Technology services company EOH on Tuesday (16 April) reported a headline loss of R1.56 billion for the six months ended January 2019, compared to headline earnings of R458.4 million before.
Revenue, EOH said, remained stable at R8.4 billion (2018: R8.35 billion) and operating costs remain flat, after the removal of once-off items.
Normalised EBITDA from continuing operations declined to R387 million, from R1.08 billion in 2018, while the group reported a diluted headline loss per share of 993 cents, from prior earnings of 309 cents per share.
The combination of a continued, stressed macro-economic environment and close out of discontinuing projects, combined with the poor performance from the Middle East and Africa Enterprise Resource Planning (ERP) business have negatively affected the results for the six month period under review, EOH said.
“Revenue has been under pressure in both the International ERP implementation business due to a slowdown in project awards, and also a slowdown in the NEXTEC Industrial Engineering sector where there have been delays in the commencement of infrastructure projects,” it said.
Once a darling on the JSE, EOH has seen a massive drop in fortunes in recent years following a number of corruption allegations – one of which prompted Microsoft to cancel its channel partner agreement with the firm earlier this year.
The group pointed out that it has recently completed a strategic review of the business, and presented a strategic plan to the board which was adopted in late March 2019.
“The period under review marks the dawn of a new era for EOH. The appointment of key executive team members, including a new group CEO and CFO, a revitalised strategic intent and transparent approach have greatly assisted the group in navigating its way through the challenges to date and to set the direction for the future,” said chief executive, Stephen van Coller.
He said that a review identified the need to refocus the businesses, including the identification and ultimate elevation of the IP businesses.
“Meaningful progress has been made on implementing this as well as towards addressing legacy governance issues, future-proofing the business and aligning strategic and financial performance.
“While much of the execution to create focus and additional liquidity is yet to be concluded, EOH is well positioned to commence the process,” Van Coller said.
“EOH is supported by the leading talent in the technology industry. It remains an imperative to ensure that the conduct of a few individuals, who may have been implicated in any wrongdoing, does not taint the 11,000 strong committed workforce.
“EOH has been in ongoing communication with clients and feedback has overwhelmingly been that their relationships with EOH are long term in nature and that the service they continue to receive is of the highest standards,” Van Coller said.
Looking ahead, the CEO said that he expects the remainder of the 2019 financial year to be under pressure as a result of a slow-down in the economy, the delay of large infrastructure projects, and the resultant group reorganisation.
Shares in EOH have suffered – down from a high of R178 in 2015, to R13 in the most recent trade session.