'Extremely challenging' six months for EOH
It was a tricky six months for beleaguered IT services company EOH, resulting in the group reporting a substantial headline loss per share and flat revenue.
The group this morning reported a headline loss per share of 973c, for the six months ended 31 January, compared to headline earnings per share of 314c the previous year.
Normalised revenue was flat at R8.194 billion, compared to R8.193 billion a year ago, but this was due to the group restating its comparative results for the period ended 31 January 2018. Normalised earnings before interest, tax, depreciation and amortisation, however, plummeted 64% to R387 million, compared to R1.1 billion the previous year.
Earnings per share, from continuing operations, for the six months, were also a loss of 2 073c, compared to earnings of 320c in January 2018.
The group admitted the last six months, as well as events after the period's end, "have been extremely challenging".
"In addition to difficult trading conditions, EOH has been the subject of ongoing governance allegations, compounded by Microsoft cancelling its channel partner agreement. This has accelerated shareholder value destruction and raised further questions about historic governance practices," the group said in its results statement.
During the six months, the company says new leadership was appointed which has "initiated a significant internal governance review and undertaken remedial action; and conducted an extensive group-wide strategic and balance sheet review". The group believes that "meaningful progress [has been] made towards addressing legacy governance issues, future-proofing the business and aligning financial performance".
Last year, the group announced an overall loss of R104 million, for the year ended 31 July 2018, compared to a profit of R1.17 billion the previous year.
"We are committed to building a sustainable, agile and competitive business. This includes preserving the future of our business, the country and the futures of a significant number of honest and hardworking EOH people," said EOH group CEO Stephen van Coller.
In March 2018, the group announced a split of its business into two separate entities, and in June, then CEO Zunaid Mayet relinquished his role. In July, Van Coller was named as the new CEO of the group and Mayet as CEO of NEXTEC, while Rob Godlonton took over as CEO of the EOH-branded business.
In terms of revenue for the six months to January, EOH ICT now contributes 56% of revenue and NEXTEC 44%. In terms of normalised gross profit, of R1.9 billion, EOH ICT makes up 52% and NEXTEC 48%.
Overall interim revenue remained stable at R8.4 billion and operating costs remained flat, after the removal of once-off items. EOH says the net asset value of the group is almost R4.6 billion, including cash of R957 million as at 31 January 2019. This means the net asset value remains substantially above the company's market capitalisation of R1.85 billion (as at 11 April 2019).
The group's share price on the Johannesburg Stock Exchange has taken a massive hit over the last year and has fallen by 67.45% over the past 12 months.
EOH is the largest technology services company in Africa and has solutions in a number of industries throughout South Africa, Africa and the Middle East, including industry consulting, IT services, software, industrial technologies and business process outsourcing.
The group is present in 134 locations in South Africa, and has a growing international footprint with 30 points of presence.