EOH is making progress on billions in debt settlement
JSE-listed technology services company EOH is making progress in paying off its debt.
The company released a trade statement yesterday saying it has repaid R580 million of the R 1.6 billion target agreed with lenders to be paid off by the end of February 2021.
The JSE-listed company has been struggling with debt for some time, and Megan Pydigadu, CFO of the EOH Group, told ITWeb in April that the company had a debt of R.2.9 billion and that it was aiming to to reduce this by 1.5 billion rand over the next 18 months.
In yesterday’s statement, EOH announced on December 13, 2019 that shareholders had been informed that a purchase agreement had been entered into between EOH Abantu, a wholly owned subsidiary of EOH and a subsidiary of Afrocentric Investment Corporation, in which EOH Abantu sold all of its Shares in Dental Information Systems (Denis) for a total of R250 million.
“EOH is pleased to announce that all conditions precedent in connection with the Denis transaction have now been met and the first payment of R 234 million in connection with the transaction was settled on September 30, 2020, whereby 16 million R up to the 1st says the company.
She adds that on April 20, 2020, EOH will complete the sale of the remaining 30% stake in Construction Computer Software (CCS) to RIB, a wholly-owned subsidiary of RIB Software, for a total price of $ 143 million.
In addition to the early exercise of the call option, RIB has agreed to pay the full cash amount of EUR 47 million.
However, she points out that the proceeds from the disposal of Denis and the 30% stake in CCS were not included in the repayment of R580 million.
“It is expected that an additional R207 million related to this revenue will be used to pay off debt,” says EOH.
According to the company, total outstanding debt as of October 19, 2020 before these proceeds were used was R 2.4 billion and will therefore be R 2.2 billion thereafter.
“Regardless of the high capital repayments to the lenders, the cash on hand remains healthy and amounted to R943 million as of October 19, 2020,” it says.
“The Group had access to additional overdrafts of R 335 million at the end of the year when the benefits of the new cash pooling process were realized. EOH remains committed to deleveraging the balance sheet and normalizing the company’s capital structure as this gives the group the opportunity to determine its future growth path. “
In its trading notice, EOH announced that it is cautioned to shareholders that the company will improve total loss per share by 67% to 73% and improve total loss per share by 70% to 76% for the group for the fiscal year ended Jan. July 2020 (FY2020) compared to the previous corresponding period, i.e. the 12 months to July 31, 2019 (FY2019).
She explains that this improved financial performance was mainly due to the positive progress made in stabilizing the business model, while at the same time coping with the difficult economic environment caused by the COVID-19 pandemic. the work done to create an appropriate cost structure; and significantly reduced one-time costs and legacy issues that put a significant strain on EOH’s financial performance and cash flow in the corresponding prior-year period.
EOH said trading conditions were negatively impacted by the effects of COVID-19 in the second half of fiscal 2020, putting some customers under pressure and causing a slight drop in sales as a result.
It adds, however, that progress has been made on key initiatives, including optimizing cost structures, dealing with legacy issues and implementing the deleveraging strategy, which enabled the group to achieve significantly better financial performance in the second half compared to the first half of 2020 To be achieved in 2020.
The continued valuation of the balance sheet had a significantly smaller impact on the impairment expenses for the 2020 financial year compared to the 2019 financial year. The Group continued to generate strong positive operating cash generation in the second half of the 2020 financial year and for the full year.
“We are also happy about positive EBITDA [earnings before interest, taxes, depreciation and amortisation] and positive normalized EBITDA for the full year, in line with our half-year course, ”it concludes.