EOH headline loss per share narrows

Technology services group EOH has been making significant strides in improving its financial performance, with the headline loss per share narrowing by 83% for the six months ended January, on a year-on-year basis. EOH CEO, Stephen van Coller, sat down with CNBC Africa to discuss the company's progress in turning its fortunes around. Van Coller highlighted the challenges inherited from the previous management, including a large legacy debt, but emphasized the ongoing efforts to reduce this burden. The company has successfully reduced its debt by 2 billion and disposed of assets totaling 1.3 billion, leading to a positive impact on the balance sheet. One of the key milestones achieved by EOH under Van Coller's leadership is the attainment of an operating profit for the first time in over two years. This achievement marks a significant turnaround for the company and signals a shift towards sustainable profitability. Van Coller expressed confidence in the quality of earnings, citing an improvement in gross profit margins from 24% to nearly 28%. Notably, the normalized EBITDA and reported EBITDA figures are now closely aligned, reflecting the company's operational performance. Van Coller acknowledged the role of the COVID-19 pandemic in accelerating the digital transformation landscape, benefiting EOH's cloud services, IOT automation, and app development businesses. The shift from on-premise computing to cloud-based solutions has contributed to margin improvement, while the company's reputation recovery has enabled the signing of long-term contracts with key clients. Moreover, EOH's international revenue has grown to 13% of total revenue, showcasing the company's expansion beyond South Africa. Looking ahead, Van Coller outlined the strategic opportunities for growth, emphasizing a three-pronged approach. Firstly, the company is leveraging its expertise in key areas like cloud and security to expand into markets such as Egypt and potentially Europe. Secondly, EOH aims to follow its clients into Africa, replicating successful solutions and services in new regions. The increased acceptance of remote work post-pandemic has facilitated this expansion strategy, allowing for cost-effective operations and improved margins. Van Coller highlighted EOH's platforms such as digital signatures and medical records management as key drivers of growth in target markets. The company's focus on scaling its back-office and compliance services further underscores its commitment to sustainable expansion and profitability.