EOH to reveal the cost of wrongdoing


EOH to reveal the cost of wrongdoing

Published Date: 2019-10-11 | Source: Stephen Gunnion | Author: Stephen Gunnion

EOH to reveal the cost of wrongdoing

The technology services group has already warned of a full-year loss and the suspicious transactions could make it worse.

EOH says it will be able to quantify the expected financial impact of suspicious transactions carried out by some of its employees when it releases its annual results next week.

In a further cautionary announcement yesterday, the technology services group said it had now assessed the results of a forensic investigation by ENSafrica into the R1.2 billion of irregular transactions. The law firm found evidence of a number of governance failings and wrongdoing at EOH, including unsubstantiated payments, tender irregularities and other unethical business practices. The transactions were primarily limited to the public sector business centralised in EOH Mthombo and to a limited number of EOH employees. EOH Mthombo was the division that Microsoft cancelled important partnership agreements with earlier this year.

EOH has already warned the market that it will report a loss of a least R27 per share from its continuing operations for the year to end-July, down from a profit of R2.02 last year. However, it said the full-year loss should be seen in the context of the R20.73 loss it reported at the half-year stage, implying that it may have turned the corner. Its headline loss per share is expected to be at least R18 from profit of R2.78 previously.

The expected losses don't include the impact of the transactions probed by ENSafrica.

The results are scheduled for release on Tuesday. EOH's shares fell 4.6% to R11.90 yesterday. The cautionary was released after the close of trade.

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