EOH expects smaller interim loss
CEO Stephen van Coller’s efforts, which include selling assets, cutting costs and reducing the paying down of debt, appear to be paying off
Technology group EOH, which has been recovering from the fallout of a governance scandal, says it expects to narrow its losses for the interim period to January.
On Thursday the group said it expects to report an improvement of 83%-86% of its headline loss per share of between 54c and 66c, compared to a loss of 395c in the previous corresponding period.
CEO Stephen van Coller has made fixing the company’s balance sheet a priority since taking over two years ago after allegations of underhanded dealings with the government forced it into taking billions of rand in writedown charges and sparked a selling frenzy of its stock.
Van Coller’s efforts, which include selling assets, cutting costs and reducing debt, appear to be paying off for EOH, which was also ensnared in the state capture project and lost a lucrative licence to resell Microsoft software.
A probe by ENSafrica had found R1.2bn worth of suspicious transactions, mostly involving public sector contracts.
Year to date, EOH said it has repaid its lenders a further R409m principally from disposal proceeds. This brings the total legacy debt repayment since July 2018, including vendors for acquisition liabilities, to R2bn leaving current debt levels at about R2bn.
“Significant progress has been made in settling and closing out the previously disclosed legacy contracts. Five of the eight problematic public sector contracts have been settled, one is currently in arbitration, one is concluding at the end of April 2021 and one is in the process of being terminated with handover discussions now under way,” said the group.
EOH said it is in the process of negotiating the winding down of contracts with the department of water & sanitation, expecting this to be settled in the second half of 2021. “This will bring to a conclusion the legacy contracting issues.”
Shares in EOH, down 22% so far this year, fell sharply on Thursday, ending the day down 9.59%, its lowest since April 2020, to close at R6.69.
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