The scandal-tainted IT group EOH believes it has largely restored its reputation after being embroiled in state capture corruption and is again focusing on government contracts, aiming aims to double the revenue it derives from them.
The company, named by the Zondo commission as one of the leading actors in state capture, began cleaning up its act in 2018 with the appointment of Stephen van Coller as CEO. Judge Raymond Zondo, now chief justice, praised EOH in his first report for the way it had co-operated with the commission.
Results for the year to end-July, released this week, said the public sector contributed 14% to total revenue of R6bn, which was down 3.1% year on year. “We definitely want that to be at least double from where it is now,” interim CEO Marius de la Rey said, without giving a time frame.
“We are winning smaller contracts ... If we can at least get to somewhere around 20% of our business it would be fantastic,” said De la Rey, who took up his post at the end of May. “But it is likely to grow incrementally.”
This year the company announced that it had resolved a significant tax dispute involving EOH Abantu and agreed to pay the South African Revenue Service R112m. It is also concluding litigation cases against former executives of the company.
De la Rey, who also joined EOH in 2018, said the company’s engagement with the government was “fruitful”.
The role I played when I initially came was to deal with what we referred to as contaminated contracts, and dealing with those contracts was particularly tricky and unpleasant
— Marius de la Rey, interim CEO
“The role I played when I initially came was to deal with what we referred to as contaminated contracts, and dealing with those contracts was particularly tricky and unpleasant,” he said this week.
“But I think we’ve demonstrated well to organisations about our cleanup of the past. The government spend is so large that we don’t need to go where we were having issues before. There’s lots of other work. My succinct summary of it is that they’re less suspicious now than before.”
As part of its new brand imagine EOH is in the process of changing its name to iOCO.
“We just felt that with us closing up two very major legacy items, which were linked to the EOH brand, this would be a great opportunity for us to start a new beginning.”
The company, whose share price has plummeted over the past five years, reported improved performance for the year to July with progress in reducing its debt, which has declined by R644m from a peak of R2bn in financial 2021. Headline loss per share improved 99% to 0.21c in the period.
CFO Ashona Kooblall said while the restructuring costs hit results for financial 2024, “we anticipate seeing the benefits of these actions in financial 2025”.
Digital, international and infrastructure services reported robust growth. The international division grew its revenue by 27% this year to R661m, now contributing 11% of total revenue. EOH views this division as an important source of future revenue growth and geographic risk diversification. EOH operates in the UK, Switzerland and Egypt.
De la Rey said growth strategy included making sure that “we can explore opportunities specifically within the UK and the Middle East”. Opportunities in Saudi Arabia were particularly promising “and will be driven out of the team that operates within Egypt at the moment”.
He said the company will continue to expand geographically through its clients, and it was well positioned to cater to the increasing need for cloud, AI, intelligent data solutions and cyber security. He said the South African business units have good pipelines and a positive outlook for financial 2025.
Once it reduces its debt further, EOH plans to make acquisitions and invest in international share buybacks.
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