Troubled JSE-Listed technology group EOH has re-launched the ICT business, which has been renamed iOCO, and the company seeks to improve its balance sheet efficiency.
The group said in an update to shareholders on Thursday that re-launched the ICT business represents a key milestone in the internal reorganisation process.
The process is aimed at simplifying the ICT business, integrating client offerings under one brand, driving governance imperatives and aligning the service delivery model and offerings for the cloud economy and fourth industrial revolution.
The company added that work on the NEXTEC strategy continues, including how iOCO, NEXTEC, and the IP businesses will work together to optimise value for EOH shareholders, with umbrella shared services being provided by EOH.
In April 2019, EOH outlined a strategy to focus the business on three key pillars, namely ICT, NEXTEC.
The company also announced that CEO Stephen van Coller and Group Financial Director, Megan Pydigadu, have assumed a caretaking leadership role for ICT and NEXTEC business units on an interim basis following the resignations of Rob Godlonton and Zunaid Mayet.
Last month, EOH provided an interim update on the detailed forensic investigation being undertaken by ENSafrica.
The group said it is committed to open engagement with all stakeholders and has outlined a number of next steps that are being progressed.
“Some improvement has been noted following the release of the interim update on the forensic investigation being undertaken by ENSafrica on 16 July 2019 as clients resume business with the Group, however, the benefits will not be realised until after year-end,” the company informed investors.
EOH said it is committed to realising cash from its debtor book which amounted to R4.2 billion at the beginning of February 2019. As of mid-July 2019, the total debtors balance has reduced to R3.6 billion and long outstanding debtors as at 31 January 2019 having realised R376 million in cash.
A further R300-400 million is expected to be realised from the long outstanding debtors over the next six months. These funds were used to fund operational needs of mainly loss-making assets on the closure or sale lists, the group said in the update.
It added that the sales of non-core assets are making good progress with the group has already achieved over 50% of its targeted R1 billion of disposals to reduce debt levels.
“Following receipt of the sale proceeds from the disposal of 70% of CCS, EOH has repaid the R250 million bridge loan provided by its bankers and expects further progress with deleveraging in the coming months,” the group said.
“In addition, EOH is working to improve its balance sheet efficiency and is moving to rather pay down debt than hold excessive cash balances. EOH expects to have availability of R400 million of its overdraft facilities, reducing the historical debt levels, while still retaining a strong cash balance of approximately R700 million expected at year end.”
EOH will publish its full-year results on 15 October 2019 and will also provide a strategic update as well as an update on the status of the ENSafrica forensic investigation.
“It has been a challenging six-month period but the group has made meaningful progress on a number of fronts. I am pleased to have a new board in place with experienced professionals that can work with the executive team and I as we future-proof EOH,” said van Coller.
“I have every confidence that the fundamental strengths of the business and its people will prevail in the longer term notwithstanding the pressures the business is facing.”