Trading statement for the six months ended 31 January 2022 and update on the disposal of Sybrin EOH HOLDINGS LIMITED (Incorporated in the Republic of South Africa) (Registration number 1998/014669/06) JSE share code: EOH ISIN: ZAE000071072 ("EOH" or "the Group") TRADING STATEMENT FOR THE SIX MONTHS ENDED 31 JANUARY 2022 AND UPDATE ON THE DISPOSAL OF SYBRIN Salient features - EOH's operating environment continued to improve, resulting in operating profit covering all interest, tax, one-off items and legacy payments. EOH achieved a positive total earnings per share ("EPS") and total headline earnings per share ("HEPS") - reflecting a major milestone in the successful execution of the turnaround strategy. - The Group generated an operating profit between R150 million to R180 million from continuing and discontinued operations for the six months ended 31 January 2022 ("HY2022") compared to R76 million generated for the six months ended 31 January 2021 ("HY2021"). - The Group also delivered an improvement in Gross Profit margin to between 28.0% and 30.0% in HY2022 from 27.6% in the prior year and an improvement in adjusted EBITDA margin to between 8.0% and 10.0% in HY2022 compared to 7.9% in HY2021. - The Group had a cash balance as at 31 January 2022 of R625 million including foreign and restricted cash±. EOH had undrawn overdraft facilities of R250 million available as at 31 January 2022. Trading statement Shareholders are advised that, EOH anticipates an improvement of between 112% and 119% to the total EPS and an improvement of between 206% and 222% to the total HEPS for HY2022 compared to the total losses per share in HY2021. In addition, EOH wishes to provide shareholders with guidance regarding adjusted EBITDA from continuing and discontinued operations in HY2022 as detailed in the table below: Total operations Y2022 HY2021 Anticipated Restated EPS Between 10 cents to 16 cents 83 cents loss per share per share HEPS Between 38 cents to 44 cents 36 cents loss per share per share Adjusted EBITDA* Between R310 million to R347 million^ R370 million * Adjusted EBITDA is defined as profit/(loss) before depreciation, amortisation, share-based payment expense, gain/loss on disposal of subsidiaries and equity-accounted investments, impairments of nonfinancial assets, share of profit/loss of equity-accounted investments, remeasurement gain/losses on vendors for acquisition liability, interest income, interest expense and current and deferred tax. ± Cash balance includes restricted cash (R85m) and cash in entities held for sale (R116m) ^ HY2021 includes adjusted EBITDA from discontinued IP businesses of R129 million whilst HY2022 includes adjusted EBITDA of R50 to R70 million from discontinued IP businesses. Operational overview The results of the first six months of the 2022 financial year, and the achievement of positive earnings per share and headline earnings per share as well as an improvement in gross profit, adjusted EBITDA and profit margins, have cemented the completion of the Group's turnaround strategy. This is a result of a focus on delivering the right solutions to the right customers and the implementation of sustainable cost optimisation initiatives. The Group has made significant progress in the asset disposal strategy with the last of the targeted IP assets, Information Services, being concluded in March 2022. EOH's refined business model and enhanced Go-To-Market strategy has allowed the Group to fully and effectively service its clients in an environment of accelerated digitisation. As an end-to-end IT services provider, EOH is well positioned to strategically support and advise its clients, both locally and abroad, on their evolving technology needs. Update on disposal of Sybrin With reference to previous announcements in respect of the Group's disposal of Sybrin for a cash consideration of up to R334 million (R50 million of which was contingent on Sybrin's performance to EBITDA targets), EOH is pleased to confirm that effective 31 March 2022, all conditions precedent and approvals for the transaction have now been fulfilled. The EV/EBITDA multiple achieved on the transaction amounts to 6 times on an Enterprise Value of R365 million. The proceeds are expected to reflect within the next 48 hours and once received, the Group will have repaid R360 million of debt since 31 January 2022. Deleveraging plan and liquidity The Group continues to closely manage its working capital and liquidity and reported a cash balance of R625 million as at 31 January 2022. Cash generated from operating activities was positive for the period. Under the Common Terms Agreement referenced in EOH's 2021 annual results announcement and pre- closing statement in January 2022, the Group has access to a R500 million 3-year bullet facility; a R1.5 billion bridge facility repayable in October 2022 and overdraft facilities of R250 million (which remain undrawn as at 31 March 2022). Following the receipt of the proceeds from the Sybrin disposal, the bridge facility balance is currently R1.2 billion (including the capitalisation of fees). The sale of the last remaining asset out of the targeted group of IP companies earmarked for disposals as part of the Group's deleveraging processes, Information Services, was announced on 11 March 2022. The sale, which is conditional upon shareholder approval, is expected to be concluded in May 2022 and will further reduce leverage by R417 million (less transaction fees). As previously communicated to the market, a portion of the bridge facility will be further repaid using c.R425 million of sale proceeds to be received primarily made up of proceeds from the aforementioned Information Services disposal. EOH continues to explore sensible rationalisation opportunities aligned to the long-term strategy. In March 2022, the EOH management team commenced engagements with shareholders and the investment community to assess its strategic options with regards to the settlement of the remaining R750 million. These engagements have been positive and are ongoing. EOH will communicate further details on the way forward in due course. Interim results The financial information on which this trading statement is based has not been reviewed and reported on by the external auditor of EOH. The Group's financial results are expected to be announced on the Stock Exchange News Service of the JSE Limited on or about Wednesday, 13 April 2022. 31 March 2022 Sponsor Java Capital Date: 31-03-2022 04:08:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.
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EOH Holdings Ltd. published this content on 31 March 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 March 2022 14:55:09 UTC.