EOH is pleased to report a continued improvement in performance with a 35% increase in operating profit from continuing operations
Highlights for the year ended 31 July 2023 include:
- EOH generated a 35% increase in operating profit from continuing operations to R135 million
- The successful rights issue and capital raise allowed for R678 repayments in debt and the restructuring of debt facilities with a single lender at significantly reduced interest rates
- Group net debt now stands at R683 million.
- Gross margins maintained at 28% for the year despite deteriorating market conditions
- R94 million invested in growth initiatives
- Restructured operations into key pillars aligned with executives responsibilities under new long-term contracts
Despite a deteriorating local economy and significant headwinds in the public sector, EOH’s continuing operations managed to deliver revenue growth of 3%, an increase in operating profits of 35% and a halving of net loss after tax from R160 million in FY2022 to R81 million for the year ended 31 July 2023.
At a divisional level, the International business delivered excellent growth of 23% in revenue largely driven by the Group’s Middle East operations. This solid performance flowed through to an EBITDA level with a 41% increase to R56 million. The IT Infrastructure business has also delivered good growth of 15% driven by new client acquisitions in the mid-market space as the business continued to tailor its offerings. Our Digital Enablement business also showed good growth at 7% as it continued to see customers accelerate their digital strategies.
The turnaround in the EasyHQ business was completed during the year and this division recorded a 33% increase in EBITDA to R121 million despite experiencing a 5% reduction in revenue as unprofitable contracts were closed out over the 12 month period. EasyHQ houses the Group Risk and Compliance “as-a-service” IP that has been created over the past four years and is an exciting business for EOH’s platform growth.
The biggest remaining challenges are in the Enterprise Applications and Software Reseller Business and the Nextec Infrastructure and Consulting businesses. Both these divisions have new leadership and are core focus areas for 2024.
Stephen Van Coller, group CEO, commenting on the results said “It has been another year of improvement and great change at EOH with the successful capital raise and restructuring of our debt facilities, re-alignment of our operations into autonomous pillars and over R90 million invested into growth initiatives. Despite the deteriorating market conditions and lack of public sector spend and SOE technology investment, our businesses have delivered solid improvements in profitability and are well positioned to continue this trend as our growth strategy and operating model gain traction.”
Van Coller has agreed to extend his initial five year contract for another six months but has asked the Board not to consider an extension beyond the 31st of March 2024 at which time he will officially retire from the Board. Van Coller says: “It has been quite a journey and not what I expected when I accepted the CEO role in 2018. Nevertheless I am immensely proud of what we have achieved as a team. EOH today is a sustainable company which lies at the heart of South Africa’s ICT ecosystem and plays an important role in everyone’s lives. It has great potential both locally and internationally, and now is an appropriate time to hand over to new leadership to guide the company through this next chapter.”
Stephen will, however, remain available to the Board after the 31st of March, as required, to help with a smooth leadership transition and to complete any projects that require his continued involvement.
Following group CFO, Megan Pydigadu’s resignation, as announced on the 25th of July 2023, the Board has appointed Marialet Greeff as the Interim Group Chief Financial Officer. Greeff has been with the Group since 2019 and is currently the Group Executive for Treasury, Tax and Regulatory Finance. Marialet is a CA(SA) and has played an integral role in both the finance function and the restructuring and turnaround process since joining EOH in 2019.
The successful rights offer has, in addition to largely rectifying EOH’s capital structure, has also given the EOH Board the freedom to consider the next chapter for the Group. EOH Board Chairman Andrew Mthembu says: “We are hugely grateful to both Stephen and Megan for their leadership which has resulted in a sustainable, growing business. As EOH has changed its strategic focus and significantly decentralised its head office functions over the past year the Board has the necessary time to undertake a thorough skills assessment as part of the recruitment of a new CEO and CFO. Importantly to ensure business continuity the Board has signed four year contracts with the heads of the respective operational businesses namely Marius De Larey, Brian Harding and Fatima Newman.”
Please see attached the full SENS announcement.
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