Our business model and value creation
CAPITAL INPUTS
FINANCIAL CAPITAL
- Leverage
- Working capital management
- EBITDA
INTELLECTUAL CAPITAL
- Own IP platforms
- OEM capability
- Specialised and bespoke solutions
- Technological expertise
HUMAN CAPITAL
- 7 333 employees
- Superior market expertise and sales capability
- Entrepreneurial culture
- Level 1 BBBEE
SOCIAL AND RELATIONSHIP CAPITAL
- Scale and capability
- Strategic relationship with key tech partners
- Preferential procurement
- Long-term SED partners
- Strong governance culture
NATURAL CAPITAL
- Energy and water used
OUR BUSINESS MODEL AND STRATEGY
Create
liquidity
Drive growth of
central iOCO business
Turnaround
NEXTEC
OEM Driven Strategy
Defensive play – enabled by EOH market expertise, sales and implementation
Software Reseller
Enterprise Applications
Mature industry,
franchise model
Own IP Driven Strategy
Enabled by own IP and multiple technology partners
AppDev
Data Architecture & Analytics
Automation/ AI/IOT
Quality Assurance/ Testing
Cloud Solutions and Infrastructure
Manage and Operate
Compute
Network/Connectivity
Future Platforms (e.g. SME; People Portal; BI (payments/ invoices)
Security
Influenced by evolving trends of Data, Cloud, Automation driving the need for bespoke dev and everything aaS
CAPITAL OUTCOMES
Optimise
cost base
Scale IP
assets with right partners
NEXTEC focuses on
two main pillars:
People
Outsourcing
Solutions
Supplying solutions around recruitment, staffing, training and development and change management
Intelligent
Infrastructure
Solutions
Designing, installing, managing and creating bespoke data platforms using the latest OEM technology solutions in the infrastructure environment across multiple sectors
OUR INPUTS
FINANCIAL CAPITAL
- Revenue R11 277 million
- Net working capital improved by R251 million to R332 million for FY2020
- Core Normalised EBITDA R827 million
INTELLECTUAL CAPITAL
- Continued progress in consolidating and aligning businesses
HUMAN CAPITAL
- Launched a new employee value proposition (EVP)
- R36.7 million invested in training
SOCIAL AND RELATIONSHIP CAPITAL
- Engaged in 224 learnership programmes for unemployed people. EOH provided R11.8 million in support of e-DEAF learnership and AET programmes
- Level 1 B-BBEE status retained
NATURAL CAPITAL
- Lower energy and water use due to the reduction in number of buildings and company vehicles used and COVID-19 lockdown
- Carbon footprint reduced by 39%
CAPITAL TRADE-OFFS
Creating value involves accepting the inevitable trade-offs between the various capitals as we conduct our business activities. Significant trade-offs during the 2020 financial year are shown below:
During the year, we exited a number of non-core assets that were either too balance sheet intensive in terms of credit lines or that had a high risk profile. This reduced the intellectual capital available to the Group through these businesses, but released funds to repay debt ahead of schedule, increasing financial capital. Disposal and exit of the buildings and equipment linked to these businesses reduces manufactured capital as well as our environmental footprint.
Over the last two years, EOH has made a significant investment in resources to improve and enhance governance, risk and compliance in the Group. While this cost represents a reduction in financial capital, the additions increase the human and intellectual capital in the Group and help to safeguard its reputation (social and relationship capital).
Work done pro bono, such as the development of web solutions for the Solidarity Fund and B4SA, resulted in reduced financial capital available for other initiatives. However, the response by EOH’s businesses to support customers, government and society during the COVID-19 pandemic demonstrates the intellectual capital available to the Group and increased social and relationship capital.
Following the COVID-19 lockdown, employees and contractors receiving more than R250 000 a year were asked to make a three-month salary sacrifice to preserve cash. This represents a tradeoff between the Group’s human capital and its financial sustainability.