Listed technology service provider, EOH says it continues to benefit from the turnaround efforts during the 2020 financial year and expects to post an operating profit for the first six months of the 2021 financial year.
The group said in a pre-closing stakeholder update on Friday (29 January), that it is now well-placed to execute on its growth initiatives whilst still navigating volatile local and global market conditions.
"EOH continues to focus on cost control and efficiency measures across the Group having exited a further 7,034 square metres of property year-to-date resulting in savings of R3 million to date," it said.
At year-end, EOH advised that five of the eight problematic legacy public sector contracts had been settled. "Of the remaining three legacy contracts, one is currently in arbitration, one is in legal dispute due to non-payment from the customer, and the final contract is concluding at the end of April 2021," it said.
Cash generation from operations for the period is positive with a cash balance of R591 million as at 27 January 2021 after paying R409 million down on debt during this period.
Disposal of assets
On 13 December 2019, EOH entered into an agreement to dispose of all of its shares in Dental Information Systems Holdings Proprietary Limited (DENIS) for a total consideration of R250 million.
On 20 April 2020, EOH announced the sale of the remaining 30% stake in CCS to RIB, a wholly owned subsidiary of RIB Software SE, for a total consideration of R143 million.
On 18 November 2020, EOH concluded the sale of 100% of the issued share capital of MARS Holdings and its principal business Syntell, to a consortium led by the current executive directors of Syntell for a consideration of R211 million.
Year-to-date, the group said it has also repaid lenders a further R409 million, principally from disposal proceeds.
Chief executive, Stephen van Coller said: "The EOH of today is far removed from the EOH I joined two years ago. We have made great progress towards building a sustainable organisation and our business is now more focused and less complex, with an improving cost and capital structure and positive cash generation.
"We will continue to look at opportunities to optimise and fine-tune the business as we move forward. The emphasis is now on executing on our growth strategy and growing our core business from a top-line and earnings perspective while providing globally competitive technology services and innovations to our customers."
Shares in the company advanced in trade on Friday.