Tech firm cuts losses as lockdown forces decrease in revenue

EOH Holdings yesterday posted a 24 percent decline in profits for the financial year end in July as Covid-19 ripped through its operations.

The group said it suffered as a results of the national lockdown and deals not repeated in financial year 2020 in the hardware business.

It said the recorded a 33 pecentt decrease in revenue.

EOH operates across three pillars: iOCO, NEXTEC and IP.

The group said total normalised earnings before interest, tax, depreciation and amortisation (Ebitda) amounted to R827 million.

It said it managed to reduced its gross debt by 20 percent year-on-year to R2.64 billion. Stephen van Coller said the group managed to position itself for growth and largely delt with our legacy. Van Coller said EOH managed to successfully steer itself to safely through unprecedented global market conditions.

While the economic recovery is uncertain, the path is now clearly set for EOH to capitalise on future growth prospects which can be accelerated given the new normal is premised on an enhanced global digital reality,” van Coller said.

EOH said that it its losses 72 percent during period on the back of its turnaround strategy despite uncertainty in the markets. The group said that its headline loses fell to 495 cents a share from 1 751c last year.

The technology company said that it was beginning to realise the benefits of its turnaround strategy

“The new management team's bold and decisive actions have largely restored confidence across all of the group's stakeholders. This confidence is reinforced by the performance trajectory on almost all metrics, which have meaningfully improved on both an annual basis and on a six-monthly basis and have continued to improve into the first quarter of the 2021 financial year,” the group said.

However its total revenue decreased 24 percent to R11.28 billion despite an improved performance and continuing revenue was down by 19 percent yearon-year.

The group said the core iOCO business remained relatively resilient with an overall reduction of 13 percent in gross revenue, largely due to businesses disposed of or closed during the current or prior year.

The group said it settled five of the eight public sector contracts with one currently in arbitration, another in final negotiations and the final contract concluding at the end of April next year.

The group reported a total loss of R323m as a result of these legacy contracts. “Settlement has also been reached with the Special Investigations Unit post-year end in respect of disclosures reported in May 2019 for two of the three identified contracts where overbilling of licences occurred,” the group said.

The group said it would will repay R42m over a period of 36 months as reimbursement for overcharging the department of defence and is in the process of finalising a similar arrangement with regards to the third and final contract.

EOH shares closed 3.58 percent lower at R6.20 yesterday.