EOH to cut pay of executives and staff to avoid job losses
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DURBAN - Information technology group EOH is planning to slash its executives' pay by 25percent in the next two months to cushion the impact of the coronavirus outbreak on its operations and to avoid potential job losses.
EOH also proposed a 20percent salary reduction across the board with the exception of those earning less than about R250000 a year.
Chief executive Stephen van Coller said the board felt it necessary to take proactive steps to ensure EOH was prudent in these times of uncertainty.
“We want to ensure that we are protecting as many jobs as possible in the company as the country’s economy is not in a position to shed more jobs.”
Van Coller said the measures would be implemented on pay day this month.
EOH has just completed 12 months into its anticipated two-year turnaround plan. The strategic review saw the group configured into three key pillars: iOCO, Nextec and Intellectual Property as part of an evolving transition of the business to a sustainable future.
“We are happy about what we have achieved. Since January 31, 2019, more than 40 businesses have been sold for R1.17billion,” Van Coller said.
The group paid its lenders R1.5bn in the last 19 months and collected R400million in long outstanding debt.
The group’s performance was reflected in its half-year results for the six months to end January by narrowing its headline loss a share to 395cents a share, compared with a loss of 827c, while headline loss a share was 381c compared with a loss of 840c last year.
Its total revenue fell by 21.8percent to R6.35bn, while loss for the period was reduced to R1.16bn, compared with last year’s loss of R2.66bn.
Mergence Investment Managers head of equities Peter Takaendesa said EOH managed to stabilise the business and reduced the worrying cash drain through asset disposals and cost reductions, but it still had a long way to return to sustainable growth.
He said that the initiatives to deal with Covid-19 could save the company R100m a month.
“If all the planned temporary cost cuts are achieved and revenue does not fall off a cliff, the programme will be material in mitigating liquidity constraints given EOH’s normalised earnings before interest, tax, depreciation and amortisation from total group operations was only R405m in the past six months,” Takaendesa said.
EOH shares gained 16.34percent on the JSE yesterday to close at R3.56.