Business

EOH now stabilised after promoting virtually 80 companies to pay down debt


IT firm EOH has accomplished its turnaround technique and is now stabilised after promoting virtually 80 companies within the final three years, says group CEO Stephen van Coller.

He was talking to Moneyweb following the discharge of the group’s interim outcomes to the tip of January 2022 on Wednesday.

“When I arrived we had debt of about R4 billion – and given an Ebitda [earnings before interest, tax, depreciation and amortisation] margin of 10% that was not sustainable if we were to pay down our debt,” says Van Coller.

“The company had acquired too many businesses too quickly in previous years and would have ended up in trouble by breaching our debt covenants had we not sold some of these businesses to realise cash.”

Read: EOH to promote Hymax enterprise to Seacom in R144m deal

EOH’s newest unaudited interim outcomes for the six-month interval present a 214% enhance to 41 cents a share in headline earnings, and an working revenue of R167 million (2021: R76 million), helped by bettering gross revenue margins.

The group ended its half-year with money obtainable of R625 million and undrawn overdraft amenities of R250 million.

The deleveraging technique is now full, the newest firm to be offered (submit monetary interval finish) being fintech firm Sybrin, the proceeds of which have been banked in March.

EOH’s curiosity invoice for the newest interval got here to R97 million, in comparison with R139 million for its comparative 2021 half-year.

Group debt

Debt on the finish of January 2022 stood at simply over R2 billion, dropping to R1.7 billion submit the Sybrin sale. Another roughly R500 million is but to return in from the sale of one other two firms, InfoSys and Network Solutions, which is able to additional cut back EOH’s debt burden.

The sale of so many companies has been criticised by former employees and executives as “selling off the crown jewels” however Van Coller says the group had no alternative, given the crippling stage of debt inherited.

“If we didn’t do something, the banks would have foreclosed, so we didn’t have a choice. There were some businesses we didn’t want to sell, but in most cases it was good for the employees and for the buyers – they inherited some good assets and could provide a good home for the employees.”

Read:
Anonymous group claims ‘crisis’ at EOH was manufactured
A take a look at how EOH’s turnaround goes

Van Coller says he’s now targeted on getting the suitable capital construction in place and rolling out the group’s progress technique.

Growth

These progress alternatives, in areas such cloud improvement, automation, information analytics and synthetic intelligence, usually develop at 2-3% above GDP. That compares with conventional {hardware} and software program companies which usually develop at GDP.

EOH additionally intends transferring into the upper progress segments of the market.

The enterprise is now break up into two main items, iOCO and NEXTEC. iOCO is the end-to-end techniques integrator, and the most important contributor to income and revenue, adopted by NEXTEC – the digital industries and folks options enterprise.

With a diversified consumer base greater than 5 000-strong and a world enterprise footprint, Van Coller says the main focus going ahead is on assembly consumer calls for for full digital transformation and IT infrastructure.

Listen to EOH CFO Megan Pydigadu discussing the group’s interim outcomes with Fifi Peters: 



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