“More of the same” for impressive EOH

CEO of IT service provider EOH Holdings, Asher Bohbot says that investors can expect “more of the same” from the group in the coming year, after reporting a 50% rise in revenue to R3.64 billion for the year ended July 2012.

Diluted headline earnings per share improved 30.4% to 224.6 cents, from 172.3 cents in 2011.

Operating profit grew to R356.62 million, up from R233 million, while EOH declared a dividend of 70 cents, 32.6% better than 48 cents in 2011.

Speaking at the group’s results presentation event in Sandton, Bohbot said that he didn’t expect EOH’s business model to change over the next three to five years.

“This year we have grown organically, handsomely,” the company chief said, adding that EOH is targeting revenue of between R4.5 billion to R5 billion going forward. “The business is healthy, we are busy, our people are busy. We are well positioned.”

Through several acquisitions over the past few years, Bohbot said that EOH has seen its addressable market increase to R150 billion, of which, it only has 3-4% market share.

He added that 25% of the EOH business is in government. “For our government to operate, they need to apply good knowledge processes in technology,” Bohbot said, adding that there was plenty of room for the company to grow.

EOH has seen its revenue grow from R176 million in 2003, to R950.9 million in 2008, and to R3.64 billion in 2012.

Headline earnings per share has increased from 33.1 cents in 2003, to 96.8 cents in 2008, to 253.1 cents in 2012.

The group has also reported a 40% rise in compounded annual growth over the past 14 years, making it attractive for investors.

EOH has seen its share price grow from R22.75, to a recent high of R37.81 at the end of August. In afternoon trade on the JSE, shares in EOH traded at R36.79, 3.63% better than its opening price. The group boasts a market cap of R3.71 billion.

EOH said that all areas of its business operations have seen strong growth during the period under review, with a further shift to services in line with its strategic intent.

Services revenue increased to R2.34 billion, a 61% improvement over the previous corresponding period. Software sales lifted 28%, to R614.9 million, and infrastructure sales rose by 39%, to 683 million.

Looking ahead, Bohbot said: “We are going to get involved in Africa, but cautiously.” He said that Africa provided a difficult challenge, highlighting the experience of a number of other companies who have been burnt in the past.

“Looking at the longer term, we will have to be in Africa,” said Bohbot. He cautioned that acquisitions would play a lesser role in the company’s growth, with organic growth expected to play a bigger role in a maturing company.

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“More of the same” for impressive EOH