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Chairman's REPORT

"What has changed in the year under review is the amount of energy and time we have been able to devote to proactive, rather than remedial, activities. We are finally able to focus on building an operationally strong and focused business that is aligned with our customers' needs, particularly in respect of digital transformation."

Andrew Mthembu

Q Could you describe the external operating environment prevailing in the year under review?

The year under review was a tale of two halves with the second half being fundamentally and radically defined by the global coronavirus pandemic, and by national responses aimed at curbing its spread. In South Africa, a hard lockdown on travel, gatherings and many types of economic activity resulted in an economy that was already under strain operating in crisis mode. While this placed increased pressure on our customers, it also opened up opportunities to lead their digital transformation.

Increased demand for technology solutions to support remote working during lockdown and beyond, and for secure cloud solutions in particular, have seen our suite of services lauded as standard-setting in the market. Although we are under no illusions as to the severity of the macroeconomic repercussions, this does provide cause for cautious optimism as to our prospects.

Q Could you describe the major changes that occurred in terms of the composition of the board and its structure?

The passing of our former chairman, Dr Xolani Humphrey Mkhwanazi, shook the board and all of those who knew him personally. He played a pivotal role in our fight against corruption, and worked diligently to enable EOH to become a company that was capable, courageous and trusted. He navigated an immensely difficult time in the company's history with dignity, morality and aplomb. His was an outstanding contribution and he continues to be sorely missed.

We also saw the resignation of two independent non-executive directors. Anushka Bogdanov, who chaired our Social and Ethics Committee resigned on 28 July 2020, while the resignation of Dr Moretlo Molefi who joined the Board in 2017, will take effect on 20 January 2021.

On a more positive note, we were delighted to welcome to the board Mr Jabu Moleketi, Mr Andrew Marshall and Mr Sipho Ngidi – all experienced, skilled individuals who offer unique and valuable expertise across various disciplines.

I am pleased to observe that the board in its current form is a coherent, energetic, and effective team. That said, we persevere in our efforts to strengthen it further, and to bolster it with people with business acumen and a firm sense of the South African socio-economic reality. Now, more than ever before, is a time that will reward courageous, effective leadership.

We have created a new board structure: the Asset Disposal and Acquisition sub-committee. This sub-committee has extensive experience in restructuring and refinancing and I must hasten to point out that it is largely focused on asset disposals for the time being. It became apparent that we needed the coordination a board structure could provide in order to ensure that we dispose of the right elements of the business in a way that makes sense, and that leaves behind a core business that provides a focused, end-to-end solution to the market.

The acquisition part of the name, for now, is aspirational, but the intention is to build a Group with a strong, healthy balance sheet that is once more in a position, having learnt from the past, where it can make reasoned, strategic acquisitions. The desired end result remains a focused, efficient business capable of becoming the digital-transformation enabler for our customers.

QAre you happy with the degree of diversity at board level and within EOH? Is this a focus area going forward?

We are on the right path in terms of board composition. There is progress still to be made, both in terms of gender and in terms of race, but as evidenced by our most recent appointments, this is progress that we are aggressively pursuing.

We remain committed to ensuring that the skill sets of our core businesses are as diverse as possible in line with our sustainability objective of building a diverse, ethical and talented workforce. We have to start looking seriously at all levels of the organisation to make sure we have adequate talent pipelines, especially in the market-development sectors, and that we are able to deliver on our commitment to transform the company, particularly below C-suite level, to ensure that EOH is demographically relevant.

QWhat were the board's priorities in the year under review?

The board's priorities remain, in essence, the same as they were last year. Firstly, to embed our newly adopted strategy aimed at enhancing delivery to clients. Secondly, to retain and attract the best talent and finally, to return value to shareholders, and to our broader stakeholder universe. Ensuring business continuity while navigating COVID-19 was also a significant priority area for the Board over the past few months.

What has changed in the year under review is the amount of energy and time we have been able to devote to proactive, rather than remedial, activities. While corruption and governance will always be top of mind, we have established a firm foundation in those respects, and the emphasis must now shift to performance.

We are finally able to focus on building an operationally strong and focused business that is aligned with our customers' needs, particularly in respect of digital transformation.

QYou mentioned business continuity while navigating COVID-19 earlier – how has the EOH board responded to the COVID-19 pandemic?

The priority when faced with a crisis of this nature is cash preservation, particularly in an organisation like ours which sits with high levels of debt. The board and management pursued that agenda vigorously, and, I think, effectively. That said, there is still a lot of work to be done, and we have to continue to be cash conscious. In particular, it is worthwhile to undertake a rationalisation of our cost structure, and I see great potential in the adoption of intelligent automation processes to further reduce costs.

We are fortunate, though, that we are a company whose strategic objective is to be the end-to-end enabler of digital transformation. What the pandemic has done is to accelerate the Fourth Industrial Revolution, and entrench in our customers' minds the absolute necessity of digital transformation. If we are able to identify and tap into these opportunities in the marketplace, then we are well placed to emerge from this crisis in a better position than we entered it in.

I have been very pleased with the positive feedback from our customers with regards to the service levels received from the teams during the crisis. We are proud that our service has not been compromised, and that we have been able to support our customers with the same – and in some cases increased – levels of productivity during the lockdown.

QWhat keeps you up at night as the chairman of the board?

As well as coordinating the way in which the parts of our business function together, we need to execute on a robust go-to-market strategy to effectively sell the benefits of digital transformation at C-suite level, which requires strategic and detailed market-analysis capability.

I also think that the market continues to undervalue the business and I do not believe that the current share price is a fair reflection of the inherent value within the organisation. I am confident though, that as we continue to consistently deliver on our turnaround promises and as our capital structure normalises, we will start seeing a positive change in market sentiment.


I would firstly like to thank my board and our senior management. It is refreshing to observe their sense of ownership and accountability. After all the work that has been done to instil an ethos of courageous leadership and to deal effectively with the legacy of the past, we have ended up with a committed team that does not shy away from what needs to be done, and I think that bodes well for our future.

I would also like to thank the EOH employees. It has been an understandably challenging period, but for the first time it doesn't feel as though we have hundreds of disparate entities each pursuing their own goals. We finally have high-functioning teams that operate symbiotically, that support one another and that are led by people with a clear vision of a strategy that supports the work of the entire organisation.

In conclusion I would like to say that EOH, as an organisation, is an exciting place to be these days. We have the capability to become the leading digital transformation enabler throughout Africa and beyond. With thorough due diligence and an overarching strategic focus, we are going to be able to offer a compelling suite of services and become the preferred partner for the most exciting companies.

Andrew Mthembu