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EOH to report a massive full-year loss

Mostly impacted by impairments, company says.
EOH says it will provide more detail on the impact of a forensic investigation into 'suspicious transactions' on its financial statements. Image: Moneyweb

Troubled technology group EOH Holdings expects to report a headline loss per share of at least R18 for the year ended July 31, 2019, with the number impacted by impairments, it warned shareholders on Wednesday. The shares plunged 12%.

The earnings per share loss from continuing operations is expected to be least R27. This should be “seen in the context of the EPS loss of R20.73/share in the audited results for the six months ended January 31, 2019”, it said. The numbers will also be impacted by the classification under accounting rules of certain businesses as either continuing or discontinued, including assets held for sale.

The expected headline loss of at least R18/share compares to the audited profit of R2.78/share a year ago and excludes the impact of a forensic investigation by law firm ENSafrica into “suspicious transactions” involving the group’s public sector contracts, which “predate the existing EOH management team”.

“The group expects at the time of releasing the financial 2019 results to provide more clarity around the impact (of this investigation) on the financial statements,” it said.

It added that it “continues to focus on building a more appropriate capital structure and has already realised more than R400 million of cash from its debtors’ book and approximately R566 million from the sale of assets between February 1 2019 and July 31, 2019”.

“This enabled a settlement of an outstanding R250 million bridge loan facility and a payment of about R455 million into existing banking facilities at year-end. Further deleveraging of the balance sheet is expected. As at July 31, 2019, the group had cash of approximately R1.35 billion.”

Under pressure

It said it remains under “sales and margin pressure” as a result of “governance issues” that have plagued it, coupled with the slowdown in the South African economy. However, it said, “good progress has been made on key strategic initiatives”.

“The benefit of these initiatives will only be seen in the next financial year.”

Last month, EOH said it had renamed its ICT services business iOCO. It described the creation of iOCO as “a key milestone in the internal reorganisation process, aimed at simplifying the ICT business, integrating client offerings under one brand, driving governance imperatives, and aligning the service delivery model and offerings for the cloud economy and fourth Industrial Revolution”.

In April, EOH outlined how it would focus the business on three key pillars, namely the ICT business, Nextec (which would focus on new growth opportunities) and intellectual property.

“Work on the Nextec strategy continues, including how iOCO, Nextec and the IP businesses will work together to optimise value for EOH shareholders, with umbrella shared services being provided by EOH,” the group said at the time.

The extensive restructuring comes as EOH continues to battle the fallout flowing from allegations of corruption involving some of its public sector dealings, including a dodgy Microsoft licensing contract with the department of defence, first revealed in a TechCentral exposé earlier this year.

EOH is expected to publish its full-year results on October 15, when it will provide a strategic update, including more information on the status of the ENSafrica investigation.  — © 2019 NewsCentral Media

This story was published with the permission of TechCentral. The original publication can be viewed here. 

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Are these directors trying their best to give Steinhoff a go.

I’m really surprised that the genius Dr Surve, Madiba’s personal physician didn’t make this work

Surve had and has nothing to do with EOH, so do not know what your are on aboout…

Would love to know the logic behind this comment. And the genius which got people to vote for it.

I would never have guessed

Anyone keeping vested interests there needs their head read.

Bought this at ZAR2000c thinking it was a deep value play. This could honestly go to zero. Just a propped up mattress this is.

The dying throes…wish them well but mountain to climb…
Problems that management face here are so diverse.
Big company head office and infrastructure but medium company revenues and profits. Will have to cut massively, the leases alone must be eye watering.
Entrepreneurs who started, ran and sold some great businesses in here are long gone, now being managed into mediocrity by managers. Slow death.
All this accounting speak about continuing and headline junk…..shareholder funds were historically misreported by the old arrogant and unethical management team aka Steinhoff and that loss is now clear to shareholders along with real losses in their equity…period.

And you inspired by scripture? This would explain your writing ‘style’.

When will the corrupt executives be exposed and held accountable?

Well, since a certain demographic showed it was possible to get away with crimes against humanity without any consequence, it is now impossible to hold any one to account for comparatively minor things like this.

End of comments.





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