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EOH’s Annus Horribilis: Zunaid Mayet steps down as CEO, takes on new role

JOHANNESBURG — Mix EOH’s plunging share price, questions over its links to corruption-accused Keith Keating together with what some analysts have called a deteriorating balance sheet (see tweet below), and you have a pretty dangerous cocktail. EOH was once the darling of the JSE, pumping out years of record earnings. But its stock has plunged in the last 18 months from just over R171 in December 2016 to around R24 on Wednesday. The sudden exit of former EOH CEO and founder Asher Bohbot in May last year seemed to be the spark that lit EOH’s dangerous flame and the subsequent CEO, Zunaid Mayet, had a tough time in the hot seat. Mayet has now stepped down from the post of CEO as part of a broader management shakeup, but he will still be within EOH’s ranks as CEO of NEXTEC, which is a new distinct business that forms part of EOH’s reconfiguration. – Gareth van Zyl

EOH Sens announcement:

UPDATE ON STRATEGY IMPLEMENTATION, BOARD CHANGES AND GOVERNANCE

EOH Holdings is pleased to provide the following update relating to the implementation of its business strategy, board reconfiguration and the outcome of ENSafrica’s independent review of the Group’s governance.

1. Strategy Implementation

– In March this year EOH Holdings announced its new strategy, which centred on reconfiguring the Group into two distinct and independent businesses, each with its own CEO, unique brand and identity, business model, growth and go-to-market strategies.

– The creation of the two independent businesses under EOH Holdings will be completed by 1 August 2018. The ICT business will operate under the EOH brand. The specialised solutions for high-growth industries businesses, will operate under the newly launched NEXTEC brand.

EOH share price
EOH share price.

– The EOH Holdings corporate structure will be responsible for corporate finance, corporate strategy, group reporting, investor relations, risk and compliance. In addition to the growth expected from the two businesses described above, EOH Holdings will drive growth in the areas of innovation, own IP software, international business and emerging technologies.

As a result of the above, the following appointments are being made:

– Mr Zunaid Mayet has been appointed as CEO of NEXTEC. Mr Mayet has opted to relinquish his role as CEO of EOH Holdings to assume this role.

Mr Rob Godlonton has been appointed as CEO of the EOH branded business.

– The Board is in the process of finalising the appointment of a CEO for EOH Holdings. The appointee is highly regarded, with a solid track record and a strong background in corporate finance, investment banking and technology. Further details on the new CEO will be made available in the coming weeks.

2. Board Changes

To further strengthen governance across the Group and to support the new business model, EOH Holdings has decided to reconfigure its Board. Accordingly, in compliance with paragraph 3.59 of the Listings Requirements of JSE Limited, the Board hereby notifies its shareholders of the following changes:

– Appointment of Ms Jesmane A Boggenpoel as Independent Non-executive Director, Chairperson of the Governance and Risk Committee and a member of the Audit Committee.

Jesmane is an experienced business executive and a former Head of Business Engagement for Africa at the World Economic Forum based in Switzerland. She has served on the Boards and Committees of various South African and international, public and private sector organisations as a Non-executive Director. Jesmane is a Chartered Accountant and holds a Masters degree from Harvard University’s JFK School of Government. She has been honoured by the World Economic Forum as a Young Global Leader and has extensive experience across diverse industries. The Board wishes Jesmane all the best in her new role.

– Appointment of Mr Ismail Mamoojee as Independent Non-executive Director, Chairman of the Audit Committee and member of the Governance and Risk Committee.

Ismail is a seasoned business executive and was Chief Financial Officer for Liberty Life’s AfricaDivision before spending the last seven years in his role as Group Chief Compliance Officer for Liberty Life. Ismail is also a former partner and director at EY. He is a Chartered Accountant and has been on a number of Boards and Committees during his career. His extensive experience and business acumen will no doubt be of great value to the Group. The Board wishes Ismail all the best in his new role.

The following Directors have resigned from the EOH Holdings Board with effect from 1 July 2018:

– Mr Lucky Khumalo, after serving as a Non-executive Director

– Mr Brian Gubbins, who will continue in his executive role in the business

– Mr Rob Godlonton, who will continue in his executive role in the business

– Mr Ebrahim Laher, who will continue in his executive role in the business

– Mr Jehan Mackay, who will continue in his executive role in the business

– Mr Johan van Jaarsveld who will be leaving the Group with effect from 31 July 2018

The Board wishes Lucky all the best for the future and thanks him for his major contribution to the business over the last 13 years.

Johan has played a significant role in the Group’s growth over the last 11 years and the Board thanks him for his invaluable contribution.

The Board would like to thank Brian, Rob, Ebrahim and Jehan for their participation on the Board and their continued contribution to the growth and development of the Group.

3. Governance review

In November 2017, EOH Holdings appointed leading law firm ENSafrica to undertake the following three workstreams:

– Workstream 1:

ENSafrica conducted a review of the commercial activities of the GCT Group (‘GCT’) and found no evidence implicating EOH of complicity, awareness or condonation of any illicit activity that may or may not have taken place. ENSafrica also found that a comprehensive due diligence was conducted prior to the acquisition of GCT and that there was no adverse information regarding GCT at the time. Accordingly, there was no impediment to engaging with GCT.

– Workstream 2:

ENSafrica has been, and will continue to perform an ongoing risk-based, monitoring and oversight role in all of the Group’s major public sector bids, contracts and engagements. ENSafrica has also overseen EOH’s review of all material current public sector contracts to ensure that governance relating to these contracts was adhered to.

The EOH Group has adopted a checklist that was developed with ENSafrica to further enhance governance and to promote consistency relating to public sector engagements. ENSafrica has worked with the EOH Group to further develop and strengthen its due diligence procedures to ensure that all new business partners are optimally screened to enhance business partner selection.

– Workstream 3:

ENSafrica is supporting EOH Holdings with its Group Regulatory Compliance framework and the adoption and implementation of the key principles of ISO 37001: the international standard for Anti-Bribery Management Systems (ABMS). This ensures that the Group is in line with international best practice governance and regulatory compliance standards while meeting local and global requirements.


EOH weighs listing new unit as tech firm revamps business

By Loni Prinsloo and Thembisile Dzonzi

(Bloomberg) – EOH Holdings Ltd., the South African information, communications and technology firm that is splitting into two divisions, will consider spinning off one of the units and trading the shares separately.

The Johannesburg-based company plans to lump its ICT businesses under the EOH brand while hiving off the subsidiary that provides specialized solutions for high-growth industries such as healthcare and water sanitation under the new NEXTEC brand, EOH said in a statement on Wednesday. The holding company will oversee both divisions once the separation is completed from Aug. 1, it said.

“The split presents an opportunity to list the units separately,” Zunaid Mayet, who has relinquished his role as chief executive officer of EOH to head NEXTEC, said in an interview. “If it makes commercial sense and will unlock value for shareholders it will be an avenue that we will explore.”

EOH’s shares extended gains to trade 5.6 percent higher at R26.62 as of 4:17 p.m. in Johannesburg. That pares its drop this year to 60 percent, among the five worst performers in the FTSE/JSE Africa All Share Index. As part of the company revamp, EOH also reorganised its board to remove some executives while adding non-executive directors and appointed law firm, ENSafrica to improve governance and better screen new business partners.

The restructuring of EOH is a move in the right direction, said Ron Klipin, a senior analyst at Cratos Capital Pty Ltd. in Johannesburg.

“A separate listing could provide the market with two focused entities which have different operating models,” he said. “One could get a better see-through value with more transparency.”

Organic growth

NEXTEC will consider acquisitions while EOH will focus on expanding its existing business, the CEO said. “There are opportunities for mergers and acquisitions in the different sectors, as well as room for organic growth,” said Mayet.

The new unit will be funded by the holding structure while the businesses still fall under one group. The company is not considering a rights issue to raise funds at the moment, said Mayet.

EOH further plans to consolidate an international business that spans the Middle East, Turkey and 29 African countries, under the holding structure. Currently 90 percent of its business comes from South Africa where it operates in a R230 billion ($17 billion) industry.

“We currently have about 8 percent market share,” Mayet said. “There is a lot of headroom to also grow in South Africa still.”

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