EOH executives take salary cuts to avoid staff retrenchments
CFO Megan Pydigadu says EOH has the right processes in place to manage the Covid-19 crisis.
On Tuesday, 7 April, EOH said that Covid-19 and the 21-day lockdown are expected to have a financial impact on the group going forward. As a result, EOH has initiated a number of initiatives, including the executive committee taking a salary reduction of 25 percent.
EOH group FD Megan Pydigadu said that the salary cuts were necessary in order to avoid retrenchments at the company. She believes that the salary cuts will save EOH up to R50 million per month.
The IT services firm also proposed a 20 percent reduction across the board in cash salaries, with the exception of those earning less than R250,000 per annum, as well as negotiating rent holidays, a review of all fixed-term and consultant contracts, reassessing the retirement policy for employees over 65 years of age, a review of variable pay elements including reimbursive travel and overtime, and a review of discretionary spend on travel, entertainment and events.
The announcement came with the release of the company’s interim results for the six months ended 31 January.
About the results, Megan said that the business is turning around as evidenced by stable revenue with gross profit over 24 percent up from 20 per cent a year ago and that cash sits at R950 million, 10 percent higher than the same period last year.
“We have been managing crisis for the last year so we have gone into Covid-19 fit. We have R950 million of cash going into April,” she said. “We have been practising weekly cash management for the last year together with weekly debtors and working capital management, so we have the processes in place to manage this. We have set up a daily meeting where the crisis team gets together.”