As it prepares to close its financial year, EOH is on track with a turnaround strategy that positions it for growth going forward.
This is according to CEO Stephen Van Coller, in a pre-closing statement to shareholders. “The EOH of today has emerged out of exceptional times characterised by massive uncertainty,” he says.
“We have built a sustainable business with clear alignment and focus allowing us to better serve more than 5000 enterprise customers, the government and the citizens of South Africa with technology and digital enablement that is critical to our country’s future success.
“Notwithstanding our commitment to South Africa over this time, we are now positioned to grow our international footprint in the UK, Europe and the Middle East.
“Our turnaround plan remains on track and is underpinned by stable revenue and quality earnings,” Van Coller adds. “I truly feel that at EOH whether we are providing end-to-end technology solutions, infrastructure solutions or people solutions, we are indeed living our stated brand promise, which is to SOLVE for our clients at every turn.
“On a personal note, I need to add how very proud I am of all of those at EOH who have gone the extra mile, over this challenging period in South Africa, to demonstrate that we stand in solidarity with those in our society who most need our help.”
At EOH’s interim results released on 14 April 2021 for the period ended 31 January 2021, the group reported a more sustainable business with a significant reduction in one-off costs and improved quality of earnings resulting in a positive operating profit of R59-million compared to a R915-million operating loss in the prior six-month period.
In addition, EOH benefited from an increased digital uptake across its client base, which positively impacted its digital industries, automation and cloud businesses. EOH is now providing its stakeholders with an update on trading conditions and events during the second six-month period of its financial year ended 31 July 2021 (FY2021).
The group states that the general operating environment in South Africa continues to remain extremely challenging. “The EOH board and management team have dealt with the individual challenges as they have arisen over the last six months by activating a clear vision through consistent communication and being proactive with rapid and considered decision-making,” it states. “Building resilience throughout the organisation has been an ongoing imperative.”
In terms of financial performance, the group expects an improvement of between 4 and 6 percentage points from the prior full year, and the gap between normalised EBITDA and reported EBITDA will narrow.
Although iOCO revenue has dropped off in the second half, it continues to post an operating profit and positive EBITDA largely driven by the iOCO Services cluster, specifically Digital Industries which has seen significant growth in its IoT capability.
The NEXTEC business continues to execute upon its turnaround strategy and revenue has remained resilient in the second half. The NEXTEC People solutions business has generated strong operating profit and EBITDA in the second half with margins improving. The NEXTEC Infrastructure solutions business, however, remains under pressure.
Looking forward, EOH states that the group’s turnaround strategy, which has been focused on restoring credibility, increasing transparency and improving liquidity, remains on track.