EOH shares down more than 13% on trading update

EOH [JSE: EOH] shares plummeted by more than 13% on Friday morning on the release of a trading statement.

The IT services group's share price opened at R10.25 on Friday morning and reached a low of R9 shortly after. The share price was trading 6.24% weaker at R10.50 by 15:10 on Friday afternoon.

According to the update, EOH warned that the financial results for the six-month period ending January 31, 2019 would differ more than 20% compared to the previous corresponding period.

Taking into account its continuing operations - earnings per share is expected to be -2 073c compared to 320c reported in January 2018. Headline earnings per share is expected to be -973c compared to 314c reported in the corresponding period.

Considering discontinued operations- earnings per share is expected to be -2 099c compared to 47c reported previously. Headline earnings per share is expected to be -993c compared to 319c reported previously.

"Revenue remains stable at R8.4bn and operating costs remain flat, after the removal of once off items," the update read.

Normalised earnings before interest, taxation, depreciation and amortisation from continuing operations for the first half of 2019 comes to R387m, according to the statement.

The main areas which have impacted earnings per share on a once-off basis include – impairments, a BEE transaction and a loss on disposal of an equity accounted investment in Zimbabwe.

The group recently completed a strategic review and presented a strategic plan adopted by the board in March 2019.

"Good progress has been made in implementing the new strategy," the update read.

Recently Microsoft terminated its contract with an EOH subsidiary for it to sell software licences.

Several EOH board members have also resigned recently, including its founder Asher Bohbot. The search is on to fill vacancies, Fin24 previously reported.

The interim results presentation will take place on April 16, 2019. 

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