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Embattled technology group, EOH [JSE:EOH] has found a buyer for another one of its subsidiaries as it continues to offload operations to cut its debt.
The latest sale has helped EOH exceed the R1bn target it wanted to realise from the sale of non-core assets.
In an announcement to shareholders on Friday, EOH said Afrocentric Health, which is partly owned by the country’s biggest insurer Sanlam, has agreed to buy the technology company’s stake in Dental Information Systems Holdings Proprietary Limited (Denis) for R250m. EOH owns a 100% stake in Denis, a healthcare technology and dental insurance company, through its subsidiary EOH Abantu.
The Denis Group had net assets of R145.4 at the end of July and contributed R34.8m to EOH’s profit after tax in the 2019 financial year. EOH said the sale of Denis, which it bought in 2012, was part of the group’s new strategic direction which includes selling non-core operations to “right-size” itself.
The company said that the businesses it sold in the past financial year helped it accommodate “significant loan repayments to the bank”.
“The cash consideration received by EOH Abantu will primarily be utilised to reduce debt which is consistent with EOH’s objective of creating a fit-for-purpose capital structure,” read Friday’s announcement.
This year EOH has sold a number of its subsidiaries after its board gave its CEO Stephen van Coller the green light to dispose of them, including:
- The sale of EOH’s 49% stake in Pan-African IT applications and business solutions provider, Twenty Third Century Systems and its subsidiaries for R122m;
- the disposal of EOH’s 70% stake in German construction software company, Construction Computer Software, for R444.4m in July; and
- fraud-hit EOH Mthombo selling its interests the Data World Group for R101.8m.
There have also been disposals of smaller software companies which resulted in losses for the company including iSquared, Sukema IP Company and AFON.
The group had set a target of achieving R1bn from the disposal of its assets and investments for the 2019 calendar year. On Friday, it said it has exceeded this target.
