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Embroiled information and technology services company EOH announced its interims for its half-year ended January, with the once-high flying darling of the JSE implementing its turnaround strategy. Under the leadership of Stephen van Coller, EOH has managed to streamline its operations ensuring the long-term sustainability of the business. Debt and legacy issues remain, however, this is a turnaround story worth keeping an eye on. – Justin Rowe-Roberts
Read also: EOH turnaround strategy bearing fruit
EOH SENS statement:
Unaudited interim results for the six months ended January 31 2021
“Our business, while smaller from a revenue perspective due to the strategic disposal of non-core assets and exit of under-performing businesses, is now a more sustainable business delivering better quality of earnings. We have seen a significant reduction in one-off costs and are confident that our legacy issues are now under control. The local and global economy remains constrained as we have seen the negative impact on some of our clients. However, we have also seen increased cloud uptake and spend on automation and application development in line with global trends since the beginning of the pandemic. Over the coming months, our focus will be on deleveraging, enhancing margins and remaining antifragile.” – Stephen van Coller, CEO
- The period followed the continued improvement theme from the last two six-month periods;
- Revenue of R4 376m – decline mainly attributable to disposals and legacy contracts;
- Improved gross profit margin to 27.6% from 24.2% in the prior period;
- Total core Normalised EBITDA for the period was R363m with a normalised EBITDA margin improvement to 8.3% from 7.8% in the prior period;
- As the business evolves and approaches a steady state, the gap between normalised EBITDA and reported;EBITDA continues to narrow with EBITDA before normalisation adjustments of R329m for the period;
- Positive operating profit of R59m generated compared to R915m loss in the prior period;
- Total headline loss per share improved by 83% with losses narrowing from 350 cents per share to 60 cents per share;
- Cash remains stable with a cash balance of R440m as at 31 March 2021; and
- Covid-19 continues to negatively impact the South African economy however increased drive towards.
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