iOCO Limited (IOC) Earnings Call Transcript & Summary

Good morning, everyone. Thank you for attending the EOH Group Annual Results Presentation. EOH's results over the last 6 months are reflective of a struggling South African economy and a persistently challenging global context. Notwithstanding these headwinds, we have still managed another year of improvement in our core digital enablement and IT infrastructure businesses, while at the same time, continuing to extract efficiencies and manage our costs downwards. Notably, just last month, after 4 years of tireless negotiations and information gathering, we successfully settled the final outstanding legacy issue with SARS. This means that as I present my final set of results for EOH, I can confidently say that I'll leave the business with a clean slate with a strong management team who have been in place for the last 4 years, and in a position where all the efforts from this point on can focus fully on propelling the business forward. The past 5 years have been nothing short of remarkable. We have faced a series of unprecedented challenges from the corruption scandal in 2019 through the disruptions of COVID in 2020 and '21, followed by riots and floods in KwaZulu and the Russian-Ukrainian war. Our consistent strategic approach, combined with the resilience of our people has helped us enormously in navigating these turbulent times, despite all of these challenges and amidst all the heights, we have celebrated many notable achievements. The team has put these across 2 slides for a record you can read in your own time, but a few are noteworthy of mention. Through carefully designed strategic measures, we have slashed gross debt, which initially surpassed ZAR 5 billion. If you factor in the OEM license catch-ups, funds, penalties, acquisition payments, debtor write-offs to less than ZAR 700 million as of today. We have settled key public sector contractual issues in a fair and transparent manner including the fraud cases with the SIU. We have avoided blacklisting by both public and private sector by doing the right things in the right way even though it was very painful. This is tangible evidence that businesses are not corrupt, people are. If you separate the people from the business, you can save jobs. We've received accolades from Judge Zondo on our transparency with the Zondo Commission and more importantly, how EOH dealt with internal cleanup. During the riots, EOH staff sourced 24 tonnes of food parcels for affected staff, providing trauma counseling to more than 300 people and volunteered to help cleanup in Alexandra. When I joined EOH, I spoke about great people doing great things for customers. This is without a doubt, one of the key reasons that EOH has not only survived, but also been able to position for growth. Great people doing great things has remained a constant and enabled us to retain a core customer complement, including the majority of South African top corporates. EOH's success in dealing with transparency and credibility with these difficult issues has earned its people a license to create a fit-for-purpose structure comprising in 3 businesses. EOH [indiscernible] and International now that now normalized can grow and compete openly. The growth, efficiency, talent or guest strategy is now driven inside these businesses by Fatima Newman, Marius de la Rey and Brian Harding, respectively. Fatima, Marius and Brian have been deeply operationally involved in EOH's transformation journey, successfully managing the businesses to achieve controllable EBITDA in 2023. In 2024, we have further decentralized to a controllable EBIT and promised $50 million of administration savings. The plan is to move to controllable PAT in 2025 to properly allow each business to independently move in flex and be as agile as required. These moves have been critical to trim the administration cost burden each year to get a more digitally lean group. We are confident we will beat the ZAR 50 million annualized savings as well as beating the ZAR 75 million of proceeds in noncore sales as promised at the end of last year. Calendar year 2023 was a very difficult year. This straddles financial year, H2 '23 and H1 '24 for EOH. Fortunately, the underlying business performance in the last 2 months of this half have shown signs of improvement. The slowdown in public sector contracting, especially in the state-owned enterprises and the trend of large corporate in-sourcing seems to be resolving itself, and we are hopeful H2 will show further growth. Revenue has shrunk slightly by 2% half 1 on half 1, but it did grow 6% half 2 on H1, highlighting the recovery. This was a mixed bag, though, and Marialet will take you through all the details. In summary though, the digital business continued growing by more than 9%. The refocused Infrastructure as a Service business grew 14%, and the international business delivered 11% growth. The public sector challenges negatively impact the operational technology and enterprise applications businesses. EOH managed to keep revenue flat as it revectored itself under Fatima. The software reseller business has come under margin pressure as expected as OEMs take back exclusive contracts and therefore, sales commission margins. The biggest issue for us over this period has been the cost of sales line. Ending contracts after a long period always results in a delay as you restructure your staffing mix. This added to the contracting delays gave us a 2% drop in GP margin as a result of these delayed or lost contracting, sales mix and staff retention, and this costs around ZAR 95 million, which drops straight to the bottom line. Operating costs were kept very much intact and reduced by 3%, even though we awarded staffs and inflationary increase. Good cost management allowed EasyHQ to generate ZAR 31 million of positive cash flow if you ignore the large licensing deal in Europe, which positively skew these numbers further. These administration cost savings were largely in head office in iOCO, South Africa as post the refinancing of the debt to a single bank, we were allowed to move forward with the legal entity restructuring and to order smaller head office dealing with investor relations, the listing requirements, group tax and accounting consolidation, the legacy debt and remaining legacy items. Marius, leading our iOCO South Africa has completed around 80% of its restructuring with largely only public sector business remaining in Matamba. Our iOCO management anticipate a further ZAR 50 million of efficiency savings in our iOCO in 2025. Fatima, leading EasyHQ post the half-felt settlement to SaaS will now be able to follow our go and start the complex collapsing of legal entities into something a lot more efficient. Fatima will update the market in due course on the art of the possible. Brian, leading international will continue as he has, having doubled the international profit in the past 3 years. The reduced interest costs and tax efficiencies, unfortunately, were somewhat consumed by the SIU interest restatement of ZAR 19.5 million and ZAR 6.9 million tax refund forfeited in the SARS settlement. As I indicated earlier, the SARS settlement is a really important milestone as the past has firmly settled now, and we can use 100% of our efforts to focus looking forward. As we continue help pursuit to be one of the coolest places to work, we have made significant progress from a diversity perspective with women in the majority at 51%. In recognition of our efforts in driving gender equality, EOH was named Southern African champions and the Accenture Gender Mainstreaming Awards against the many global players. Our AIC people complement top 65% for the first time as our transformation strategy is bear fruit. Our focus on differently abled individuals and youth in our country was supported by a total spend of around ZAR 13 million, impacting the lives of over 120 people with disabilities. We continue our intense focus on employee care with over 1,713 interactions for the period. At EOH, we believe that an inclusive world is an enabled one, and we will continue to drive and deliver on the coolest place to work agenda. As I outlined at the year-end presentation, investing in EOH makes a difference. We are the ESG of the ICT sector. For H1 '24, we made strides in the following areas: to improve our employee value proposition, we retained our top employer status for the second year in a row with demonstrable improvements in the pillars of development, attract and shape, and an 81% overall score. An example of our people demonstrating our communities' matter, EOH's contributed 500 hours in volunteerism for the early childhood development linked initiatives. On the job creation front, EOH created 70 new jobs through the expansion of our period poverty project. We targeted skills interventions with 266 unemployed learners at a cost of ZAR 12.8 million, and we opened our first enterprise development hub at our [indiscernible] site in commemoration of International Women's Day. Investing in EOH makes a difference. I will now hand over to Marialet for the detailed and [indiscernible] of our numbers.

Good morning, everyone, and thank you, Stephen. Starting on our income statement, we have no discontinued operations for the current financial period. We have seen a slight decrease of 2% in continuing revenue as well as a 2% decrease in our gross profit margin from 29% to 27% compared to the prior year, which I will unpack in the next slide. Despite inflationary increases given to staff for the current financial period, we have managed to reduce operating costs by 3% compared to the first half of 2023 and we are on track to realize the ZAR 50 million in savings and operating costs communicated at year-end. Net finance charges have reduced by 40% following our capital restructure in 2023. Despite these savings, the decrease in gross profit has resulted in a decrease in adjusted EBITDA margin on a continuing basis from 6% to 3%. 1Over the next few slides, I will unpack the business performance on a more granular level, so you can get a proper view of the operations and business performance over this period. Our digital enablement business showed good growth of 9% as well as our international business, which grew revenues at 11%. Infrastructure Services also saw good growth, although much of which was on the back of large hardware deals, which did impact margins. The Enterprise Applications and Software Reseller saw a 20% revenue decrease to ZAR 427 million. This was primarily due to the loss of a significant contract in Enterprise Applications in 2023. Revenue growth was again held back by operational technologies, where delays in closing certain significant contracts resulted in a 24% reduction in revenue. EasyHQ overall business revenue decreased by 4% to ZAR 431 million. However, on a continuing basis, revenues flat despite muted economic conditions. The NEXTEC legacy businesses are being managed on a performance basis with all being in various stages of disposal processes. Digital enablement business managed a slight increase in gross profit margins year-on-year, leading to an 11% increase in gross profit to ZAR 246 million. The International Business increased its gross profit on the back of good revenue growth. However, there's been a decrease in gross profit margins across all other lines of business. In the EasyHQ business, the gross profit margin has decreased by 3%, which is directly related to an inflationary increase in the fixed cost base, not supported by the necessary increase in revenue. The decrease of 2% in the Operational Technologies gross margin is as a result of expensive billable specialist employees being underutilized, stemming from the aforementioned delay in closing new contracts. The Infrastructure Services business had a decrease of 3% in the gross margin due to a change in sales mix with higher hardware sales recorded at lower margins. Overall, there's been a decrease in gross profit realized of ZAR 95 million compared to the prior period, was effectively dropped straight to the normalized EBITDA performance. iOCO, EBITDA performance has remained stable year-on-year in total with the main volatility coming through in the Enterprise Applications and Software Reseller businesses. Following the rights issue last year, iOCO, South Africa has been able to reorganize the business into a more efficient cost structure by consolidating its various administrative layers which should realize further ZAR 50 million in cost savings for the 2025 financial year. iOCO International's EBITDA performance has been fairly flat year-on-year, with a decrease in H2 2023 being cyclical. Turning to EasyHQ. Adjusted EBITDA for half 1 2023 and half 2 2023 included certain large one-offs relating to the benefits from delayed government grants in prior periods received of ZAR 12 million as well as net recovery of previous bad debts and bad debts written off of ZAR 11 million. The remaining delta in EBITDA between H2 2023 and H1 2024 is mainly due to the seasonality in our Learning and Development businesses, where leadership contract renewals tend to fall into the second half of our financial year. We reported a loss after tax of ZAR 91 million for the period. This does, however, include certain one-off items, which will not be repeated in the future, which, if excluded, shows that the business is trending towards breakeven. Goodwill impairment of ZAR 20 million was recognized, of which ZAR 16 million is in the NEXTEC legacy businesses, which due to aforementioned delay in contract revenues and stagnant growth. As part of the compromise agreement with SARS, a tax receivable of ZAR 6.6 million was derecognized and increased our tax expense for the period. We further had to increase our provisions on legacy items by ZAR 22 million, which is related to an IFRS adjustment required on the Department of Water and Sanitation payable, ZAR 14 million of the adjustment relates to interest cost and the balance is an increase in the remaining payable. During the period, we invested over ZAR 26 million into various growth initiatives across the business, including ZAR 14 million in OpEx and ZAR 7 million in cost of sales, the balance being in CapEx. Our Infrastructure Services business, we invested ZAR 7 million in the development of tools and new products in the managed services business relating to the Service Desk Command Center and everything as a service, which will be scalable in the future. Internally, we have continued to invest in Phase 2 of our ERP system, which went live in March 2023 as well as other IT initiatives to ensure that we're continuously improving the insights that we get from our data. We will continue to invest for growth in our business and implement our GET strategy. We continue to realize savings related to our corporate costs. This is a key focus area, and we realized savings of 13% in H1 compared to the prior period. With the restructure of the business has entered its 3 main operating units, it has further enabled us to streamline back-office functions, which we expect to continue into the second half of the financial year. We have seen a significant decrease in the working capital investment on balance sheet. This is, however, skewed by a significant one-off receipt from a customer in our Swiss business for which the relevant supply payment was only made just after half year-end. Excluding this one-off mismatch, the working capital balance has remained stable at approximately ZAR 350 million, with the continued tightening of liquidity in the economy and the outlook for the remainder of the financial year, not looking significantly improved we are still seeing our customers, including our blue-chip debtors push out their terms. However, the group continues to manage liquidity very tightly on a weekly basis. Overall, we generated ZAR 129 million of cash flow from operations and ZAR 110 million from working capital, as discussed earlier. We had a net investment in maintenance and investment CapEx of ZAR 29 million after paying ZAR 39 million for legacy settlements and ZAR 55 million for interest. We had ZAR 240 million of cash available before disposals of ZAR 14 million, finishing the period on ZAR 255 million of cash. We have further agreed with our lenders that we are able to settle our legacy payments related to Mehleketo and SARS from disposal proceeds and not operational cash. Our legacy issues have decreased significantly. The DWS and DoD SIU investigations are settled, and we pay on a monthly basis, the agreed amounts. DoD payments were concluded in the first quarter of financial year 2024, whilst DWS will close out in 2026. Mehleketo is a rail business that we put into liquidation after the sale of the business fell through and has historically been a contingent liability. We have closed this out as a liquidator, and we're paying on a monthly basis concluding in financial year 2025. As mentioned earlier, we had to increase our provision marginally from an IFRS perspective. However, our net cash outflow is in line with the original provision after receipt of the administrative claim from liquidators. Autospec, one of the 3 primary contracts was completed during the previous year. The conclusion of the remaining 2 projects has been impacted by challenges associated with Rand Water shutdown windows. And as a result, the time lines for completion have been extended. We remain committed to see these projects through to completion. On Pia, we have made good progress in resolving the functional issues on the primary Pia side of projects and have substantial completion on both projects. We're resolving remediation work on these projects with the expectation to close these out in the coming year, thereby significantly reducing the risk after which will be left only with the limited warranty periods to service. And then the last of our legacy matters, which remained uncertain when we communicated with shareholders in October 2023 was the size related [ Pia ] matter. We closed out the compromise agreement with SARS in February and full payment was made on 1 March 2024. This was funded through disposal proceeds and an increased facility from our lenders. This was the last large legacy issue that needed to be solved to allow the EOH Group to operate as a normal business. The group's finance charges decreased to ZAR 68 million for the first half of the financial year from ZAR 102 million for the same period in the prior year. As a result of the ZAR 600 million capital raise and the refinancing of consortium facilities with a single bank at improved interest rates during financial year 2023. This improvement has ever been ameliorated by an additional interest charge recognized on legacy debts of around ZAR 14 million. However, we're forecasting to still see approximately 27% saving in the total finance charges year-on-year. We've made good progress on the disposal of businesses we had identified as part of a strategic portfolio cleanup, which was aimed at streamlining the group's operations and further aligning its business portfolio with its core objectives. To date, we've received ZAR 20 million in disposal proceeds from disposals closed in the current year, and we have another ZAR 58 million in binding offers, which should close before the end of our financial year. There's a additional of disposals, which are in the final stages of due diligence. So we are on track to generate more than the ZAR 75 million in disposal proceeds we had initially targeted for the current financial year. We received ZAR 22 million from disposals that were closed in financial year '23, together with ZAR 35 million from a prior period disposal that was held in escrow, which was used as part settlement of our size matter. Our balance sheet is largely stable. However, I would just like to draw attention to the following items: the large movement in other financial liabilities. At year-end, our long-term debt facilities were classified as current due to a strict interpretation of IAS 1 paragraph 69. However, based on confirmation from Standard Bank, this was not a breach nor an event of default and therefore, this debt has been reclassified back to noncurrent liabilities. The significant increase in cash balance year-on-year is due to the early receipt already discussed in our business in Switzerland. I'd like to hand over to Stephen to take you through the group outlook.

At year-end, I said the outlook is a little murky. Well, the [ murk ] remains. We have both global and local economic and political uncertainty. But hopefully, U.S. rates will come down now that it looks like inflation is under control. However, tough times create both opportunities and threats. We will do what we did in COVID, focusing on the 4 Cs, which determine our brand strength, who will stay close to our clients and our OEM partners to ensure we can support them in solving their digital transformation strategies. We will continue our Coolest Place to Work strategy as this effectively affects the quality of our talent and our impact on our communities. We will continue to save on administration costs to become more agile and allow investment in growth. While this growth remains muted in the current climate, we need to prepare the business for prospective GDP growth, as I've outlined before, the ICT sector is very correlated to GDP growth. Since the rights issue and refinancing the debt, we have been able to move at pace with our iOCO consolidation. This has already yielded benefits with the consolidation into 4 main units with the commensurate consolidation of the administration. Our iOCO have committed to a further ZAR 50 million admin cost savings into 2025 as they close out this reorganization. This will be on top of the annualized ZAR 50 million savings that we have met in the first 8 months of 2024 as promised as year-end. Some of these benefits will be seen in the second half. You have seen the final noncore sales Marialet showed you. We will materially beat the ZAR 75 million promised, and this will close the NEXTEC business line by year-end. This is a huge milestone, and the proceeds will plug the SARS settlement outflow. Lastly, as I move on and hand the reins to an incredible team, I would like to thank all the EOH's for their endless energy, openness and dedication to making this journey possible. It has been a tremendous learning and growing experience for me personally. A big thank you to the Board for their guidance and energy through difficult times. I'm thankful to my Chairman for always being available for chats and advice and now taking up the range, so I can spend some quality time with my family in the Midlands. The journey has been epic, and I will take so much away with me, and we'll be watching closely as I remain a committed long-term shareholder. Thank you.

Thank you, Stephen. EOH has indeed at a tenant point in its evolution, as we finally move past the legacy issues that have played the company for so many years. I would like to thank Stephen personally on behalf of the Board and all staff for the role he has played in getting us to this point. It certainly was not the job you signed up for in 2019, but the leadership demonstrated in bringing EOH from the brink of collapse, saving thousands of jobs while delivering excellent service to our clients has been remarkable. It has been an honor indeed serving alongside you over the past few years, and I'm looking forward to working closely with the excellent leadership team you leave behind in taking EOH to the next level. We would like to now address any questions that you have for Stephen, Marialet and myself.

Welcome to the interim results for EOH to the end of January 2024. I have with me outgoing CEO, Stephen van Coller; Group Financial Director, Marialet Greeff; and the Chair of the EOH Group, Andrew Mthembu, thank you very much. Stephen, your last set of results, I need to start there. How are you feeling right now?

Yes. It's obviously mixed feelings. It's been very challenging 5.5 years, obviously disappointing that we've given results that I think investors will be disappointed with. But I think there's a lot of upside if you look underneath them. The real issue was the 2023 calendar year, which was half of '22 -- or half of '23 and half of '24. But if you have a look at half 2 '24 to half 1, we've actually increased revenue by 6%, and you saw Marialet's slide just on EBITDA. So I think that '23 doldrum has passed, and we're on that. And actually, if you have a look at the normalized results, they're pretty flat from half 2 to half 1, which is good. But I think there's some really important things there like we have done our restructuring finally, and we weren't allowed to do that until we managed to get a single bank facility that's been huge. It allowed us to sell the last legacy businesses, and that's going to bring in a chunk of money that will help us settle SARS to. We've once again reduced admin costs, so even though we gave staff of 6% or inflationary increase, and that's important because we are a people business. We still managed to reduce cost by 3%. And now Marius with iOCO having consolidated to force promising another ZAR 50 million. And so all those things come out the bottom line. Marialet and the team have done a great job now reducing tax closer to a normalized basis. The settlement was source, a very big issue because now the other 1/3 of the business, which is EasyHQ, you cannot start that restructuring, which will normalize further those admin costs and tax costs that we haven't been able to do until now. So there will be further improvement on that. And obviously, interest through the right issue and the ability to do the right issue has brought that down to a much lower number. So if you go back and you think about ZAR 5 billion of debt down to ZAR 700 million, over 5 years, you've seen head office cost on 400 now to below 200. And actually, you'll see at the end of the year when we split out the actual investment holding cost, that's less than 40 people and it's going to be less than ZAR 100 million. I think it's been an amazing achievement by the team because these things are very difficult. They take a lot of time, and you have to do them in a way that is respectful. The other thing that I think for me that was massively positive is I know that our GPs have gone down. But if you actually have a look at half 2 last year, for the whole year, we did 28%, first half, we did 29%. So actually, in the second half, we had 27%. We've kept it to 27%. But the reality is it's the first time we've been able to make a long-term business decision. And so you know what, we are a people business. We've got highly skilled people. There is some delays, but we want to hold on to those people. We were able to make that. In the past, we couldn't. We had to do things that we didn't really want to do just to make sure that we kept our heads above water. And so for me, it's a very exciting place to be actually not withstand obviously, I would have loved to have traveled profit and traveled revenue and done all those wonderful things. But [indiscernible] to be real.

Marialet, your first set of results as a Group Financial Director, highlights from your side, what stands out?

I think Stephen has sort of highlighted the majority of the items that have been very positive from our perspective. The SARS settlement being one of the main items. That was one of the legacy items that was holding us back from growing as a business because there was still significant uncertainty around it. We have managed to grow our revenue by 6% from half 2, even though there's been a slight decline of 2% from half 1 to half 2 -- half 1 to half 1 for this year, and the reduction in interest cost, which has freed up liquidity and has managed -- has definitely made a difference to the business and from where we can go from here.

Andrew, you become Executive Chair on the 1st of April. So how is your role going to change fundamentally -- you've been Chair of the Group for some time?

And Andrew can tell you, it's not an April Fool's joke, it's real.

Definitely. What I can say is that I'm not expecting a walk in the park. The reality of the situation is that -- and the comfort that I have is that I'm working into an environment where all the head [indiscernible] have been done by Stephen and his team. He's cleaned up the balance sheet, reduced debt, what most of the legacy issues, which are now behind us. And it is an organization that has been restructured and restructured to focus on the 3 stripes that have been described by Stephen and Marialet and he also not only that he leaves very able people that have been with us for quite a while, heading those 3 units in the name of team, Marius and Brian. And so my job really is to come in and try and bed down the structure that has been lend by his team. And of course, we'll continue looking at taking out -- or making sure that we get more efficiencies out of the business to a point where we also look at head office and redefine what that head office looks like and scope what the new CEO should look like or...

When you talk about the new CEO. Andrew, I've got to ask you that question. When are you going to make an announcement?

Well, I think from where I'm sitting, give or take maybe about 4 months, we should start the process of looking CEO, once we understand what the final structure of the business is and what head office should look like. And therefore, the period of 6 months, I think well within that period, we should be able to be in a position to identify a new CEO for the business.

[ Harold ] de Kock asking, will EOH be able to recover its GP margin in the second half of this year? This seems to be a critical factor to sustainable profitability. Who wants to take GP margin?

I can have a crack. I mean, the issue, as I've said is the business is very correlated to the GDP growth, and we're getting nothing in South Africa. So while we're defensive one or SARS to manager. Clearly, what will help Harold is that these cost savings we've done are going to roll through. So obviously, what we agreed to do in August last year, which is we've executed on, and that's largely finished at -- finished largely a few weeks ago, so we know what that is, and we know it's going to be more than ZAR 50 million annualized, that obviously falls to the bottom line. And then iOCO will now between now and the end of the year with their force structure put out some admin layers and that will also into 2025. So I think the GP margins are going to be more driven by cost savings and efficiencies than they will actually buy contracting. If you have a look at that GP margin slide, there's some very high GP margins there. I mean, some of them are in the 30s and the rest are in the high 20s. There's people who would love to have GP margins like -- ours is not a business issue. It's more a structural issue. As you know, we had 283 legal entities and so when one makes a loss and one makes a profit, you pay a tax, but you don't get the tax back on the other one. And so you get this massively inefficient structure, but also you need to have a finance person and a debtor's person and everything for each entity, so you end up with 280 of them. With this consolidation, we are been able to put the businesses into more effective units. As you know, we're down to 100 legal entities of which 40 are being deregistered as we speak. So we end up with no more changes. We'll have maximum 60 working entities and that all change over time, but that's a huge efficiency gain. So that's where you're going to see it. And what we are well positioned for is once the world economy starts turning and hopefully, South Africa will follow, we will obviously be able to ride that wave on the up. So my prediction is there's not going to be much change for 18 months in the actual business lines because you're growing with inflation, but you're also giving inflationary increases to your people to obviously keep them because we are a people business. So that's going to be fairly static. But in the next -- into 2025, our ability to realize those cost admin savings is going to be critical in terms of getting that underlying structure, but everything is in place. It's moving ahead, and that's why I'm pretty confident that this is the right time to let the team actually create EOH 3.0.

Andrew, in light of the prolonged impact or negativity of the EHO share price, are there any plans to delist?

Well, I wouldn't say there are plans to delist. We take each proposal as it comes. And at the end of the day, the decision to delist is going to be taken by the shareholders. I think the focus for us as the operations as management is to make sure that we sort of like bringing as much efficiency in the business as possible. And hopefully, the markets will look at this and see a positive and reward us by worse name up ticking the share price. But with regards to delisting, that's a decision to be taken by shareholders.

Marialet, just focusing on efficiencies, a pleasing reduction in tax rate in your presentation. When can we expect a normalized tax rate for the group?

With the restructure that we've done now in the group with putting the business into the main -- 3 main business or operating units. We're constantly looking at driving efficiencies there. There has been delay in getting these cost structures or these business structures corrected. We've -- obviously, we had to wait for the rights issue, which was delayed slightly in terms of getting that right. With that now done, we've managed to get iOCO into its proper operating structure that should be fully complete by the end of this financial year. And with the settlement of SARS, we've now -- we're now in the position to get the EasyHQ structure into its correct operating structure. With us, we'll rationalize the number of legal entities that we have. And with that, we'll be able to rationalize the tax for the group.

Stephen, the final message from you, I suppose, and this is your final -- final for EOH as outgoing CEO, last word.

Yes. Last word. I mean, I've always said to investors, 2025 is going to be the year, all things being equal, like SARS settlements and things that we were and rights issues that we've had to wait for to actually get ourselves into fit for purpose was going to be the year you would see the true EOH. And I think we're well on our way. I think you're going to see in the second half of the year, some of that will come through. Obviously, we beholden to economic situation, we're beholden to the fact that it's an election year and what happens through that. And so the best thing is that we've been through COVID. We've been through bribery and corruption. We've been through riots and flooding. We've been to Ukrainian war and difficult political and economic times. And we're still here and we're still doing well, and we're still delivering very, very healthy GP margins. And so it just tells you the underlying business is a very good business, but it's a people business. We sell time. So it's not a rocket ship. It will never be a rocket ship, but it's a utility that's very cash generative and will continue to be that way. So I'm pretty confident that the team and what we agreed as a strategy as a team, but also what was agreed with the Board. And obviously, that gets rehashed every 6 months, but we continue on that strategy. And I think the team have done an amazing job of actually executing on it. You see it in the results. And as I said earlier, my biggest excitement, although the results are disappointing, I would love them to be better, but you have to be responsible. You've got to take long-term decisions. I mean I was just listening to some of our peers last night to -- I used to work with -- talk about, yes, there's big issues to face, but do long-term decisions to make sure that you have got a long-term sustainable business. And I think between the Board and the team, they've done an amazing job to actually get us to a very sustainable business. So I leave feeling like it's a good time to leave. And you need to pass the baton on some time. Otherwise, you get long in the tooth and so I'm going to try my hand at more easier things like fishing and golf.

Stephen van Coller, Marialet Greeff and Andrew Mthembu. Thank you very much for joining us and thank you so much to our live audience joining us here for this Q&A for EOH's interim results to the 31st of January 2024.