Volatile ride for EOH after update
Embattled technology and consulting group EOH’s share price slumped to a more than nine-year low on Friday, after it said it expected a drop in headline earnings of 409% for the six months to end-January.
Embattled technology and consulting group EOH’s share price slumped to a more than nineyear low on Friday, after it said it expected a drop in headline earnings of 409% for the six months to end-January.
The company’s earnings have been hit by a strategic review of its assets, but it said on Friday that revenue remained stable at R8.4bn during the period, while operating costs remained flat.
The strategic review necessitated a revision of the carrying value of intangible assets, the identification of business lines no longer core to the adopted strategy as well as a review of minority investments, EOH said in a statement.
The company noted that despite the hit to its cash flow, its net asset value remained substantially above its current market capitalisation of R1.85bn, at R4.57bn. The latter figure includes cash of R957m as of the end of January.
By 9.05am EOH’s share price had slumped 15.15% to R9.52 and was down almost two-thirds so far in 2019. This represented its worst level since December 2009. However, it closed 1.6% higher on the day. The share price has been battered recently, including an 8% drop on March 20, when it announced the delay of its results because of the need to conduct the strategic review.
The results are due for release on April 16.
MICROSOFT
In March, EOH confirmed that US tech giant Microsoft has officially terminated its contract with the company, which is probing its past bids for state projects due to concerns about its dealings with various government departments.
So far in 2019, the stock has extended the heavy losses incurred in the two previous calendar years. In late 2016, EOH’s shares were trading above R170.
Microsoft SA served EOH’s subsidiary, EOH Mthombo, with a cancellation notice in February after an anonymous corruption complaint. EOH hired a forensics team to look into the matter and has since suspended or received resignations from those implicated, new CEO Stephen van Coller said in a letter to staff in February.