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EOH upbeat despite rough year

Sep 06 2018 19:30
Tlhologelo Masehla

Despite a "challenging" year, IT services group EOH is expecting an 8% revenue increase to around R16.3bn in its estimated financial results for the year ended July 31, 2018, it said in a trading statement released on Thursday morning.

The group told shareholders it expected normalised earnings before interest, taxation, depreciation and amortisation (EBITDA) from continuing operations to be between R1.7bn and R1.94bn, reflecting a decrease of between 15% to 25% compared, to the previous corresponding period.

Headline earnings per share (HEPS) were expected to be between 250c and 374c, this is 55% to 70% lower than the 832c reported in the previous comparative period.

Normalised headline earnings per share from continuing operations were expected to land between 438c and 558c, reflecting a decrease of between 30% and 45% compared to the previous corresponding period's 797c.

"Although challenging, the past year has re-focused, energised and strengthened the business and made it more resilient," the group said.

"EOH’s new strategy, structure and operating model will enable the business to return to past performance."

EOH said the year under review was split into two halves. The first six months ended January 31, 2018. During this period, the GCT group of companies had a negative impact on earnings of R399m, EOH said. 

"Fake news stories adversely impacted the business necessitating intense stakeholder engagement," the group added.

As a result, EOH said fewer major contracts were awarded to the group, which adversely impacted the business in the second half of the financial year. 

In the second six months, EOH was reorganised into two independent focused businesses, namely EOH and NEXTEC, creating two growth platforms. This resulted in major benefits, the group said. 

However, various businesses went through right-sizing, which cost approximately R120m. Additionally, impairment of goodwill, investments and other assets amounted to approximately R90m.

More recently, EOH said, the group had focused on improving its BEE ownership. 

Over the last three months, it had seen a marked increase in the number of large contracts awarded to it, indicating normalisation of business activities, the statement read. 

EOH's annual financial results for the 12 months ended July 31, 2018 will be released on October 3, 2018. 

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