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- EOH has reduced debt from slightly over R2 billion at the of January 2022 to R1.7 billion.
- The company has been using proceeds from the sale of non-core assets to help reduce its debt.
- Revenue for the six months to the end of January decreased 20% to 3.5 billion, from R4.3 billion in the prior year.
Technology group EOH says it has completed its turnaround strategy, paying down R360 million in debt since the end of January 2022.
Three years ago, EOH embarked on a "challenging turnaround strategy" following the revelation of a corruption scandal in 2018 involving its senior directors that rocked the business.
On Wednesday, as it tabled interim financial statements, the company said that the past six-month period marked the successful completion of its targeted turnaround strategy. The company has been on a journey to streamline its extensive IT operations and has over the past year disposed of a number of assets over the past year.
It said "good progress" had been made in deleveraging its balance sheet, generating an operating profit of R167 million from continuing and discontinued operations for the six months ended 31 January 2022. Operating profit in the corresponding period six months to the end January 2021 was R76 million.
"Three years ago, we embarked on a challenging turnaround strategy for the EOH group and it has been a tough but truly rewarding journey," said CEO Stephen van Coller.
Despite being able to chip away at debt, revenue for the period decreased 20% to 3.5 billion, from R4.3 billion in the prior year.
The company said the dip was because of exiting non-performing and non-core businesses, as well as the close-out of legacy and low-margin contracts.
There was a R167 million operating profit from continuing and discontinued operations compared to R76 million generated for the six months ended 31 January 2021.
"While revenue has declined, the group's focus on the quality of earnings and sustainable business is evidenced in the total gross profit margin, which increased by 2.3% points from 27.6% to 29.9%," the company said.
Total headline earnings per share improved from a loss of 36 cents to a profit of 41 cents.
Debt, which has been one of the critical areas of concern for the business, has dipped from R2 billion at the end of January 2022 to R1.7 billion, thanks to the company's asset disposals.
The Sybrin sale was announced on 8 June 2021, with the proceeds from the disposal received on 31 March 2022 and the sale of the Information Services (InfoSys) companies, announced on 11 March 2022, is expected to conclude in May 2022.
"Proceeds from the disposal of InfoSys will also be utilised to reduce the group's overall debt by approximately a further R425 million," the company said in its results commentary.
