JSE-listed technology services firm EOH is looking to change its name to iOCO, as it moves on from its troubled past.
This emerged today when it announced its annual results for the year ended 31 July, saying it delivered a “significantly improved financial position for the year”.
EOH advised shareholders that it intends to recommend that shareholders at the upcoming AGM approve a proposal to change the company’s name to iOCO.
It believes the proposed name change aligns with the company’s strategic objectives and branding initiatives.
iOCO is a subsidiary of EOH, which is mainly involved in systems integration and digital transformation solutions.
The proposed name change comes as the JSE-listed IT services group has been on the mend since a 2019 ENSafrica investigation into EOH’s dealings revealed governance failings and wrongdoing.
EOH appointed ENSafrica to conduct a proactive, comprehensive investigation of the company’s contracts and identify any wrongdoing or criminal conduct in the acquisition, award or execution of contracts.
The probe found about R1.2 billion worth of suspicious transactions at EOH, which mostly involved transactions within the public sector contracts.
According to the company, a special board subcommittee was formed in June 2024, to turn EOH around. The board committee includes business turnaround specialists, together with the CEO and CFO.
It explains that key initiatives include business restructure and rationalisation plans.
Dwindling revenue
The results reflect that total group revenue generated was R6 billion, down 3.1% (FY2023: R6.23 billion from continuing operations).
Total group revenue, excluding sold Nextec legacy entities, of R5.78 billion was down 0.3% (FY2032: R5.80 billion from continuing operations).
Revenue growth from international grew 27% and infrastructure services businesses was up 5%, with robust digital revenue generation, says the firm.
It saw declines in revenue in connected industrial ecosystems (-15%) and digital business solutions (-12%).
According to EOH, gross profit margins remained steady at 27.3% (FY2023:27.9%).
Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) declined marginally to R307 million (FY2023:R312 million), adjusted for share-based payment expense. The company points out that EBITDA growth was achieved from the international, digital and infrastructure services clusters.
It realised operating profit of R112 million, down 17% (FY2023:R135.0 million), including once-off restructuring costs incurred.
However, it says net finance costs reduced by 28% to R118 million, while loss per share (LPS) narrowed by 23% to 10c (FY2023: LPS of 13c).
Headline loss per share (HLPS) improved by 99% to 0.21c (FY2023: HLPS of 21c).
Group net interest-bearing bank loans stood at R644 million after repaying a further R41 million of debt during FY2024.
It notes EOH has improved its capital structure, resolved many of its legacy issues, significantly streamlined its corporate office and administrative functions, and made additional progress in its growth strategy.
These achievements mark milestones in EOH's journey towards financial stability, it notes.
EOH interim group CEO Marius de le Rey says: “Asset sales have assisted in a marked debt reduction and now the focus moves to operational efficiencies and value extraction from the restructure.
“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.”
CFO Ashona Kooblall emphasises the success of a stringent expense management programme, stating: “By rationalising inefficient cost structures, we have also reduced complexity, optimised tax structures and established a lean, consolidated business model.
“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 FY2025.”
She further states that by having a determined value creation mindset and strategy, driving growth and profitability across the diverse range of business, the outlook for FY25 is promising.
Kooblall re-joined EOH as group CFO with determination to make EOH great again, says the company.
Remaining legacy issues
It adds that in the 2024 financial 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 strategy more effectively. Legacy payments are nearing their conclusion, with final payments expected to wrap up in FY2025.”
It adds that it remains committed to supporting customers in addressing the wave of change being experienced in this sector.
Looking ahead, EOH says it anticipates a resurgence in business and investor confidence under the new political landscape.
De la Rey concludes: “We have completed significant strategic realignment and are now poised to enter a new growth phase.
“We will continue our focus on becoming a leading customer-centric organisation and establishing ourselves as a best-in-class technology partner throughout the EMEA region. We are excited about the opportunities that lie ahead and are committed to delivering exceptional value to our customers and stakeholders.”
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