EOH CEO Stephen Van Coller has unveiled a list of stringent measures to dramatically cut costs and manage liquidity at the company.
In a letter to staff, Van Coller said the unprecedented times they find themselves in requires the company to implement stringent actions to manage their liquidity.
He said their key focus is to manage the business in an environment where they can expect a substantial drop in revenue.
They also anticipate a drop in cash receivables from their clients and significant future uncertainty on the full impact of COVID-19 on the economy and EOH.
“Our objective is to keep as many people employed as possible,” he said, adding that interventions are needed to keep EOH relevant and sustainable in the longer term.
EOH is now in the process of implementing a wide range of initiatives to reduce costs quickly and dramatically.
These include negotiating rent holidays and a critical review of non-performing or loss-making businesses and projects.
Measures in place
Van Coller provided a list of reviews and measures which will be implemented with immediate effect:
- A review of all fixed-term and consultant contracts across the group to assess whether these skills are required.
- EOH has several employees over the age of 65 . They are assessing this impact and the group policy in this regard.
- A review of variable pay elements as it relates to reimbursive travel, overtime, and standby.
- A review and reduction of discretionary spend which includes travel, entertainment, events, and property rental expenses.
- A payday move, where the pay date for April will move from 25 April to 30 April, and will remain at the last day of the month until formally notified otherwise.
- Temporary implementation of short time, which is a 4-day work week for a period of two months with immediate effect. This also means a salary cut of around 20%.
- All reimbursable expense claims incurred after 1 April 2020 will not be honored. This includes expenses that relate to petrol cards, company credit cards, entertainment expenditure, and any other claims.
The company said it will also engage with pension and provident funds on a payment holiday during this period.
Furthermore. it will apply to the UIF and the COVID-19 Temporary Employer-Employee Relief Scheme (COVID-19 TERS) for interim relief.
The company will also assist employees with their creditors through its XDS business unit.
“There will be team members who will have to continue to operate for the full five days in order to service our clients,” Van Coller said.
Despite working a full week, these team members are also subject to the proposed salary cut.
They will, however, receive an additional two leave days per month and the company is exploring a share allocation in lieu of some of the value lost.
“The above measures are for all EOH businesses and each will need to review their own situation,” Van Coller said.
“They may need to implement harsher measures if they have been more severely impacted in order to ensure sustainability.”
Van Coller highlighted that all options are still on the table and they welcomed counter-proposals from staff.
“After reviewing any such alternatives and subject to further consultation with business where required, the objective is to present the final approach by no later than 9 April 2020,” he said.