Stephen Van Coller and his executive team are committed to completing EOH’s reorganisation in a manner that creates best in class governance and transparency, which led to the company’s woes.
The EOH CEO pledged Wednesday to take a series of steps to fix the business and ensure it retains the entrepreneurial and innovative spirit that has made the group the most successful ICT business in Africa.
In December the JSE-listed technology services group, which employs more than 11 500 people, announced that forced stock sales as result of margin calls involving two directors caused a 35% drop in its share price.
The company used to be the darling of the JSE, delivering record earnings.
Its troubles started when the founder and CEO Asher Bohbot suddenly resign in May and new CEO Zunaid Mayet had a torrid time. He was later replaced by Van Coller, a former MTN executive.
Van Coller is driving the revival of the company, which is now valued at R5.7 billion.
“(I) am committed to partnering with all stakeholders to grow the company both transparently and sustainably,” Van Coller informed investors on Monday.
He said the group over the next year would primary focus on finalising the corporate strategy and capital structure to ensure that underlying businesses that require capital to take advantage of appropriate opportunities are not constrained while it return on equity is improved.
The group would also focus on the expense and working capital optimisation, expanding on the significant work done in the second half of 2018.
He further added that EOH would also pay attention to creating shared value partnerships with its clients to meet their needs in a cost-effective and mutually beneficial manner.
The group would also finalise and complete the implementation of an appropriate corporate governance structure. “This is an ongoing process that started in 2018, will be refined in 2019 and continually improved on an annual basis. Particular reference will be on ISO 37001, King Codes of Governance and the JSE Listings Requirements,” said Van Coller.
Finally, he said the company would focus on continuing and enhancing the anti-bribery and corruption and fraud screening on its tenders, especially with the public sector.
“I am excited at the opportunity the EOH Group presents,” said Van Coller.
EOH Delivers Poor Full Year Results
The group, which provides services to over 5 000 large enterprise customers across all major industries, on Wednesday reported a 8% rise in normalised revenue to R16.2 billion for the year to end-July 2018.
But the group’s headline earnings per share (HEPS) dropped to 278 cents a share in the year to end-July 2018 versus 797 cents in the previous year.
HEPS is South Africa’s main profit gauge.
The group also reported a R104 million loss in the year compared to a profit of R1,17 billion in the previous year.
EOH Group attributed its poor financial performance to various factors.
The first was the the disposal of the GCT group of companies, which had a negative impact on earnings of R400 million (non-cash, once-off deduction).
Secondly, the group said “negative news stories adversely impacted the business necessitating intense stakeholder engagement”.
Thirdly, the dissolving of its public-sector-focused division by incorporating the majority of its activities into NEXTEC and EOH and discontinuing the remainder of the business. The company said the associated operating loss and restructuring costs was R379 million.
Recently, EOH Group restructured itself into two separate business, EOH and Nextec.
Finally, the company attributed its poor performance to a deliberate customer retention strategy while sacrificing some margin. “As a result of the above, fewer major contracts were awarded to the group during the period, adversely impacting the business in the second half of the year,” EOH said.
The company has a growing international footprint with 2 500 skilled resources in 30 countries on five continents.
Van Coller believes the group remains a business with significant potential combining outstanding intellectual property with highly skilled staff.
“The EOH Group occupies a critical position at the centre of the fourth industrial revolution with all the skills and capabilities to make a meaningful impact and, ultimately provide integrated services covering a broad spectrum of associated technology needs.”