EOH to cut salaries in wake of Covid-19
Technology group EOH, which is a battling a debt pile that is more than five times its market capitalisation, says it wants to cut executive pay and staff salaries to contend with the Covid-19 pandemic.
EOH CEO Stephen van Coller and the group’s executive committee will cut their salaries by a quarter, while the group is also proposing a 20% reduction in salaries for staff earning more than R250,000 a year. The cut to staff salaries requires consultation.
The group said it had responsibilities in terms of supporting SA’s information technology infrastructure, with its 5,000 long-term clients including many banks in SA, Eskom, as well as municipalities and government agencies.
The move comes as EOH battles a debt burden and reputational damage from poorly contracted legacy public sector contracts.
In February 2019, it hired law firm ENSafrica (ENS) to review its large, historical licensing contracts with the state.
It has since instructed ENS to begin legal proceedings against alleged perpetrators implicated during the probe.
The group is disposing of assets to reduce its debt burden, which fell to R2.99bn at the end of its six months to end-January, from R4.1bn at the end of the prior comparative period.
This compares unfavourably to its R540m market capitalisation on Tuesday morning.
The group narrowed its loss during the period, more than halving it to R1.16bn.
Sales concluded during the period included Dental Information Systems, a health-care technology group based in Cape Town, for R250m to AfroCentric.
Total revenue decreased 21.8% to R6.35bn, with the group reporting lower sales of hardware and software, while citing a slowdown in SA’s economy.
The group said its core ICT businesses had seen a stabilisation of its customer base and revenue.
“Our key businesses have delivered sound performances demonstrated by improved gross margins over the reporting period,” Van Coller said.
“We have made good progress on cost management projects and achieved both our disposal and closure targets resulting in access to cash and a continued simplification of the business,” he said. — with Mudiwa Gavaza, BusinessLIVE