EOH to focus business into four distinct operating units

JSE-listed technology service provider, EOH, says key objectives over the next year will be to restore value through enhanced internal processes and policies, while also ensuring adequate funding to deliver its growth plan.

“EOH’s redefined strategy is being driven by a desire to improve growth,” it said in a strategic update to the market on Tuesday (11 November) – marking the first 100 days in office for chief executive, Stephen Van Coller.

EOH has struggled through a number of setbacks including a series of negative articles in the media which saw its share price tank, and fewer major contract awards.

“Following a strategic review during my first 100 days in office and an assessment of our business, we have refined and expanded the reporting and management of the business into four distinct operating units. This will allow us to better support these businesses as they need different focus, capital structure and management,” said Van Coller.

“Firstly, EOH is a largely cloud-based digital, data and applications business. The second strategic pillar is Nextec that offers tremendous domain consulting, advisory and knowledge process outsourcing options and various other solutions, while the third is our Own Software businesses where the assessment has uncovered many significant opportunities to unlock value.

“Lastly, the International business, which still requires focused attention and is at an early stage of being implemented with an enhanced ability to ensure a better global delivery model.”

EOH said that the new structure also presents opportunities for better cross-silo-selling as well as significantly enhanced and improved collaboration, business unit empowerment and accountability to enable a fully customer-centric approach that focuses on holistic solutions over products.

“A detailed optimisation of the EOH property portfolio is being implemented as well as the centralisation of treasury management and procurement on large items. This should deliver significant annual cost savings.”

The group admitted that specific legacy issues have affected the company’s value and capital structure.

“These include the assets from the group’s international businesses that in some cases are in a growth phase and not paying dividends and in other cases cash remains trapped in the countries. Furthermore, there have been significant delayed payments from public sector transformational projects. Resolution is expected on these issues over the coming eighteen-month period.”

Difficult trading conditions have continued in the first three months of the financial year, which have been exacerbated by the constrained South African economy as well as the Government’s public sector austerity measures, the group said.

“Important progress has been made at EOH over the last few months, however, there is a lot to do,” said Van Coller. “Our strategic intent and alignment is now better focused which will ultimately enable us to maintain and improve margins, while allowing our businesses to flourish separately and start moving to an increased software and solution mix to create a more diverse business.

 


Read: EOH upbeat after difficult year

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EOH to focus business into four distinct operating units