EOH has reduced its debt burden by R409 million from disposal proceeds, as the Stephen van Coller-led executive team continues to rebuild the JSE-listed firm.
The company announced on Friday that for the first six months of the 2021 financial year, cash generation from operations is positive, with a cash balance of R591 million as at 27 January 2021, after paying R409 million down on debt during this period.
EOH said it received the first R234 million payment related to the disposal of its shares in Dental Information Systems Holdings (DENIS) on 30 September 2020, with R16 million being held in escrow until 1 April 2022.
In December 2019, the company announced its plans to dispose of shares in DENIS for a total of R250 million.
In another transaction, EOH announced the sale of the remaining 30% stake in CCS to RIB Limited, a wholly-owned subsidiary of RIB Software SE, for a total consideration of R143 million.
“In addition to the early exercise of the call option, RIB released the full cash amount in escrow of R47 million on 30 September 2020,” it said on Friday.
Further, the company said, 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.
The execution of the transaction provided EOH with the opportunity to extinguish the last sizeable VFA liability of R36 million on its balance sheet, said the company.
“Furthermore, a shareholder loan from EOH of R10.5 million was settled by Syntell prior to the signature date of the sale agreement. On 18 November 2020, the group received a cash amount equal to the base purchase price of R211 million less the VFA liability of R36 million.”
It said EOH remains pleased with the progress made in managing liquidity following the implementation of its cash pooling arrangement.
“The group’s cash pooling policy allows for cash previously held in individual legal entities to be centrally managed. This improved visibility has significantly decreased liquidity risk for the business.”
Commenting on the company’s performance during the six-month period, 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.”
The company said its deleveraging plan is paying off and it is proactively engaging with lenders who remain a strategic priority for EOH.
“Year-to-date, the group has repaid the lenders a further R409 million, principally from disposal proceeds. The lower base interest rates and lower outstanding gross debt balance, R2 billion as at 25 January 2021, has resulted in materially lower and more manageable financing costs.
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