EOH signals improved financial performance with reduced losses
There has been an improvement of 67% on the previously reported total loss per share
Troubled technology group EOH has reduced losses for the six months to end-January, it said in a trading update on Friday.
EOH said it expects to report a headline loss per share from total operations of 395c for the six months to end-January, a 60% improvement compared to a 993c loss previously. The headline loss per share from continued operations is expected to be 381c, a 61% improvement.
There has been an improvement of 67% on the previously reported total loss per share, which is expected to be 687c, compared to 2,099c in the six months to end-January 2019. The loss per share from continuing operations is set to be 527c, from a 2.073c loss in the previous corresponding period.
EOH had previously given guidance based on a range.
The company said these numbers are affected by the restatement of its financial results for the period ended January 31 2019 so as to align with the conclusions and restatements set out in the consolidated annual financial statements for the year ended July 31 2019.
EOH also said impairment assessments performed on the group’s cash-generating units having an indicator of impairment, which, coupled with the sale and discontinuation of certain non-core business activities, had an impact on the carrying value of goodwill.
The group’s performance may have have been affected by an ENSAfrica investigation into governance issues at the company last year, which revealed close to R1bn in underhanded dealings, including transactions with no evidence of valid contracts being in place or for which no work was done (R665m), as well as R90m of loans written off and overbilling of about R180m.
EOH did not say if the restatements were as a result of these findings.
As part of clean-up efforts, CEO Stephen Van Coller has said EOH Mthombo, the business unit implicated in 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.
The group is sitting on a R3.1bn debt pile, more than six times its market capitalisation. In 2019, it beat its own target of raising R1bn from the sale of assets with the disposal of Dental Information Systems, a healthcare technology group based in Cape Town, for R250m to AfroCentric.
Shares in EOH were down 11.44% on Friday, giving the company a R478.44m market value.