EOH shares rise on news of improved financial performance
The technology group has trimmed losses for the six months to end-January with an improvement of at least 64% on the previous total loss per share
Shares in troubled technology group EOH rose more than 14% on Thursday after it said that it has trimmed losses for the six months to end-January.
In a trading update, EOH said it expects to report a headline loss per share from total operations of up to 525c for the six months to end-January compared to a 993c loss previously, while the headline loss per share from continued operations is expected to be no more than 500c.
There has been an improvement of at least 64% on the previously reported total loss per share, which is expected to be no more than 750c, compared to 2099c in the six months to end-January 2019. The loss per share from continuing operations is set to be 600c, from a 2073c loss in the previous corresponding period.
EOH has been battling to improve its image after corporate governance issues emerged following an investigation by ENSafrica.
As part of clean-up efforts, CEO Stephen van Coller has said EOH Mthombo, the business unit implicated in alleged fraud and which was primarily responsible for securing public-sector contracts, will be closed down. EOH Mthombo accounts for 18% of the company’s nearly R12bn revenue.
EOH’s stock, which once fetched as much as R178 about three years ago, closed the day 14.58% higher at R2.75 a share.
EOH intends to continue with its strategy of selling assets, which has raised over R1bn in the past year, in a bid to reduce debt.
This week, the group said it is approximately 12 months into a turnaround plan that is expected to take at least two years, adding that “Good progress on key strategic initiatives in respect of the evolving business model, cost savings and capital structure initiatives has continued over the past six months.”
EOH said work continues on the remaining inherited legacy issues, including the identified public-sector contracts together with its non-core, underperforming Nextec businesses, and the interest burden associated with its debt.
In addition, the company said it identified a need for a cost-cutting programme that has resulted in 21 rental properties being sold in the past six months, as well as reduction of more than 1,000 people in its workforce.
Regarding the coronavirus threat, the group said it has a crisis team in place monitoring things daily. The outbreak may have an impact on EOH’s business, but the company said it is too early to tell what that impact will be.