EOH is “back in the black” and had completed its turnaround strategy, “an important milestone”, the technology firm said as it posted its results for the six months to end-January.
In 2019, EOH embarked on a turnaround strategy after it was hit by a corruption scandal the previous year, involving its senior directors.
Headline earnings per share grew by 214 percent to 41c. The group's operating profit, which includes continued and discontinued operations, amounted to R167million, compared to the previous year's R76m.
EOH chief executive Stephen van Coller said: “We embarked on a challenging turnaround strategy for the EOH Group, and it has been a tough, but truly rewarding journey. Today we stand together as an agile and focused organisation proudly celebrating the fact that we are able to report positive earnings per share. This important milestone is clear evidence of our collective success.”
EOH group finance director Megan Pydigadu echoed Van Coller sentiments and said: “From the overall group perspective, we are very excited because we successfully executed our turnaround strategy, EOH is now back in the black, making a profit.“
However, revenue for the period decreased by 20 percent to R3.5 billion due to asset sales.
EOH has had to whittle down its sizeable debt via the sale of non-core assets, reporting that on January 31 its debt was still more than R2 billion. This as it reported a cash balance as of January 31 of R625 million.
Over the past year, the company has disposed of several assets and paid off some of its historical debt. The company said with the proceeds from a sale of Sybrin, it repaid R360m of debt. EOH hoped to raise another R500m on asset sales.
“We received the proceeds from Sybrin. I think even though our capital structure isn’t optimum yet in terms of the level of debt we have, we still manage to post operating profit and profit after tax bottom line. I think that is significant in terms of the strong operational performance, and also from a cash flow perspective, we still got good cash generation for the period under review,” Pydigadu said.
EOH said its IT services business, iOCO, performed well, improving its gross profit margin from 26.6 percent to 29 percent. Nextec, EOH’s subsidiary, also had a similar performance of 22.9 percent to 28.9 percent.
“Nextec is the more problematic part of the EOH group. Its business performed well for the six months and delivered good down margins so that business has turned around significantly than what it was in the prior year,“ Pydigadu said.
Looking ahead, she said now that EOH had completed the turnaround strategy, it would look for opportunities to grow in the ICT sector.
“We see a lot of opportunities in terms of current trends. Everyone who has gone through the Covid-19 pandemic has realised that your ICT and digitisation strategy is not something you just spend money on, but it has to be core to your strategy going forward. We see a lot of opportunity in the digitisation for customers and clients,” she said.
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