EOH chief financial officer, Ashona Kooblall. Picture: Supplied
Information, communication and technology group EOH has made progress on its growth strategy, resolved many legacy issues and significantly streamlined its corporate office and administrative functions on its journey to financial stability, the group said yesterday.
In the year to July 31, the headline loss per share (HLPS) for the group that operates across Africa, the UK, Europe, and the Middle East, improved substantially by 99% to 0.21 cents, after net finance costs reduced by 28% to R118 million.
Revenue from continuing operations fell 3.1% to R6 billion after good growth from the International segment (27%) and Infrastructure services businesses (5%), with Digital revenue generation remaining robust.
International revenue as a percentage of the total grew to 11% during the year from 8% the previous year and growth was good, particularly in the Middle East and the UK, interim CEO Marius de la Rey said in an online interview.
Revenue in the Connected Industrial Ecosystems segment fell 15% and by 12% in Digital business solutions. Gross profit margins were steady at 27.3% (27.9%). The last remaining businesses identified as non-core were sold during the year, and focus for the new year was to grow organically, reduce debt, while smaller acquisitions might be considered, he said.
De la Rey said although the level of demand for the group’s services was not yet where he believed it should be, the diversity of their services, and clients from the private to the public sector, was standing it in good stead.
He said the group, when one considered the repositioning over the past year and costs cuts, was well positioned to benefit from an expected improvement in overall demand.
De la Rey said they had been through a number of “abnormal years” where management had to focus on matters that were apart from growing the business - the group’s legacy issues include payment of a fine to SA Revenue Services, involvement in corrupt tenders and having to clean up the group including reporting the implicated personnel to authorities.
“Asset sales have assisted in a marked debt reduction and now the focus moves to operational efficiencies and value extraction from the restructure,” said De la Rey.
“This has unlocked more efficient day-to-day operations with promising growth potential. These are significant steps toward improving investor and other stakeholder confidence, giving us a strong competitive position in the market and setting the stage for future growth and innovation.”
Adjusted earnings before interest, Tax, and depreciation allowances (EBITDA) declined marginally to R307m from R312m. Net interest-bearing bank loans stood at R644m after repaying a further R41m of debt during the year. The accounts were unqualified for a fifth consecutive year.
The group was restructured into three divisions to enhance market share by greater internal cohesion, and optimisation of client solutions.
EOH’s operating company iOCO South Africa now provides technology services to 38 of the top 40 JSE-listed South African companies.
At the same time, iOCO International offers digital enablement services in the Middle East and Europe. easyHQ, now referred to as OKS (Outsourced Knowledge Services), offers People Solutions and HR Platforms via technology platforms to various businesses.
EOH chief financial officer Ashona Kooblall said the “stringent expense management programme” was a success.
“By rationalising inefficient cost structures, we have also reduced complexity, optimised tax structures and established a lean, consolidated business model,” said Kooblall.
“While restructuring costs impacted FY24 performance, normalising these results reveals year-on-year growth in both operating profit and EBITDA. We anticipate seeing the benefits of these actions in the 2025 year.”
During the year, EOH successfully addressed the “last remaining significant legacy issues”: the Mehleketo and SARS PAYE disputes.
“With these matters resolved, the group is now able to concentrate on implementing its Growth-Efficiency-Talent (GET) strategy more effectively. Legacy payments are nearing their conclusion, with final payments expected to wrap up in the 2025 financial year,” said De la Rey.
He said EOH was committed to supporting customers through the wave of change in this sector. One of iOCO's achievements in the period was its modernisation of legacy applications and large-scale cloud migration projects in the financial services sector.
EOH also remained focused on addressing the overdue modernisation of legacy IT systems within South Africa's public sector.
“With a strong track record in software modernisation, the company is well-prepared to apply its extensive experience to meet the demands of this sector,” said De la Rey.
“The renewed government engagement for potential involvement in future projects has further focused the EOH teams and provided considerable momentum internally within the company.”
EOH intends to recommend that shareholders approve a proposal to change the company name to iOCO Limited at the upcoming AGM. He said EOH anticipated a resurgence in business and investor confidence under the new political landscape.
BUSINESS REPORT
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