JSE-listed technology services firm, EOH rebounded to profitability in fiscal year 2022, and intends to raise up to R600 million to settle the majority of its bridge facility.
The capital will be raised through a R500 million rights issue and an additional R100 million through a broad-based black economic empowerment deal by the group’s strategic partner, Lebashe Investment Group.
Lebashe has been EOH’s long-term strategic partner since 2018 when the company picked up shareholding through a R1 billion capital injection.
EOH today reported profitability during the year ended July, saying it has finalised plans for its upcoming capital raise to optimise its capital structure.
The cash raising exercise by the company comes on the back of its increased efforts to reduce debt.
EOH has been battling with debt for some time, but in the past two years, it has been fulfilling its obligations to the lenders.
In the current reporting period, EOH fared well, further deleveraging its balance sheet despite the continued tough local and global trading environment.
EOH’s highlights for the year include 92% increase in total operating profit to R282 million compared to R147 million in 2021.
The company recorded an 82% surge in operating profit from continuing operations of R100 million. The previous year, it was R55 million, while total loss per share improved by 91% to 15 cents in the period (166 cents for FY2021).
In addition, EOH made notable progress on its financial obligation, with R733 million of debt repaid to lenders.
“Following an intense turnaround period, EOH is now efficiently streamlined and profitable; and for the first time, has board-approved investment spend for growth. I would like to extend a huge thank you to our customers and staff who have enabled us to achieve this huge milestone,” comments Stephen van Coller, EOH Group CEO.
In augmenting the company’s success, EOH says its growth engines comprise iOCO Digital, which taps into the fourth industrial revolution market trends; iOCO Operational Technologies, which directly aligns with the rapid growth areas of operational and information and has opportunities into East and West Africa; and iOCO Infrastructure Services, which the company says creates the ideal platform for clients to outsource their IT infrastructure.
“All of these businesses are currently significant contributors to both revenue and profit,” says EOH.
Further, it adds, EOH’s own IP companies are “the foundation of exciting future growth potential as they are ready for local and geographic expansion and scaling.
“They will be housed together under Rocketlab Ventures to allow separate partnerships and investment as appropriate.”
On the expansion plans, EOH notes: “As we expand our geographical footprint of our centres of excellence, exciting opportunities are developing in the United Kingdom, parts of Europe, Egypt and the Middle East.
“Our focus is on creating centres of excellence internationally, pursuing mid-market clients, and ensuring that there is an appropriate movement of IP and skills across the geographies in which the group operates.”
EOH also raised its outlook for organic growth, saying it continues to deliver end-to-end IT solutions to its almost 5 000 clients and “remains a partner of choice as they accelerate their digitisation journeys”.
It adds: “With the finalisation of our capital raise, management will be able to focus on recapturing market share in South Africa and expanding EOH’s presence in East and West Africa, the Middle East and Europe.
“We are well positioned to take advantage of the exponential shifts in the world today, which creates an opportunity to be an attractive digital transformation enabler for our customers.”
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