The Johannesburg Stock Exchange (JSE) on Wednesday said it would impose a public censure and fine of R7.5 million on struggling tech firm EOH Group due to non-compliance with its listing requirements.
“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 said in a statement.
“For these reasons and with reference to the JSE’s findings of breach, the JSE has decided to impose a public censure and the maximum fine of R7,5 million on EOH as a result of its failure to comply with important provisions of the listings requirements.
“EOH assisted the JSE in its investigation and admitted its failure to comply with these provisions of the listings requirements.”
In the annual report for the 2019 financial year, EOH disclosed the historical accounting issues and discrepancies the new management team uncovered which included various transactions that spanned various accounting topics, including revenue recognition, asset capitalisation and subsequent recovery, the timing of the recognition of liabilities and the recognition of impairment losses.
The primary focus for the 2019 reporting period was on ensuring that the closing balance sheet provided a credible basis upon which investors and shareholders could make decisions.
Although EOH is disappointed to have received a public censure and fine from the JSE, the company said it accepts the JSE’s findings.
“This is in line with the group’s own findings following its own internal review of the financial periods approved by the previous management team and vindicates the actions taken in restating the FY2018 financial results.”
EOH added in a statement that it is pleased that the JSE has agreed to suspend a portion of the fine and allocate the balance to potential future costs. The company said it has worked tirelessly to address inherited legacy issues and ensure that EOH is once again a respected name in the South African ICT sector.
EOH remains committed to pursuing legal action against the main perpetrators identified during the ENSafrica forensic investigation and to try to recover losses caused by the main perpetrators of wrongdoing.
”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,” Megan Pydigadu EOH Group CFO said.
“The EOH management team remains committed to transparency and the timeous dissemination of relevant and accurate information to all stakeholders.”