JSE-listed technology group Cognition Holdings (share code: CGN) has warned in a decrease of earnings.

In a trading statement released earlier today, the company warned:

– the earnings per share (“EPS”) is expected to be between 9.69 cents and 6.71 cents, reflecting a decrease of between 35% and 55% compared to the EPS of 14.90 cents for the year ended 30 June 2018; and

– the headline earnings per share (“HEPS”) is expected to be between 10.86 cents and 7.89 cents, reflecting a decrease of between 27% and 47% compared to the HEPS of 14.88 cents for the year ended 30 June 2018.

The company attributed the lower than expected earnings was as a result of “acquisitions, impairment of goodwill and a decline in revenue from the Group’s research assets as a result of a low growth domestic market with protracted tough economic conditions.”

The Cognition share price has struggled in 2019 and is down 46% year to date at 67c/share.

The company was trading on an historic price to earnings multiple of 4.48 times earnings with an attractive dividend yield of 8.9%. With earnings down, these metrics will re-adjust when the company releases its full year results.

In October 2018, the company announced it would be acquiring Caxtons 50.1% stake in Private Property for R127m. For the previous 12 months, Private Property had delivered an attributable profit to shareholders of R24m.

Investors will be looking to see whether Cognition have overpaid for this asset or whether it is a meaningful contributor to the bottom-line.