EOH warns of hefty loss

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EOH warns of hefty loss

Published Date: 2019-04-15 | Source: Stephen Gunnion | Author: Stephen Gunnion | Comments

EOH warns of hefty loss

The company will report a significant loss when it releases first-half results tomorrow due to a number of impairments and write-downs.

EOH will report a massive first-half loss after it was forced to write down the value of a number of its businesses.

In a trading statement, the embattled IT outsourcing and tech services group said headline earnings per share (HEPS) for the six months to end-January would fall by 410% to a 973c loss. Including operations that it has discontinued, HEPS will fall by 411% to a 993c loss.

The group said revenue remained stable over the period at R8.43 million and operating costs were flat, after the removal of once-off items. It will report normalised earnings before interest, tax, depreciation, and amortisation of R387 million.

The group recently completed a strategic review of its operations and presented a plan that was adopted by the board late last month. It said impairments to goodwill, intangible assets and equity accounted investments stripped 1,092c from first-half earnings, while losses taken on business identified for closeout cost 372c per share. Earnings have also been affected by impairment provisions of trade receivables, the loss on the disposal of an equity accounted investment in Zimbabwe and the impact of its recent empowerment transaction.

It has also restated last year's results following a financial review of its business. This was due to an impairment against GCT Group after it unwound the acquisition of Grid Control Technologies, Forensic Data Analysts and Investigative Software Solutions following governance concerns around the awarding of some public-sector contracts.

The group said its net asset value sat at R4.57 billion, including cash of R957 million at the end of January. This was well above its current market capitalisation of R1.86 billion, it added.

Its shares fell as much as 20% on Friday, before recovering to close 1.6% higher at R11.40. Its results are due out tomorrow.





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