EOH expects big losses as share price continues to fall

Listed-technology group EOH said in trading note on Friday (12 April), that it expects a headline loss of R9.73 per share for the interim period ended January 2019, down more than 400% from a prior gain.

This prompted yet another big drop in the group’s share price at a time when it is trying to clean up its image, following a number of corruption allegations which prompted Microsoft to cancel its channel partner agreement with the firm.

Revenue remained stable at R8.428 billion, EOH said, and operating costs remain flat, after the removal of once off items.

Normalised EBITDA from continuing operations for H1 2019 is R387 million, EOH said.

The group said it has recently completed a strategic review of the business and presented a strategic plan to the board which was adopted in late March 2019.

“The strategic review necessitated a review of the carrying value of intangible assets, the identification of business lines no longer core to the adopted strategy and a review of minority investments,” it said.

The main areas impacting EPS on a once-off basis are:

  • Impairments to goodwill, intangible assets and equity accounted investments of 1,092 cents;
  • Losses on business identified for close out at H1 2019 of 372 cents;
  • Impact of additional specific impairment provisions of trade receivables and other financial assets in terms of IFRS 9 of 142 cents;
  • Impact of the Lebashe BEE transaction IFRS 2 costs of 100 cents; and
  • Loss on the disposal of an equity accounted investment in Zimbabwe of 93 cents.

Shares in EOH dropped more than 15%, trading at levels last seen a decade ago, before recovering slightly in mid-day trade. As recently as December 2017, share in EOH reached R171.

Read: EOH counts the cost of Microsoft contract termination

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EOH expects big losses as share price continues to fall