Technology services provider EOH has published its financial results for the year ended July 2021, revealing a return to operating profit of R147 million, from a R1.3 billion loss in FY2020.
EOH said its work to close out legacy contracts and make targeted disposals over the past two years resulted in more profit from a smaller revenue base. Revenue from continuing operations declined to R6.9 billion, from R8.8 billion a year ago.
Losses for the year reduced to R280 million, from R1.7 billion in 2020, while the group reported a diluted loss per share of 166 cents, from a prior loss of R10.
Total headline loss per share from continuing and discontinued operations improved by 96% with losses reducing to 22 cents from 534 cents in FY2020, it said.
“The ongoing headline loss is largely due to the group’s over-indebted capital structure and inefficient legal entity structure, which the management team continues to address as a core focus area.”
EOH said that operating expenses decreased by 46% to R2 billion in FY2021 (FY2020: R3.8 billion), as the remaining legacy issues were closed out and the benefits of cost-saving initiatives were realised.
The group is on a reputational cleanup mission following damaging corruption findings resulting in a major contract loss with Microsoft.
It reduced its property portfolio from 56 to 33 and legal entities have been reduced to around 145 from 272 thus far.
“From a property portfolio perspective, most of our leases expire in 2023, which is when we expect to optimise our property portfolio. Cost reductions have continued across the major expense categories such as travel, marketing and administrative expenses, it said.
Adjusted EBITDA from continuing and discontinued operations for the year was R667 million compared to R19 million in FY2020. Adjusted EBITDA margin improved from 0.2% in FY2020 to 8.5%, which is in line with a stated target of achieving a 10% margin in the medium term.
The group pointed to significant progress made in simplifying the business by bundling complementary offerings to better serve customers with its end-to-end capability and creating sustainable cost savings.
Stephen van Coller, EOH CEO, said: “I am really proud of the fact that we have rebuilt EOH in such a short time frame. Just two and a half years ago the new EOH management team initiated a massive turnaround strategy for the group.
“For the first time since I arrived our current assets exceed our current liabilities, and we are well-positioned to progress the transformed EOH in supporting our customers to solve their business challenges using our innovative technology offerings. Today EOH is streamlined, profitable and is winning new public and private sector contracts across multiple geographies.”
“EOH is now entering an exciting new phase with a key focus on solving for its clients business challenges in an increasingly dynamic environment aimed at achieving mutual growth.”