JSE-listed actions EOH Holdings rose more than 5% in Johannesburg on Wednesday morning after the IT services group reported its first financial results following its recent rights issue.
The group, which has struggled in recent years after investigations found it was a central player in public sector corruption, said it reported R110 million in operating profit for the six months ended Jan. 31. of 2023. That’s more than double full-year operating profit reported through the end of July 2022, suggesting the business is now headed in the right direction operationally.
Revenue from continuing operations increased 8%, despite what EOH described as a “challenging local operating environment,” while gross profit margins were “flat” at 29%. It reported a cash balance at the end of January of R234 million.
The financial results follow EOH’s recent recapitalization, in which R600m of new capital was raised from shareholders, including R100m from Lebashe Investment Group, which reduced the group’s interest-bearing debt to more manageable levels. EOH has now repackaged the remaining debt under a single facility with Standard Bank.
“With the improved operating performance and prospects in fiscal 2022, the board was able to approve a strategic investment of R80 million in the business, of which R48 million was invested in the first six months (of fiscal 2023),” it said. . saying. “In addition, the recent successful capital raise significantly reduces interest charges. In the future, EOH will further accelerate its organic growth strategy, especially thanks to the good results that are being seen in the initial investments”.
EOH said its Digital Enablement division performed well in the latest interim reporting period, with a 20% increase in revenue and a 24% improvement in earnings before interest, taxes, depreciation and amortization (Ebitda), which which drove higher margins. International diversification also helped, with the Middle East, Europe and the UK showing “excellent growth”. The offshore business now accounts for a third of Digital Enablement’s revenues.
“The IT Infrastructure Services, Applications and Enterprise Software and Infrastructure Solutions divisions all experienced pleasing revenue growth in excess of 10%,” the group said. “The Operational Technologies business had a challenging business period mainly due to delays and an inability to close contracts with state-owned companies, resulting in a 10% reduction in revenue. This business depends on state-owned companies and mining in South Africa, but diversification initiatives have started with investments in West and East Africa.”
In a press release issued with its interim results, EOH said its executive management team and board are “thrilled” by the “momentum that has been built over the past six months.”
“Compared to the prior six-month period (the second half of fiscal 2022), all key metrics have improved, with revenue up 5%, gross profit up 13%, adjusted Ebitda up 112% and profit after taxes of 82%.
Read: Hit rights issue ‘defining moment’ for EOH: Van Coller
“Furthermore, with the completion of the asset sale process to reduce the company’s leverage, EOH now has a stable portfolio of businesses with a coherent go-to-market strategy,” he added.
CEO Stephen Van Coller He said, “Our initial growth investments are showing excellent results and we will continue to build on this momentum while maintaining our focus on cost efficiencies and making EOH the employer of choice in the IT industry.” — © 2023 Central Media News