EOH CEO Stephen van Coller’s performance analysed

When Stephen van Coller was appointed as the chief executive of EOH, his mandate was simple – create value by growing EOH and creating jobs.

However, faced with the challenges of corruption and high debt, he shrunk the company by selling profitable businesses and cutting staff.

To assess whether Van Coller made the right choice and measure his performance as EOH CEO is not trivial.

There are a few factors to keep in mind when looking at EOH’s performance under his leadership.

• When he became EOH CEO on 1 September 2018, reports of corruption and mismanagement at EOH had already surfaced.
• Risk and compliance at EOH were essentially non-existent, and a consolidation of 272 companies was done on Excel.
• The poor corporate governance allowed EOH executives to engage in corruption and steal money from the company.
• There was no daily cash flow management, no pooling arrangements, and there was no investment committee to vet acquisitions.
• EOH had a big debt burden which had to be addressed.

He addressed the corruption by firing employees implicated in financial maleficence and renegotiating problematic contracts.

He also testified at the Zondo Commission, sued former executives for R6.4 billion, and laid criminal charges against employees implicated in corruption.

Van Coller’s public fight against corruption came at a price. Along with Steinhoff, EOH became the poster child for corporate corruption.

As a result, EOH was low-hanging fruit for the government to target to show it was fighting maleficence.

He was also accused of unnecessarily spending R245 million with legal firm ENS Africa and another R190 million on consultants. It is more than half of EOH’s current market cap.

As a former banker, Van Coller was nearly obsessive about reducing debt. He sold many profitable businesses and used the proceeds to pay the banks.

As a last measure to cut debt, EOH intends to go to the market to raise up to R600 million through a rights issue and BBBEE deal.

Van Coller said EOH never missed an interest payment, which means he served the banks and other lenders well.

Not everyone thinks Van Coller did a great job. His critics argue that he favoured the banks ahead of EOH’s staff and shareholders.

He is accused of selling the company’s crown jewels far below market value to ensure the banks get their money.

As a result, the company’s equity plummeted by 99% during his tenure as CEO – from R8.1 billion to a mere R60 million. It is, therefore, on the verge of technical insolvency.

Another criticism is that Van Coller and other top executives received handsome pay packages while many employees had to take pay cuts and lost their jobs.

One former EOH executive said the biggest winners under Van Coller’s leadership were him, his management team, and the banks. The biggest losers were shareholders and staff.

Stephen van Coller’s performance as EOH CEO

It is difficult to assess whether Van Coller saved EOH, which is the prevailing narrative, by selling assets to reduce debt and cutting staff.

His critics argue that, instead of selling valuable assets, he could have focused on growth and cutting costs to address the debt. It would have favoured shareholders and employees.

For Van Coller to prove he was right, EOH must show growth. Unless it starts growing revenue and profit, his critics have a strong case that he harmed EOH.

The table below shows EOH’s performance under Stephen van Coller.

Stephen van Coller	Start	Current	Change
Revenue	R16.3 billion	R6.0 billion	-63%
Net Profit	R288 million	-R160 million	-156%
Cash generated from operations	R1.3 billion	R0.4 billion	-68%
EBITDA	R1.4 billion	R0.5 billion	-64%
Staff	11,500	6,111	-47%
Net Equity	R8.1 billion	R0.06 billion	-99%
Share Price	R36.16	R3.82	-89%