EOH reduced its debt to R2bn, down from R2.4bn in 2020. Picture: Karen Sandison, ANA.
AS TECHNOLOGY company EOH posted results for the year ended July swinging into the red, chief executive Stephen van Coller said the turnaround strategy implemented two years ago by the new management team was bearing fruit.
The JSE-listed technology company said yesterday that it had turned the corner in record time after generating a R148 million operating profit compared to a R1.3 billion loss a year earlier.
“For the first time since I arrived, our current assets exceed our current liabilities, and we are well-positioned to progress the transformed EOH in supporting our customers to solve their business challenges using our innovative technology offerings.
“Today EOH is streamlined, profitable and is winning new public and private-sector contracts across multiple geographies,” Van Coller said.
He said EOH was now entering an exciting new phase with a key focus on solving its clients’ business challenges in an increasingly dynamic environment aimed at achieving mutual growth.
EOH, whose share price was trading at R170 a share until 2017 when it was hit by a series of corruption charges resulting in the implosion of the stock, said it had dealt with legacy issues.
John King, 61, the former chief financial officer of EOH, who was being reportedly sued by the company for R1.7bn in damages for governance lapses, died on Wednesday.
EOH reduced its debt to R2bn, down from R2.4bn in 2020. It said debt had declined significantly since 2018, although not as quickly as the company would have liked.
Van Coller said reducing the debt burden remained a critical focus for the management team.
“Hopefully this time next year, debt will be well below two times Ebitda (earnings before interest, taxes, depreciation and amortisation) on our growth debt and below 1.5 times on our net debt which is very important.
“For the first time since I joined the group, our overdraft has been reduced to zero which takes a lot of pressure off the team and allows us to focus on growth, not just cleaning up,” Van Cooler said.
EOH concluded a common terms agreement with its lenders, structured into a R500m three-year senior term loan facility and a R1.5bn bridge facility repayable at the end of October 2022.
During the year, EOH also repaid lenders a further R433m, principally from disposal proceeds and said the conclusion of the sales of the remaining IP assets would further reduce the debt to a more manageable level.
EOH sold Syntell in November last year for R211m, and concluded the disposal of Sybrin in June 2021 for a base cash consideration of R334m. The Sybrin deal is currently awaiting competition approvals in various African countries.
In terms of financial results, total headline loss per share from continuing and discontinued operations improved by 96 percent, with losses reducing to 22 cents from 534c in the 2020 financial year.
“The ongoing headline loss is largely due to the group’s over-indebted capital structure and inefficient legal entity structure, which the management team continues to address as a core focus area,” the group said.
Total revenue decreased to R7.8bn from R11 277m in 2020. Business disposals and the close-out of loss-making legacy contracts accounted for 75 percent of the revenue decline.
dineo.faku@inl.co.za
BUSINESS REPORT ONLINE
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