EOH shows good recovery despite COVID-19

EOH has published its financial statements for the year ended 31 July 2020, which saw the business suffer headline losses per share of 495 cents.

However, this is a notable improvement compared to the same period last year, when EOH suffered headline losses per share of 1,751 cents.

Total revenue for the year amounted to R11.3 billion, which is 25% down on last year’s R14.9 billion figure, while EBITDA amounts to R827 million.

EOH’s gross debt figure also decreased by 20% year on year to R2.6 billion, while total cash balances amounted to R946 million.

According to EOH CEO Stephen van Coller, the results for the 2019/20 financial year are a good step in the right direction.

“We are immensely pleased with the significant progress made by the EOH Group during the current financial year,” said van Coller.

“We have managed to position ourselves for growth and largely deal with our legacy issues all while successfully steering the Group safely through unprecedented global market conditions.”

The effect of COVID-19

EOH said it had reacted well to the difficulties that the COVID-19 pandemic and the resultant national lockdowns had brought upon its business.

“In the short term, the Group has reacted swiftly in implementing its business continuity plans well ahead of the forced lockdowns imposed by the government,” said EOH in its financial statements.

“The national lockdown necessitated the review and assessment of ways of working differently and to adopt a cost-conscious mindset and focus on liquidity.”

Some key cash costs that were reduced during the pandemic included:

  • Salary adjustments with staff taking 20% salary cuts for two months and 10% for a further month
  • Rental holidays and extensions with landlords
  • Significant reduction in travel, entertainment and marketing spend
  • Continued removal of unnecessary costs
  • Ensuring cost structures are as flexible as possible thereby reducing fixed costs

EOH said that while the aftermath of the COVID-19 pandemic on the economy will have a negative impact on many of its biggest customers, this is partially mitigated by the group’s “quality product offering, robust cost optimisation process and diversification of customer base and positioning at the heart of the Fourth Industrial Revolution and accelerated digitisation journeys of
customers.”

It also noted that it has over R900 million of cash, as well as access to overdraft facilities worth about R288 million, that are currently not being utilised.

Van Coller also noted that the new way of working that was accelerated by the COVID-19 pandemic will enable EOH to grow its business in the long term.

“While the economic recovery is uncertain, the path is now clearly set for EOH to capitalise on future growth prospects which can be accelerated given the new normal is premised on an enhanced global digital reality,” he said.

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EOH shows good recovery despite COVID-19