Shares in EOH shot up almost a 10th on Wednesday as the technology group reported a narrowing of its losses, while it is proposing a name change to Ioco.
Ravaged by scandal, the group has made a concerted effort to salvage its reputation after allegations of malpractice and tender irregularities under previous leadership.
In a move to distance itself from that past, the group sees a name change as part of the solution.
Acting group CEO and head of the company’s Ioco business, Marius de la Rey, told Business Day the name change has been in works for three years.
“We’ve been operating within the ICT sector as Ioco now for more than three years. It has made up [a big part] of the actual technology revenue that we generate within the organisation for a considerable period of time.
“Five years ago when I joined, we had no idea as to what the contamination would be from an entity like EOH Mthombo. So we started a journey of migrating the business to the Ioco brand, with the full appreciation that EOH is our mother ship and listed entity.
“Over a period of time, most of our contracts, staff contracts and the business that we’ve got has been through Ioco. We felt with all the changes that have taken place now and the fact that we closed our two biggest legacy items last year, this would be the right juncture to [take on] the new name,” which represents the leading technology business in Africa, he said.
EOH intends to recommend that shareholders approve the new name at the AGM scheduled for November 27.
Rivals like Dimension Data, now trading as NTT Data, have been through similar name changes, albeit for a different set of reasons. But like Didata’s Japanese parent, EOH is hoping to unify the once-fragmented entity under one name. “We come out of a history of nearly 900 different businesses.”
The group, valued at R1.07bn on the JSE, reported a 3.1% drop in revenue to R6bn for the year to end-July, while adjusted earnings before interest, tax, depreciation and amortisation (ebitda) was marginally lower at R307m from R312m a year ago. Its headline loss per share narrowed to 0.21c from a loss of 21c before.
EOH said in a statement on Wednesday that it experienced revenue growth from international (27%) and infrastructure services businesses (5%), with digital revenue generation remaining robust. There was a fall in revenue in connected industrial ecosystems (-15%) and digital business solutions (-12%).
Market players cheered the group’s performance, sending the stock up almost 9% on Wednesday to R1.82. The share is up 27% so far in 2024.
Apart from the proposed new name, there have been many other changes at the group. A special board subcommittee was formed in June to turn EOH around, with key initiatives including business restructure and rationalisation plans.
A corporate and administration cost restructure was successfully completed and cost savings of R160m-R200m are expected into the 2025 financial year. In addition, the group resolved major legacy items, and operations have stabilised and continue to improve.
The group has also been working hard to reduce a mountain of debt accumulated a few years ago when it focused on acquisitions.
Disillusioned with the erosion of value at this once-thriving tech firm, shareholders initiated a plan aimed at revitalising it. The strategy includes expanding Ioco and the international unit and cutting unnecessary costs, as well as leadership changes.
Jabu Moleketi, who represents strategic investor Lebashe, is now EOH chair. Another change, in July, saw Ashona Kooblall appointed as CFO.
Update: October 23 2024
This story has been updated with new information.
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