “In addition, we will explore new vendor partnerships in new territories.”
“EOH International will continue to focus on the strategic markets of the Middle East, Africa, UK and Europe where we are present, where cash generating opportunities exist and where business is performing well.
“We expect market conditions to continue to be tough for at least the first six months of the 2019 financial year. We are, however, well positioned to take advantage of opportunities that arise and expect to continue to post positive results,” Godlonton said.
NEXTEC CEO, Zunaid Mayet said that the general outlook for the NEXTEC business in the South African and African markets remains positive.
“The growth drivers in NEXTEC span diverse areas whose relevance in both South Africa and other countries on the continent is unquestionable. These areas include the digitalisation of industries and industrial IoT; e-Health; smart cities incorporating public safety technologies; intelligent transport and traffic management; smarter utilities; new industry-specific digital technologies; and embedded software.
“The increased adoption of artificial intelligence and robotics in business operations, coupled with a maturing and rapidly growing knowledge process outsourcing and off-shoring markets, point to significant growth potential.”
Market conditions are expected to continue to be difficult in the short to medium term, Mayet said.
“However, the NEXTEC specialised solutions, combined with the deep levels of domain expertise, position the business optimally to navigate this. Having invested in establishing the NEXTEC platform over the recent period, management remains cautiously optimistic about the growth prospects in the medium to long term.”