EOH responds to public censure and fine imposed by JSE
Earlier today, the JSE released an announcement relating to the public censure and fine imposed by the JSE on EOH Holdings (EOH) for the prior period errors contained in EOH’s previously published financial statements for financial years ended 31 July 2017 (FY2017 financial results) and 31 July 2018 (FY2018 financial results).
In the annual report for the 2019 financial year, EOH disclosed the historical accounting issues and discrepancies the new management team uncovered, which included various transactions that spanned various accounting topics, including revenue recognition, asset capitalisation and subsequent recovery, the timing of the recognition of liabilities and the recognition of impairment losses. The primary focus for the 2019 reporting period was on ensuring the closing balance sheet provided a credible basis on which investors and shareholders could make decisions.
Although EOH is disappointed to have received a public censure and fine from the JSE, the group accepts the JSE’s finding that the FY2017 financial results and the FY2018 financial results did not comply with IFRS, were incorrectly prepared and, as a result, incorrect, false and misleading information was disseminated to shareholders in respect of the FY2017 financial results and the FY2018 financial results. This is in line with the group’s own findings following its own internal review of the financial periods approved by the previous management team and vindicates the actions taken in restating the FY2018 financial results.
The JSE has undertaken to apply the fine of R7.5 million (R2.5 million of which has been suspended for a period of five years on condition that EOH is not found to be in breach of material and important provisions of the JSE Listings Requirements) to the settlement of any future costs incurred by the JSE which may arise through the enforcement of the JSE Listings Requirements and which may include the investigation into the conduct of the previous management that presided over the company during the periods in question.
The EOH Board is pleased that the JSE has agreed to suspend a portion of the fine and allocate the balance to potential future costs. EOH has worked tirelessly to address the inherited legacy issues and ensure that EOH is once again a respected name in the South African ICT sector. EOH remains committed to pursuing legal action against the main perpetrators identified during the ENSafrica forensic investigation and to try to recover losses caused by the main perpetrators of wrongdoing.
Megan Pydigadu, EOH Group CFO, said: ”The current management team and board of directors have spent a significant amount of time rebuilding EOH credibility through the establishment of a robust governance framework, driving transparency in the business and ensuring the accuracy and reliability of the financial information disclosed to the market, while continuing to resolve the remaining inherited legacy issues. The EOH management team remains committed to transparency and the timeous dissemination of relevant and accurate information to all stakeholders."