EOH climbed 9.4% to R5.80 per share after a trading statement for the six months to January 2022 was released, along with an update on the disposal of Sybrin.
In a significant milestone, EOH achieved a positive operating profit and HEPS number. If you know where the company has come from, you’ll know how big a deal that is.
Profit margins have increased at gross profit and adjusted EBITDA level.
HEPS for this interim period is expected to be between 38 and 44 cents per share. That’s a strong result vs. a headline loss per share of 36 cents in the comparable period.
The group had a cash balance on 31 January 2022 of R625 million as well as undrawn overdraft facilities of R250 million. Of that cash balance, R85 million is restricted and R116 million is in entities held for sale.
The Sybrin disposal has met all conditions precedent and the final pricing for the deal is an EV/EBITDA multiple of 6x. Once the proceeds are received, the group would’ve repaid R360 million of debt since 31 January 2022.
The bridge facility repayable in October 2022 stands at R1.2 billion. The sale of the last-remaining IP division will raise R417 million gross of transaction fees. This still leaves a significant amount of debt that needs to be settle and there aren’t many ways left to do it, with an equity capital raise clearly one of the possibilities here.
The market cap is R1 billion and the immediate debt problem is around R750 million, so the worries aren’t over yet for shareholders.
