Managed Services Boost EOH Growth in South Africa

Mergers, Acquisitions and Financial Results

Technology group EOH is targeting acquisitions locally and in the rest of the southern Africa region to further grow its operations. CE Asher Bohbot said the company's strategy was to buy companies operating in different technology areas than EOH. But those businesses should be complementary to EOH's operations.

The targeted areas include managed services, and outsourcing of technology products and services by companies that want to focus on their core businesses. In managed services, a company like EOH will manage IT infrastructure and software applications on behalf of its clients.

Bohbot said IT infrastructure and services required by corporations were becoming complex and it was difficult for companies to maintain them on their own as they would be required, among other things, to ensure that they had the required skills.

"They will have to rely on vendors or service providers, hence we see the trend of outsourcing happening more and more," Bohbot said. EOH reported a 29.2% jump in headline earnings per share to 70c for the six months to January. Revenue rose 40.6% to R787.3m. Earnings per share increased 30.4% to 70.3c.

EOH has cash reserves of R213m and no debt. Bohbot said that while all divisions had performed well, the services business generated the highest revenue, R400m, which accounted for just over half of EOH's revenue.

Venter expects that managed services will continue to be a strong driver of revenue growth for EOH. "This is currently one of the most exciting and growing segments in the IT industry. Every company wants to save money without jeopardising quality," Venter said.

Business Day