JSE-listed information technology services company EOH's share price on the JSE fell by 13.6% early on Wednesday, after the company warned of a significant deterioration in its earnings per share (EPS) and headline earnings per share (HEPS) for the financial year ended July 31.
EOH expects to swing to a loss a share, from continuing operations, of at least R27, compared with the EPS of R2.02 reported for the 2018 financial year.
Similarly, it expects to report a headline loss a share of at least R18, compared with the HEPS of R2.78 in the prior financial year.
EOH stated in a release to shareholders that the full-year loss a share from continuing operations should be seen in the context of the R20.73 loss a share from continuing operations reported for the interim period ended January 31.
It noted, however, that the estimated figures for the 2019 financial year did not include the potential impact of the findings of a forensic investigation undertaken by ENSafrica into suspicious transactions that predate the current EOH management team.
"The group expects at the time of releasing the full-year results to provide more clarity around the impact on the financial statements.
"The group continues to focus on building a more appropriate capital structure and has already realised more than R400-million of cash from its debtors book and approximately R566-million from the sale of assets between February 1 and July 31. This enabled a settlement of the outstanding R250-million bridge loan facility and a payment of about R455-million into existing banking facilities at year-end," the company noted.
It further pointed out that the company remained under sales and margin pressure as a result of governance issues and the slow-down of the economy, but said good progress had been made on key strategic initiatives.
"The benefit of these initiatives will only be seen in the next financial year," EOH stated.
The company is finalising its financial results, which it expects to publish on or about October 15. At that time, it also plans to provide shareholders with a strategic update, as well as an update on the status of the ENSafrica forensic investigation.
EOH's share price on the JSE fell to R10.97 early on Wednesday, a 13.6% decrease on Tuesday's close of R12.70 a share. Its share price, however, recovered to R12.37 a share by 12:15.