EOH Holdings Reaches Settlement with SARS Over PAYE Dispute

  • Settlement reached between EOH and SARS on PAYE dispute.
  • EOH to pay R112 million by March 1, 2024.
  • Standard Bank agrees to temporary facilities increase and loan covenant waivers for 12 months.
Published by
Lethabo Ntsoane

In a significant development, EOH Holdings Limited announced today that it has reached a settlement with the South African Revenue Service (SARS) regarding a longstanding PAYE dispute involving its subsidiary, EOH Abantu (Pty) Ltd t/a Highveld (“Abantu”). The resolution marks the conclusion of a protracted negotiation process and paves the way for the company to focus on its strategic objectives.

Terms of Settlement

The settlement terms agreed upon by Abantu and SARS are as follows:

TermsDetails
PaymentAbantu is required to pay R112 million to SARS by March 1, 2024, aligning with its provisions.
Forfeiture of Tax Receivable CreditAbantu will forfeit its tax receivable credit of R6.9 million, impacting the income statement.
Forfeiture of Assessed LossAbantu will forfeit its assessed loss of R34.5 million, with no direct effect on the balance sheet or income statement.

Financial Arrangements

To facilitate the payment to SARS, EOH Holdings has entered into an agreement with Standard Bank. The key terms of the agreement include:

  • Temporary Increase in Facilities: A temporary increase in facilities has been agreed upon to cover the payment before the due date.
  • Limited Additional Facility Requirements: Due to successful sales of non-core assets, additional facility requirements are limited to R63 million.
  • Waiver of Loan Covenants: Loan covenants will be waived for 12 months to allow additional loan repayments to meet the EBITDA to total debt covenant ratio requirement.
  • Commitment to Sale Proceeds: The company is committed to raising at least R75 million in sale proceeds by year-end.

CEO’s Perspective

Stephen van Coller, the CEO of EOH Holdings, expressed his satisfaction with the resolution, stating, “We are extremely excited to close out our last significant legacy issue. While this negotiation was frustrating at times from an EOH business perspective, I would like to assure South Africans that in solving this very technical and complex issue, the senior SARS officials were extremely diligent in ensuring the best possible outcome for South Africa.”

He further added, “EOH can now focus firmly on executing our Growth, Efficiency, Talent (GET) strategy. This large legacy issue was the final piece of the very complicated puzzle that was needed to be solved to allow the EOH Group to operate as a normal business.”

Financial Results and Outlook

EOH Holdings expects to release its financial results for the six months ended January 31, 2024, on or about March 26, 2024. With the settlement of the PAYE dispute, the company looks forward to pursuing its growth initiatives and delivering value to its stakeholders.

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Lethabo Ntsoane

Lethabo Ntsoane holds a Bachelors Degree in Accounting from the University of South Africa. He is a Financial Product commentator at Rateweb. He is an expect financial product analyst with years of experience in reviewing products and offering commentary. Lethabo majors in financial news, reviews and financial tips. He can be contacted: Email: lethabo@rateweb.co.za Twitter: @NtsoaneLethabo