EOH has released updated pro forma financial effects related to the disposal of the Information Services Group. In simpler terms, this means that the company is helping investors understand what the financial picture will be after the latest sale of assets to help settle debts.
EOH has been managing to dispose of its “intellectual property” assets at EBITDA multiples of just over 5x. This leaves behind the core businesses of iOCO (an ICT distributor and systems integrator) and NEXTEC, focused on people outsourcing solutions and intelligent infrastructure.
When the Information Services Group deal was initially announced, the pro forma effects were based on EOH’s results for the year ended July 2021. As these are outdated and differ from the latest results by more than 10%, EOH is required under JSE rules to provide updated pro forma effects.
“Pro forma” just means that the accountants present numbers at a specific date as though the transaction had gone ahead, even though it hadn’t. In this case, EOH has used 31 January 2022.
On this assumption, Headline Earnings per Share (HEPS) would’ve been 34 cents instead of 41 cents, as the company has sold off some of its earnings. Net asset value per share would’ve been 108 cents instead of 114 cents.
To give an idea of how much trouble the balance sheet is still in, net tangible asset value per share (i.e. excluding intangible assets like goodwill etc.) would be negative 380 cents per share.
These updated pro forma numbers should be read in conjunction with the deal circular. You can read this here
