EOH reduces full-year losses, outlines debt restructuring plan

EOH Holdings has reported a full-year loss of R280-million, an improvement from the R1.7-billion loss in the 2020 financial year and has said the latest numbers are evidence of success of its turnaround strategy.

It reported a loss per share of R1.66, an improvement from the loss of R10 a year ago. Gross profit margins improved to 28%, from 22%, while operating profit swung from a R1.3-billion loss in the year to July 2020 to a R147-million profit this year (with the margin going from -12% to 2%).

Revenue from continuing operations was R6.9-billion, a sharp decline from R8.8-billion in 2020, but EOH said this is related to its work to “close out legacy contracts and make targeted disposals over the past two years which resulted in more profit from a smaller revenue base”.

Cash generated from operations was R405-million, a decline from the R707-million reported in 2020. It ended the year with R437-million in cash, from R531-million before.

The group has also announced on Wednesday that it is refinancing its debt and signed an agreement with a “lender group” last week to this effect. “The refinancing of existing debt provides EOH with greater certainty with respect to the overall debt outstanding and provides a more stable platform for the optimisation of the capital structure,” it said.

Term sheets were signed in April 2021 and since then management has been engaging with lenders on the terms and conditions governing a “common terms agreement”.

“The CTA was signed by all parties on 20 October 2021. The refinancing contemplated by the CTA is subject to the closing date having occurred by 1 December 2021, and any other conditions of the CTA and the other legal documentation referred to in the CTA,” EOH said.

New terms

The terms of the CTA are:

• A R500-million three-year term loan;
• A R1.5-billion bridge facility repayable on 31 October 2022;
• Disposal of the Sybrin Group — completion pending Competition Commission approval;
• Disposal of the Information Services Group; and
• Optimisation of the overall capital structure of the group.

“The refinancing of the existing debt package provides the group with greater certainty with respect to the overall debt outstanding and provides a more stable platform for the optimisation of the capital structure,” EOH said.

“For the first time since I arrived (as CEO), our current assets exceed our current liabilities, and we are well positioned to progress the transformed EOH in supporting our customers to solve their business challenges using our innovative technology offerings,” said CEO Stephen van Coller in a statement issued with the full-year results.  — (c) 2021 NewsCentral Media