The JSE has imposed a R7.5-million fine on EOH, R2.5 million of which has been suspended for five years on condition that EOH does not breach the provisions of the JSE listing requirements.
The remaining R5 million will be appropriated in settlement of any future costs incurred by the JSE which may arise through the enforcement of its listing requirements.
This fine was applied due to errors contained in EOH’s previously-published financial statements for the financial years ended 31 July 2017 and 31 July 2018.
“EOH’s previously published financial information for the periods 2017 to 2018 did not comply with IFRS and was incorrect, false and misleading in material aspects and this incorrect information was disseminated to shareholders, the JSE and the investing public,” the JSE stated.
“In these circumstances, the JSE found that EOH failed to comply with section 8.62(b) of the JSE Listings Requirements in that EOH failed to comply with IFRS in respect of the annual financial statements for the 2017 and 2018 financial periods.”
The JSE noted that EOH assisted in the investigation and admitted its failure to comply with its listing requirements.
Restatements made to correct this reporting reflected the following:
- The total loss per share increased from 70 cents to 1,367 cents per share, reflecting a 1,806% deterioration
- The total headline earnings per share of 283 cents decreased to a headline loss per share of 546 cents, reflecting a 293% deterioration
- Intangible assets decreased by R384 million as a result of the errors, representing a decrease of 30%
- Equity-accounted investments decreased by R291 million, representing a decrease of 35%
- The corrections led to a 10% decrease in EOH’s total assets for 2018, and an increase of total liabilities for 2018 by 7%
EOH issued a statement acknowledging the censure imposed by the JSE, stating that its findings were in line with the result of its own internal review.
“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,” the company said.
EOH added that it was pleased the JSE had agreed to suspend a portion of the fine and allocate the balance to potential future costs.
The company said it has continuously worked to address its historical problems and ensure that its name is once again respected in the South African IT sector.
It added that it is committed to pursuing legal action against the perpetrators of corruption identified in its forensic investigation.
”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, whilst continuing to resolve the remaining inherited legacy issues,” said EOH Group CFO Megan Pydigadu.
“The EOH management team remains committed to transparency and the timeous dissemination of relevant and accurate information to all stakeholders.”