JSE-listed EOH has reported sustained operating profitability during the six months ended January 31 and the subsequent deleveraging of the group’s balance sheet after a recent capital raise.

Highlights for the six months under review include a R110-miillion operating profit.

Revenue from continuing operations increased by 8% year-on-year, despite a challenging local operating environment.

Gross profit margins remain stable at 29%.

EOH invested R48-million into the business as part of the group’s Growth-Efficiency-Talent strategy.

The group also raised R600-million post period to reduce its debt levels to R673-million, which EOH says will create an efficient capital structure and significantly reduce the interest charge going forward.

The cash balance at period-end was R234-million and the group had a normalised debt structure with a single bank.

The largest operating division, Digital Enablement, was the best performer in the six months under review, achieving a 20% increase in revenue and 24% increase in earnings before interest, taxes, depreciation and amortisation (Ebitda) at improved margins.

The international diversification strategy was said to have delivered benefits with the Middle East, Europe and UK businesses showing very good growth of over 45% to R257-million. At 33% of EOH’s Digital Enablement revenues, the international operations are becoming key contributors.

The Operational Technologies business had a challenging trading period, primarily owing to delays and the inability to close State-owned enterprise (SOE) contracts, resulting in a 10% reduction in revenue. T

This business is fairly reliant on SOEs and mining in South Africa, but diversification initiatives are under way, with investments into West and East Africa, as well as a focus on manufacturing and fast-moving consumer goods clients in South Africa, EOH says.

With the improved operating performance and outlook in full-year 2022, the board approved an R80-million strategic investment into the business of which R48-million was invested in the first six months of the new financial year.

Going forward, EOH says it will further accelerate its organic growth strategy, especially on the back of the pleasing results being seen on the initial investments.

EOH highlights that momentum has built over the past six months. Compared with the previous six-month period, all key metrics have improved, with revenue having increased by 5%, gross profit by 13%, adjusted Ebitda by 112% and profit after tax by 82%.

Moreover, with the completion of the asset disposal process to deleverage the company, EOH says it has a stable portfolio of businesses with a coherent go-to-market strategy.

The group will approach the market through four key product pillars; namely Digital Enablement, IT Infrastructure Services, Operational Technologies and EasyHQ.