More misery in store for EOH investors 

EOH revealed more pain for its investors today in a trading update announcing an exceptionally poor set of results with declining revenue and deepening losses.

The company released a trading update for the six-month period that ended 31 January 2024 today, in which EOH announced that its revenue will see a 2% to 4% reduction from the previous year.

The company said it has experienced a challenging operating environment, which hurt its revenue.

While its core digital enablement division has been able to increase revenue, a reduction in revenue from other divisions offset all that growth.

EOH also announced that it expects significant decreases in its profit margins.

Operating profit is expected to fall by between 89% and 96% – going from R142 million to at least R5 million.

EOH also said it expects its net loss to increase by between 460% and 530%, which translates to a net loss of between R77.6 million and R88.6 million.

Investors in EOH have seen their wealth disappear after corruption was uncovered in the company back in 2017.

The company has since promised a turnaround strategy, which was set in motion with the appointment of its previous CEO, Stephen van Coller.

As part of this strategy, EOH sold many of its businesses at prices much lower than their book values to rid itself of debt.

However, although this helped reduce debt, the company’s revenue streams dried up even faster as a result.

By the end of 2022, EOH had little capital left and was close to technical insolvency when it announced that it would issue a R500 million rights offer.

The company said this would lead to a new and improved EOH 2.0 and lay the foundation for growth. However, this never happened.

Shortly after the rights offer concluded, Van Coller notified the market that he would be stepping down as CEO.

Investors have yet to see the turnaround EOH promised years ago and have lost 55% of their wealth since the announcement of the rights offer.

EOH is battling with cost management and growing revenue streams, and the R740 million company is now only a shadow of the R24 billion company it once was.