EOH CEO, Stephen van Coller, said the company achieved a stable cash generative position six-months ahead of time. PHOTO: LERATO MADUNA
- IT firm EOH says it is making progress in its debt repayment, cost-cutting and governance improvement measures.
- The share price rallied 13% on the back of its pre-close financial performance update.
- The company has been in a process of cleaning up its business, after a probe found that it lost nearly R1 billion in fraudulent transactions.
IT firm EOH [JSE: EOH] said it is making progress in reducing debt levels, implementing other cost control measures and addressing governance challenges, according to an update to shareholders.
The share price lifted more than 13% on the back of a pre-close financial performance update for the six-month period ending 31 July 2020, issued on Wednesday afternoon.
The share, which opened at R4.92 on Wednesday, reached a high of R5.60 shortly before markets closed. The share price has lost nearly three-quarters of its value over the past year.
The company has been trying to reform its governance structures, this after a probe last year found that it lost nearly R1 billion in fraudulent transactions.
A number of executives have left in the wake of the graft reports, including founder Asher Bohbot.
Earlier on Wednesday Fin24 reported that the Johannesburg Stock Exchange had fined the company R5 million for errors in its past financial statements.
In the latest update the group said its financial performance had been impacted by the Covid-19 lockdown.
The group, however, has implemented cost control measures – this includes disposal of property and 25% salary cuts across the board.
“Management targeted cash cost savings of R400 million over the four months to the end of July 2020. To date, through strict adherence to cost control measures, including salary cuts for three months, management have been able to achieve in excess of 90% of this target,” it said. Further sustainable cost savings of between 3% and 5% are expected to continue into the next financial year.
EOH is expecting “meaningful improvement ” in ebitda. It has seen positive cash generation in the second half of the year and an improved liquidity position, the update read.
Last year EOH committed to a R1.6 billion deleverage plan which came into effect on 1 May, 2019. It has since repaid nearly a third of the target to lenders, mainly from disposal proceeds.
CEO Stephen van Coller said the company had returned to a “stable and cash generative organisation in such a short period” six months ahead of plan, despite the impact of Covid-19.
In terms of addressing governance challenges, the group said it had rolled out 16 policies, and has established an internal audit function. “94% of key training has been completed across the Group and a standard contracting framework is now in place.”
EOH advised its audited financial results for the year ended 31 July would be made available on or around 17 November, 2020. This is as a result of the Financial Sector Conduct Authority granting JSE-listed companies an extension of two months to file their reports – mainly due the impact of the Covid-19 pandemic.