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EOH HOLDINGS LIMITED - Trading Statement

Release Date: 14/03/2018 09:15
Code(s): EOH     PDF:  
Wrap Text
Trading Statement

EOH HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number 1998/014669/06)
Share code: EOH ISIN: ZAE000071072
(“EOH”)

TRADING STATEMENT

In terms of the Listings Requirements of JSE Limited, companies are required to publish a trading
statement as soon as they become reasonably certain that the financial results for the period to
be reported on will differ by more than 20% from that of the previous corresponding period.

Accordingly, a review of the financial results for the six months ended 31 January 2018 by
management has indicated that:

-   Revenue is expected to be approximately R8,4 billion, reflecting an increase of about 16%,
    indicating a market-share increase;
-   EBITDA from continuing operations is expected to be between R980 million and R1 035
    million, reflecting a decline of between 5% and 10%;
-   Headline earnings per share from continuing operations is expected to be between 312 cents
    and 333 cents, reflecting a decline of between 20% and 25% compared to the headline
    earnings per share from continuing operations of 416 cents for the previous corresponding
    period;
    -   Despite the challenging general market conditions during this period, most areas of the
        business coped well. However certain areas in the business, particularly those operating
        in the public sector, have under-performed and did not timeously adjust their cost base;
    -   In view of the challenges during the period, EOH adopted a deliberate customer retention
        strategy whilst sacrificing some margin;
-   Headline earnings per share is expected to be between 307 cents and 350 cents reflecting a
    decline of between 20% and 30% compared to the headline earnings per share of 438 cents
    for the previous corresponding period;
-   Earnings per share from continuing operations is expected to be between 312 cents and 333
    cents, reflecting a decline of between 20% and 25% compared to the earnings per share from
    continuing operations of 416 cents for the previous corresponding period; and
-   Earnings per share (net of the after tax, non-cash, once-off deduction of R399 million from the
    disposal of businesses as per the SENS announcement dated 3 January 2018), is expected to
    be between 44 cents and 66 cents reflecting a decline of between 85% and 90% compared to
    the earnings per share of 439 cents for the previous corresponding period.

Outlook:
-   EOH expects improved market conditions and increased business confidence over the next
    period.
-   EOH expects better performance from the under-performing units mentioned above, for the
    next six month period.

Following the groups strategic review, EOH announced its strategy on 12 March 2018 as follows:
-   EOH has decided that it shall form two independent businesses within EOH for the long-term
    benefit of all stakeholders, each with its own identity and brand growth strategy; go-to-market
    approach; business model and culture.
-   The first business will trade under the EOH brand and focus on ICT services and solutions. It
    will be a highly efficient integrated business with cross-industry IP; have an integrated go-to-
    market strategy focused on organic growth driven by new generation digital technologies.
-   The second business will be characterised by a high degree of specialisation in each business
    area; it will have domain specific IP; each business area will be less integrated and operate
    relatively autonomously; it will operate in high growth industries and be differentiated by its
    domain specific offerings. Growth will be driven equally by acquisitions and organic growth.
-   The benefit of having two highly focused businesses will enable each business to realise its
    full potential with clarity of brand and identity; a simplified business model and reduced
    complexity; greater oversight and stronger governance; increased agility; and the reversal of
    diseconomies of scale.
-   To facilitate growth, remain relevant and continue to promote black economic empowerment,
    EOH has signed a long-term partnership with Lebashe, a 100% black-owned investment
    holding company.
-   The strategic alignment of Lebashe and EOH’s interests through an equity transaction
    presents an opportunity for both parties to jointly pursue growth opportunities to the benefit of
    both sets of stakeholders.
-   The transaction will result in an equity investment by Lebashe of R250 million and the
    provision of a funding facility of R3 billion. EOH will have access to such facility for growth
    opportunities whilst significantly increasing its BEE ownership by a minimum of 20.3%.

EOH expects that the implementation of its strategy, enhanced by stronger empowerment
credentials, will result in a more competitive and cost-effective organisation, leading to increased
profitability and accelerated growth.

The information on which this trading statement is based has not been reviewed or reported on
by EOH’s auditors. EOH's financial results are expected to be released on SENS on 28 March
2018.


Johannesburg
14 March 2018

Sponsor
Merchantec Capital

Date: 14/03/2018 09:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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