Big name change for EOH

EOH has announced that it will ask shareholders to approve rebranding the company to iOCO Limited at its next annual general meeting.

“The board of directors of the company believe that the proposed name change aligns with the company’s strategic objectives and branding initiatives,” it said in a note at the end of its annual financial results announcement.

The rebranding comes after EOH appointed former iOCO boss Marius de le Rey as the company’s new executive chairman and interim CEO.

It has not yet set a date for the meeting, but EOH usually holds its AGM in November or December.

EOH released its financial results for the year ended 31 July 2024 on Wednesday, stating that the company has delivered a significantly improved financial position.

“Asset sales have assisted in a marked debt reduction and now the focus moves to operational efficiencies and value extraction from the restructure,” said EOH interim group CEO Marius de le Rey.

“This has unlocked more efficient day-to-day operations with promising growth potential,” De le Rey continued.

“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.”

However, despite some improvements in its financial results, the company reported a R82.6-million comprehensive loss attributable to the owners of EOH.

This is 5.8% worse than the R78-million loss attributable to EOH shareholders that the company reported last year.

Group revenue was also down 3.5% to R6.0 billion from nearly R6.3 billion (including discontinued operations).

Operating profit was down 17% to R112 million, which EOH explained included once-off restructuring costs.

However, there were some encouraging signs, too.

EOH reported that its gross margin remained steady at 27.3% compared to 27.9% from the prior year.

Its net finance costs also reduced by 28% to R118 million.

EOH reported strong revenue growth from its international (+27%) and infrastructure services businesses (+5%), adding that digital revenue generation was robust.

However, it also reported a decline in revenue in connected industrial ecosystems (-15%) and digital business solutions (-12%).

EOH said that a significant achievement during this period was the restructuring of the group into three divisions.

These are iOCO South Africa, iOCO International, and Outsourced Knowledge Services (formerly Easy HQ).

The company’s restructuring also included a reorganisation of its digital businesses under a project named “Tetris”.

This focused on the internal sale and transfer of digital businesses previously housed in EOH Mthombo Proprietary Limited and iOCO Software Distribution Proprietary Limited to iOCO Digital Proprietary Limited.

As a result, the cash-generating units (CGUs) previously comprising these business units were restructured, and the associated goodwill was reallocated across the newly defined CGUs within the group’s digital business segment.

EOH’s Digital and Coastal CGU was subdivided into five new CGUs: Application development, Automation, Data and Analytics, Cloud and Security, and Testing and Quality assurance.

Additionally, the Data Consultancy business, previously part of Softworks CGU, and the Database Support Services business, previously part of Integrated Services CGU, were reallocated to the newly formed Data and Analytics CGU.

According to EOH, this reorganisation aimed to enhance the Group’s market share by fostering greater internal cohesion, and optimisation of client solutions.

Chief financial officer Ashona Kooblall said their 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,” stated Kooblall.

“While restructuring costs impacted FY24 performance, normalising these results reveals year-on-year growth in both operating profit and EBITDA.”

Kooblall said they anticipate seeing the benefits of these actions in the next financial year.