EOH explains painful loss of R100m
DURBAN – Information and communications technology (ICT) group EOH Holdings yesterday blamed the political uncertainty, squeeze on public sector funding, delays in sign-offs on projects and the postponement of the awarding of contracts for its R100.98 million loss during the year to end July.
The group said unfavourable media coverage also contributed to the decline from the R1.16 billion it posted last year and affected its position in the market. It said it expected public sector payment to deteriorate in the short-term.
The group elected not to pay a dividend.
It said its overall revenue, however, increased 8 percent to R16.34bn as a result of increased activity from existing customers while headline earnings per share (Heps) fell to 278 cents a share from 797c last year.
Incoming chief executive Stephen van Coller said South Africa had a challenging 2018 and entered a technical recession with President Cyril Ramaphosa placing the need to address state capture at the centre of his agenda, and a complex global political environment including conflicting US sentiments towards Africa and South Africa in particular.
“The EOH Group was not unscathed but still managed to grow revenue at a credible 8 percent which is testament to a dedicated and loyal workforce. The group remains a business with significant potential combining outstanding intellectual property with highly skilled staff,” Van Coller said.
EOH this year split its business into two units to improve its corporate governance with former chief executive Zunaid Mayet assuming the role of chief executive of Nextec and Rob Godlonton becoming chief executive of EOH.
In July, the group secured a R1bn equity injection from Lebashe Investment Group as part of its amended BEE transaction.
EOH and Lebashe signed final agreements which would see EOH becoming one of the largest transformed technology companies on the continent, with an effective black shareholding in excess of 50 percent.
Van Coller said the group remained positive about its prospects going forward. “EOH is well-positioned under its ‘One EOH’ go-to-market strategy to deliver integrated solutions from a diverse and comprehensive range of underlying capabilities,” he said.
Peter Takaendesa, a portfolio manager at Mergence Investment Managers, said the results were weaker than 2017 due to significant restructuring costs and other non-recurring costs.
Takaendesa said EOH had to sacrifice profit margins in order to retain customers in a very tough economic environment as well as public sector contracts related negative news.