EOH is pivoting to grow its international operations
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EOH HOLDINGS said on Friday that it was positioned to grow its footprint in the UK, Europe and the Middle East.
In a pre-close statement, the IT group, which is pursuing legal claims of R6.4 billion against four former directors for alleged involvement in tender fraud some years back, said it had “built a sustainable business with clear alignment and focus, allowing us to better serve more than 5 000 enterprise customers, the government and citizens with technology and digital enablement that is critical to our country’s future success.
“Our turnaround plan remains on track and is underpinned by stable revenue and quality earnings.”
EOH’s shares closed 2.55 percent lower at R6.50 on Friday. However, Friday’s price was 44.2 percent higher than a year previously.
In the interim results to January 31, EOH reported significant oneoff cost reductions and operating profit of R59 million compared with a R915m operating loss in the previous six-month period.
It had benefited from an increased digital uptake across its client base, which positively affected the digital industries, automation and cloud businesses.
In the second six-month period to July 31, the operating environment remained challenging because of the third wave of Covid-19, loadshedding, and the impact of the looting and violence. These were on top of already fragile prospects for economic recovery and business confidence.
Second-half revenue was dented by weak economic conditions, but the focus on quality of earnings saw an anticipated gross profit margin improvement of between 4 and 6 percentage points from the prior full year – the gross profit margin was 22 percent in the 2020 financial year.
Positive operating profit and earnings before interest, tax, depreciation and amortisation (Ebitda) were expected for the full year. The gap between normalised Ebitda and reported Ebitda would also continue to narrow, the pre-close statement said.
Revenue in the iOCO business fell as a result of hardware sales continuing to be under pressure because of the impact of Covid-19 and as customers migrated to cloud alternatives.
The iOCO business had seen strong traction in customer renewals, and a recently mobilised public sector re-entry strategy was yielding value with a solid pipeline.
The NexTec business continued its turnaround strategy, with revenue “remaining resilient”.
The NexTec People solutions business had generated strong operating profit and Ebitda in the second half, with margins improving because of further efficiency gains and cost controls.
The NexTec Infrastructure solutions business remained under pressure because of contract delays in consulting services mainly across municipalities, and the construction, water and energy sectors.
BUSINESS REPORT ONLINE