With virtually all inherited legacy issues now resolved. From Moneyweb.
It’s not hard to imagine that Stephen van Coller has had enough after five years at the helm of tech services group EOH, a company that featured so prominently in the Zondo Commission of Inquiry into State Capture.
In its July 2023 year-end results announcement on Wednesday, EOH says Van Coller’s five-year term is up, but he has agreed to stay on another six months.
Read:Can EOH become the poster child for crisis turnaround? [Oct 2021]
A look at how EOH’s turnaround is going [Nov 2021]
EOH’s journey to redemption has blue chips knocking on its door [Oct 2022]
This follows the announced departure of CFO Megan Pydigadu in July.
Van Coller was brought in to clean up a group riddled with corruption, as detailed in the Part IV of the Zondo Report into state capture.
He received praise from the Zondo Commission for initiating investigations into corruption at the group and sharing the findings.
Read:
Former EOH finance chief John King dies amid R1.7bn damages claim [Oct 2021]
Anonymous group claims ‘crisis’ at EOH was manufactured [Nov 2021]
Zondo praises EOH for coming clean, but says it cannot keep the proceeds of corruption [Apr 2022]
EOH spent R865 million on kickbacks and commissions to politically connected intermediaries, including to the ANC, and was richly rewarded in the form of multi-million rand contracts with the City of Joburg, the Department of Defence and the Department of Water Affairs, among others.
EOH is claiming billions of rands in damages from former executives who are being held liable for the corruption that infested the group.
Financial results
The latest results show the group paid down R678 million in debt over the past financial year, with R555 million of this coming from a capital raise earlier in the year, and R123 million from the disposal of assets, mainly from the sale of Network Solutions and Hymax SA.
Net debt now stands at R683 million, down from about R4 billion when Van Coller joined in 2018.
To get a grip on this debt, Van Coller had to sell off more than 80 group companies and earlier this year tapped shareholders for R600 million by way of a rights issue (which was oversubscribed). This reduced interest charges by 13% over the past year, notwithstanding higher interest rates and a R74 million extra cost due to delays in executing the rights issue.
Read:
EOH to sell Hymax business to Seacom in R144m deal [Apr 2022]
EOH now stabilised after selling almost 80 businesses to pay down debt [Apr 2022]
Revenue from continuing operations was R6.2 billion, 3.3% up on the prior year, and operating profit was 35% improved at R135 million.
The net loss after tax halved from R160 million in 2022 to R81 million for the latest financial year. That loss was largely due to the unbudgeted interest expense of R74 million due to delays in the rights issue, and will not repeat. That being the case, the group should reach or exceed breakeven going forward.
Ethics, integrity, progress
Announcing her resignation, Pydigadu says the aim at the outset was “to save as many jobs as we could, create transparency as we worked through a very dark time closing out the fraud and corruption issues for the EOH Group, establish a new standard of ethics and integrity in how we do business, stabilise an organisation with a great history of innovation and ensure the group is on a sustainable footing”.
“I believe we have achieved this thanks to an incredible group of people who had a vision and purpose.”
Looking to the future, Van Coller says for the first time since joining EOH: “I can say that it is now very much about ‘business as usual’.”
Virtually all the legacy issues inherited have been resolved, and the business restructured into five “stripes” with capital enough to allow them to grow.
“EOH today is a sustainable company which lies at the heart of South Africa’s ICT ecosystem and plays an important role in everyone’s lives,” says Van Coller.
“It has great potential both locally and internationally, and now is an appropriate time to hand over to new leadership to guide the company through this next chapter,” says Van Coller.
