EOH has reported sustained operating profitability during the six months ended 31 January 2023 and the subsequent deleveraging of the group’s balance sheet post the capital raise after the half year end.
Highlights for the period include:
* R110-million in operating profit from continuing operations, compared to the R100-million for the full year end 31 July 2022.
* Revenue from continuing operations increased 8% despite a challenging local operating environment.
* Gross profit margins remain stable at 29%.
* R48-million invested into the business as part of our GET strategy.
* R600-million new capital raised post half year end used to reduce debt levels to R673-million, creating an efficient capital structure and a significantly reduced interest charge going forward.
* Cash balances at 31 January 2023 of R234-million and a normalised debt structure with a single bank.
Despite a challenging operating environment EOH achieved revenue growth of 8% for the period with sustained operating profitability. The largest operating division, Digital Enablement led the way with a 20% increase in revenue and 24% increase in EBITDA at improved margins. The international diversification strategy delivered benefits with the Middle East, Europe and UK businesses showing excellent growth of over 45% to R257-million. At 33% of the Digital Enablement revenues, international operations are becoming key contributors.
The IT Infrastructure Services, Enterprise Apps & Software and Infrastructure Solutions divisions all saw pleasing revenue growth over 10%. The Operational Technologies business had a challenging trading period primarily due to delays and the inability to close SOE contracts, resulting in a 10% reduction in revenue. This business is fairly reliant on SOEs and mining in South Africa but diversification initiatives have started with investments into West and East Africa through the exclusive AVEVA rights, as well as a focus on manufacturing and FMCG clients in South Africa.
With the improved operating performance and outlook in FY2022, the Board was able to approve an R80-million strategic investment into the business of which R48-million has been invested in the first six months. Additionally the recent successful capital raise significantly reduces interest charges.
Stephen van Coller, EOH Group CEO, comments: “Having successfully completed our capital raise to normalise EOH’s capital structure, I am excited we can now turn our full attention to our Growth-Efficiency-Talent strategy. Our initial growth investments are showing great results and we will continue to build on this momentum, whilst maintain our focus on cost efficiencies and making EOH the employer of choice in the IT industry. We look forward to the next phase of our journey working with our many clients to enhance their business through industry leading information and digital technologies.”