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- EOH says it is well-positioned to expand into new markets, with Sub-Saharan Africa, the UK and EU as targets.
- The technology group has been selling off non-core assets to free up cash to reduce debt.
- Data analytics, cybersecurity and cloud consulting to new clients are seen as another area of growth.
Technology group EOH - which has embarked on a turnaround strategy following the eruption of a corruption scandal involving senior managers - is looking at expanding to new markets as part of its growth strategy.
The company is set to engage investors to outline its strategic options and is eying South African firms with a UK or EU presence for potential growth opportunities. Bumping up the selling of software development, data analytics, cybersecurity, own IP products and cloud consulting to new clients is seen as another area of growth.
"EOH is at the point where it requires a right-sized capital structure to set the business up for the resumption of a growth-led strategy driven by cross-sell opportunities," the company said.
The company sees itself as well positioned to expand into new markets and clients through a cost-effective service offering, concentrated in Sub-Saharan Africa, Egypt and the UK.
Part of of its turnaround involved debt reduction, which saw it sell off some of its assets. The company's debt stood at just over R4.5 billion in the 2018 financial year, in what it said was a result of "aggressive acquisition growth phase".
Debt has been slashed to around R2 billion, with R1.4 billion repaid.
Its high debt levels were compounded by a "complicated structure" with 272 legal entities and a duplicated management, sales structures and property lease inefficiencies. It posted a R1.3 billion loss in 2020, and swung to profit in the full 2021 financial year.
An amount of R750 million is anticipated from the disposal of non-core assets.
"Right-sizing the capital structure will allow EOH to pursue a growth strategy, immediately improve earnings and ultimately lead to a value unlock for shareholders."
EOH's reputation took a knock in 2019 when a probe by ENSafrica revealed a web of corruption, bribery and overpayment of enterprise development suppliers in a ring that involved its senior executives. Most of the dubious transactions involved the firm's subsidiary, EOH Mthombo, which had significant contracts with the public sector.
