Chairman's report

The South African business sector remains under pressure with low economic growth and high unemployment exacerbated by the ongoing impact of COVID-19 and load shedding. In July, the country was hit by devastating rioting and looting across KwaZulu-Natal and Gauteng.

In addition to the direct human impact on EOH's ~6 000 employees and 5 000+ enterprise customers, COVID-19 resulted in slower sales for most of the year. The pandemic also challenged us to think outside the box to solve the problems our customers faced. EOH's suite of technology solutions position the Group perfectly to support the move to the cloud and facilitate business processes and controls in a remote working environment. iOCO's Impressions solution, for example, enables customers to view, sign, and send sensitive documents on any connected device conveniently, securely and with full legal compliance.

Improved financial performance and a robust go-to-market strategy

It is gratifying that the financial results are starting to reflect the immense effort the management team put into this business over the past three years, with the Group reporting improved margins and an operating profit while continuing to work the last of the once-off costs out of the system. The finance team made good headway in cleaning up the balance sheet and reducing debt towards our goal of reaching a level where it can be comfortably served through operating cash flow. Management worked very closely with the Group's lenders to ensure transparency regarding the progress we are making and we appreciate the cooperative spirit that characterised these engagements.

The rigorous focus on improving controls and progress in streamlining business processes across the organisation has greatly increased confidence in the reliability of information coming out of the business. The restructuring of the organisation into two key segments following strategies that are clearly understood by the market is progressing well following the sale of non-core and unprofitable businesses.

We are enhancing our ability to sell efficiency-enhancing solutions by pitching our sales efforts to the executive level of potential customers. In  this regard, we appointed an experienced and enthusiastic Chief Commercial Officer, Ziaad Suleman, to take the lead with a robust go-to-market strategy. We are exploring opportunities in Southern Africa, Europe and the Middle East, with our operation in Egypt well positioned to develop into a centre of excellence serving the Middle  East and Europe.

Cost management remains a key focus and as we have settled into the changed ways of working, we have further reduced office space and associated costs. Our view is that around half of our employees will work from offices at any one time and we are seeing a similar trend with many of our customers. This has required that cybersecurity be top of mind in everything we do, both in our own operations and in ensuring security for our customers.

Engaging to enhance transparency

Since the start of our turnaround, the Group proactively engaged with the relevant authorities to resolve problematic legacy contracts and other issues. The repeated coverage of these issues in the media required a significant investment in time from management and the Board to ensure these are dealt with appropriately. Adverse publicity impacts not only the Group's reputation, but also affects morale. The CEO regularly engages with staff to keep them informed about the Group's progress and latest developments. Our people are our ambassadors and transparent communication not only helps their peace of mind but also gives them the information they need when engaging family, friends and customers.

The Board is grateful to the EOH employees for their commitment and contribution through an uncertain and challenging year. In  an industry where skills are in demand and mobility is high, we are pleased that so many staff have chosen to stay the course, particularly in the context of the salary sacrifices and salary freeze implemented last year. We are pleased that this year we are in a position to recommend bonuses and salary increases as a reward for performance. We believe that our ability to retain talent demonstrates that we are on the right track, that employees have bought into the culture we are creating and are proud to be part of a winning team.

Changes to the Board

The Board is functioning well, with a good balance of highly qualified, experienced and ethical directors, with good progress in refreshing the Board subcommittees. We wish to thank Dr Moretlo Molefi and Ismail Mamoojee, who resigned from the Board at the AGM in January 2021, for their contributions and wish them all the best in their future endeavours. We welcomed Jabu  Moleketi, Nosipho Molope and Bharti Harie, further broadening and strengthening the skills and experience on the Board, as well as improving race and gender diversity. Thiroshnee Naidoo was appointed as Company Secretary at the beginning of June  2021.

Broadening our positive impact

The Board is committed to ensuring that environmental, social and governance considerations receive the appropriate emphasis in the Group. Strengthening governance, risk and compliance ('GRC') has been a priority over the past three years and our intention is that EOH moves forward with an emphasis on using its position to increase its positive impact on broader society. We  have a particular  interest in youth development and have aligned with initiatives that build digital skills among youth. At the same time, we  continue to invest in developing skills in our workforce and driving transformation across the Group through hiring and promotion practices.

The ethos of transparency adopted by the executive supports the strong ethical culture that is evident across the Group. As such, the Board's effectiveness is reviewed regularly and processes are in place to verify the qualifications of directors. The fact that nearly 100% of employees completed their compliance training by the due date demonstrates that they understand the importance of ensuring that GRC receives the requisite attention and priority.

I would like to close by acknowledging the constructive approach we experienced in our engagements with government and regulators in addressing the legacy issues the Group has faced over the past three years. These positive engagements have been essential in ensuring that EOH could continue to trade and preserve jobs through the turnaround and COVID-19 crisis. We thank our customers for their ongoing support. The increasing number of long-term contracts being signed in both the private and public sectors is an endorsement of the effectiveness of our best-in-breed technology solutions to SOLVE for their organisations.

We are excited about our next phase, as we are now positioned for growth through our clear business model and enhanced route to market strategy.

Andrew Mthembu
Chairman