EOH Holdings said late on Tuesday that it expects to generate operating profit from continuing operations of up to R120 million in the six months to January 31, 2023, up from R100 million for the full year to July 31, 2022.
Adjusted Ebitda (or earnings before interest, tax, depreciation and amortization) from continuing operations is expected to be between R160 million and R190 million.
The IT services group, which has fallen on hard times in recent years as it battled high debt levels and grappled with corrupt legacy dealings from the public sector, said its revenue in the latest interim reporting period will show income from operations. that will increase between 5% and 10% compared to the same period a year ago.
Gross profit margins from continuing operations have been maintained and will be between 28% and 30% overall, EOH saying.
The group will report a total loss per share from continuing and discontinued operations of between 0c and -6c, compared with updated earnings per share (EPS) of 8c a year ago and a total loss per share for fiscal 2022 of -9c. .
Total overall loss per share from continuing and discontinued operations for the final six-month period will be between -15c and -20c, from overall EPS of 25c a year ago and a FY22 (remeasured) loss of -11c . Loss per share from continuing operations will be between -12c and -16c, compared with 14c EPS a year ago and a loss of -62c for fiscal 2022.
“Operating results for the first half of fiscal year 2023 reflected an improvement in trade compared to the prior six months ending July 31, 2022. However, they were lower than those for the first half of fiscal year 2022, which were benefited from significant one-off adjustments,” EOH said. .
Following its recent rights offer, EOH said it has reduced its debt by R673 million to bring it down to a much more manageable figure of around half a billion rand.
“Following the completion of the deleveraging process and the strengthening of the balance sheet, which included the sale of assets to pay down legacy debt, EOH has a stable portfolio of businesses focused on helping clients with the digitization of their businesses through a full stack of offerings that cover all your technology needs.”
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EOH said the net proceeds from the capital increase were used to repay the bulk of a R728 million bridging loan, bringing it down to R173 million. It is now renegotiating its “onerous” debt lines to a standardized structure with a single bank. “The benefits of the restructuring will significantly reduce the cost of debt and improve efficiency in decision making, eliminating the need for cumbersome loan pool authorizations.
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“With an efficient capital structure now in place, EOH is finally in a position where it can invest in growing its businesses, which will ultimately result in better earnings and value creation for its shareholders.”
EOH will publish its interim results on April 5. – © 2023 Central Media News