EOH had a bruising 2023, with its share price plummeting and its chief executive Stephen van Coller announcing his departure.
Last week, EOH released its audited financial statements for the year ended 31 July 2023. It showed that revenue, gross profit, operating profit, and EBITDA were down.
Revenue declined from R6.9 billion to R6.3 billion, and operating profit declined from R282 million to R165 million.
The loss after tax increased by 189%, showing that the company has yet to find a strategy to create shareholder value.
EOH focused on the positives, saying it was pleased to report a “continued improvement in performance with a 35% increase in operating profit from continuing operations”.
It highlighted that it generated a 35% increase in operating profit from continuing operations to R135 million.
EOH maintained gross margins at 28% despite deteriorating market conditions and invested R94 million in growth initiatives.
Van Coller said it has been another year of improvement and great change at EOH with the successful capital raise and restructuring of their debt facilities.
“Despite the deteriorating market conditions and lack of public sector spending and SOE technology investment, our businesses have delivered solid improvements in profitability,” he said.
He added that they are well-positioned to continue this trend as their growth strategy and operating model gain traction.
The market did not share Van Coller’s enthusiasm about EOH’s future, and the share price continued its slide to hit a 20-year low.
The image below shows the EOH share price over the last year.
Stephen van Coller to depart
Van Coller announced that he will step down as chief executive and EOH board member on 31 March 2024.
He was appointed EOH CEO on 1 September 2018 and soon discovered that he inherited a company battling corruption, mismanagement, and poor governance.
EOH also struggled with a growing debt burden, and the share price was on a downward trend. It traded at R40 per share, well below its highs of over R100 two years earlier.
He cleaned up the corruption, created good governance principles, simplified the operating structure, and wiped out most of the debt.
This came at a cost. The balance sheet weakened tremendously, and many EOH employees lost their jobs.
Van Coller said they had to sell many crown jewels to reduce their debt and save the business.
Commenting on his time leading EOH, he said it had been quite a journey and not what he expected when he accepted the CEO role.
“I am immensely proud of what we have achieved as a team. EOH today is a sustainable company which lies at the heart of South Africa’s ICT ecosystem.”
“It has great potential both locally and internationally, and now is an appropriate time to hand over to new leadership to guide the company through this next chapter.”
He said his days of running a company are done, and he looks forward to moving to the Midlands and spending time with his family.
Although he is not keen on another chief executive position, he is still keen on helping boards and chief executives solve problems in their businesses.
The table below provides an overview of EOH’s performance during Van Coller’s tenure as CEO.
|EOH (R million)||July 2018||June 2023||Difference|
|Profit after tax||-1,986||-52||+97%|