JSE-listed information technology services group EOH expects the investigations into alleged impropriety in the resale of multinational technology company Microsoft’s licences to be completed by the end of May, EOH CEO Stephen van Coller said in an update to shareholders sent out on Wednesday.
“The Microsoft issue that has recently come to light is limited to a few individuals, but has had a disproportionate impact on EOH’s reputation. These last few months have certainly been the most challenging time in the history of the EOH group. However, we believe EOH is going to get through this period as a stronger, more agile business.
“We are strengthening our leadership team, instituting stronger governance processes and reorganising our group structure. Our work to build a sustainable business that is untainted by unethical practices continues,” he said.
The company’s legacy information and communication technology public sector business has been migrated to a new structure, where all public sector transactions and related enterprise-development partners are reviewed and independently vetted by law firm ENSafrica.
Additionally, the company is reviewing its accounting policies to ensure it delivers a sensibly valued balance sheet by year-end. This process will also result in the release of its interim financial results on April 16, said Van Coller.
Further, the EOH group board has approved a refinement of the group structure, which provides for separate capital and governance structures.
“Each group business will be accountable for their own governance, risk and compliance, with oversight by their respective boards. All these board appointments are expected to be concluded by May 31,” he said.
International investment bank Rothschild & Co is working closely with the company to reorganise the business for enhanced growth and stakeholder value. The company believes Rothschild & Co’s experience will add impetus to the reorganisation process.
“This reorganisation process needs skilled and experienced people to lead the change. Potential candidates for the independent nonexecutive chair and other EOH group board roles are being shortlisted and we will communicate when these appointments are made,” he added.
An unnamed chief commercial officer, who starts on April 8, has been appointed and will have the executive responsibility for implementing more stringent risk, compliance, procurement and enterprise development procedures.
Her extensive financial services and large-listed company risk and compliance experience will allow the company to split the finance function and provide a second line of governance oversight, EOH pointed out.
“Key employees will be incentivised in their respective businesses to ensure they are directly remunerated for performance and contribution. We are very optimistic about the potential for this to significantly future-proof the businesses,” said Van Coller.
More than 11 000 people at EOH continue to drive innovation and value for its clients daily, he added.
The changes the group is making have established the building blocks for its businesses to grow at their own pace in specialised markets.
“The leadership team and I are very encouraged by the active support of our clients, technology partners and employees to help build the EOH of the future. We are committed to working closely with shareholders, clients and partners and keeping them and the public informed about our progress. I look forward to engaging after our interim results,” concluded Van Coller.