Unaudited interim condensed consolidated financial statements
for the six months ended 31 January 2024
Unaudited interim condensed consolidated financial statements
for the six months ended 31 January 2024
| Figures in Rand thousand | Notes | Unaudited for the six months to 31 January 2024 |
Unaudited for the six months to 31 January 2023 |
| Continuing operations | |||
| Revenue | 6 | 3 145 755 | 3 214 962 |
| Cost of sales | (2 307 205) | (2 281 055) | |
| Gross profit | 838 550 | 933 907 | |
| Net financial asset impairment (losses)/reversals | 8 | (20 778) | 5 804 |
| Operating expenses | (808 333) | (829 355) | |
| Operating profit | 9 439 | 110 356 | |
| Investment income | 9 043 | 4 579 | |
| Finance costs | (68 019) | (102 237) | |
| (Loss)/profit before taxation | (49 537) | 12 698 | |
| Taxation | (41 845) | (49 662) | |
| Loss for the period from continuing operations | (91 382) | (36 964) | |
| Profit for the period from discontinued operations | 9 | — | 31 634 |
| Loss for the period | (91 382) | (5 330) | |
| Other comprehensive income | |||
| Items that may be reclassified to profit or loss | |||
| Exchange differences on translation of foreign operations^ | 5 777 | (28 095) | |
| Total comprehensive loss for the period | (85 605) | (33 425) | |
| (Loss)/profit attributable to: | |||
| Owners of EOH Holdings Limited | (92 968) | (7 038) | |
| Non-controlling interests | 1 586 | 1 708 | |
| (91 382) | (5 330) | ||
| Total comprehensive (loss)/profit attributable to: | |||
| Owners of EOH Holdings Limited | (89 428) | (29 338) | |
| Non-controlling interests | 3 823 | (4 087) | |
| (85 605) | (33 425) | ||
| From continuing and discontinued operations (cents) | |||
| Loss per share | (15) | (3) | |
| Diluted loss per share | (15) | (3) | |
| From continuing operations (cents) | |||
| Loss per share | (15) | (14) | |
| Diluted loss per share | (15) | (14) |
| ^ | This component of other comprehensive income does not attract any tax. |
| Figures in Rand thousand | Notes | Unaudited at 31 January 2024 |
Audited at 31 July 2023 |
| Assets | |||
| Non-current assets | |||
| Property, plant, equipment and right-of-use assets | 154 237 | 145 360 | |
| Intangible assets | 83 251 | 93 571 | |
| Goodwill | 11 | 647 902 | 668 924 |
| Other financial assets | 17 968 | 15 968 | |
| Deferred taxation | 108 861 | 112 125 | |
| Finance lease receivables | 729 | 1 226 | |
| 1 012 948 | 1 037 174 | ||
| Current assets | |||
| Inventories | 12 | 90 642 | 73 727 |
| Other financial assets | 57 081 | 59 311 | |
| Current taxation receivable | 20 138 | 42 381 | |
| Finance lease receivables | 19 700 | 20 804 | |
| Trade and other receivables | 1 959 727 | 1 959 103 | |
| Cash and cash equivalents | 410 800 | 235 948 | |
| 2 558 088 | 2 391 274 | ||
| Assets held for sale | 13 | 32 829 | — |
| Total assets | 3 603 865 | 3 428 448 | |
| Equity and liabilities | |||
| Equity | |||
| Stated capital | 15 | 4 774 521 | 4 774 521 |
| Other reserves | 76 462 | 111 578 | |
| Accumulated loss | (4 375 278) | (4 325 319) | |
| Equity attributable to the owners of EOH Holdings Limited | 475 705 | 560 780 | |
| Non-controlling interests | 30 712 | 26 889 | |
| Total equity | 506 417 | 587 669 | |
| Liabilities | |||
| Non-current liabilities | |||
| Other financial liabilities* | 16 | 645 323 | 2 489 |
| Lease liabilities | 42 436 | 33 324 | |
| Deferred taxation | 7 452 | 25 095 | |
| 695 211 | 60 908 | ||
| Current liabilities | |||
| Other financial liabilities* | 16 | 314 845 | 836 006 |
| Current taxation payable | 26 162 | 27 006 | |
| Lease liabilities | 31 198 | 34 099 | |
| Trade and other payables | 1 879 179 | 1 698 995 | |
| Provisions | 17 | 139 925 | 183 765 |
| 2 391 309 | 2 779 871 | ||
| Liabilities directly associated with assets held for sale | 13 | 10 928 | — |
| Total liabilities | 3 097 448 | 2 840 779 | |
| Total equity and liabilities | 3 603 865 | 3 428 448 |
| * | In terms of a strict interpretation of IAS 1 paragraph 69, the debt was viewed as current liabilities as at 31 July 2023 based on the interest-cover ratio. With effect from 6 October 2023, this debt has been reclassified back to non-current liabilities. Refer to note 16 for more details. |
| Figures in Rand thousand | Stated capital |
Shares to be issued to vendors |
Other reserves |
Accumulated loss |
Equity attributable to the owners of EOH Holdings Limited |
Non- controlling interests |
Total equity |
| Audited balance at 1 August 2022 | 4 217 285 | 393 | 494 754 | (4 678 738) | 33 694 | 26 360 | 60 054 |
| (Loss)/profit for the period | — | — | — | (7 038) | (7 038) | 1 708 | (5 330) |
| Other comprehensive loss | — | — | (22 300) | — | (22 300) | (5 795) | (28 095) |
| Transfers within equity* | — | (393) | (1 658) | 2 051 | — | — | — |
| Share-based payments | — | — | (3 500) | — | (3 500) | — | (3 500) |
| Share-based payments paid out during the period | — | — | (2 229) | — | (2 229) | — | (2 229) |
| Unaudited balance at 31 January 2023 | 4 217 285 | — | 465 067 | (4 683 725) | (1 373) | 22 273 | 20 900 |
| Audited balance at 1 August 2023** | 4 774 521 | — | 111 578 | (4 325 319) | 560 780 | 26 889 | 587 669 |
|---|---|---|---|---|---|---|---|
| (Loss)/profit for the period | — | — | — | (92 968) | (92 968) | 1 586 | (91 382) |
| Other comprehensive income | — | — | 3 540 | — | 3 540 | 2 237 | 5 777 |
| Transfers within equity* | — | — | (43 009) | 43 009 | — | — | — |
| Share-based payments | — | — | 4 849 | — | 4 849 | — | 4 849 |
| Share-based payments paid out during the period | — | — | (496) | — | (496) | — | (496) |
| Unaudited balance at 31 January 2024 | 4 774 521 | — | 76 462 | (4 375 278) | 475 705 | 30 712 | 506 417 |
| Notes | 15 |
| * | Transfers within equity are transfers from the share-based payments reserve for expired, unexercised options. |
| ** | During February 2023, the Group undertook a renounceable rights offer to qualifying shareholders, and a specific issue of ordinary shares to Lebashe in order to raise a total of R600 million, as well as amended the terms of EOH A Shares issued to Lebashe in 2018. |
| Figures in Rand thousand | Notes | Unaudited for the six months to 31 January 2024 |
Unaudited for the six months to 31 January 2023 |
| Cash flows from operating activities | |||
| Cash generated from operations | 19 | 201 441 | 4 676 |
| Investment income received | 8 075 | 4 607 | |
| Interest paid | (67 134) | (89 565) | |
| Taxation paid | (37 737) | (57 943) | |
| Net cash inflow/(outflow) from operating activities | 104 645 | (138 225) | |
| Cash flows from investing activities | |||
| Additions to property, plant and equipment | (24 701) | (20 258) | |
| Proceeds on the sale of property, plant, equipment and intangible assets | 7 318 | 1 167 | |
| Intangible assets acquired | (11 297) | (24 712) | |
| Cash receipt from disposal of businesses, net of cash given up | 25 077 | 92 117 | |
| Cash outflow relating to other financial assets | (1 032) | — | |
| Increase in restricted cash | (28 593) | (112 768) | |
| Decrease in restricted cash | 10 356 | 107 556 | |
| Net cash (outflow)/inflow from investing activities | (22 872) | 43 102 | |
| Cash flows from financing activities | |||
| Repayment of other financial liabilities | (10 291) | (104 120) | |
| Principal elements of lease payments | (20 877) | (31 958) | |
| Net cash outflow from financing activities | (31 168) | (136 078) | |
| Net increase/(decrease) in cash and cash equivalents | 50 605 | (231 201) | |
| Cash and cash equivalents at the beginning of the period* | 204 080 | 410 955 | |
| Assets held for sale at the beginning of the period | — | 47 412 | |
| Assets held for sale at the end of the period | (7 645) | (28 658) | |
| Exchange losses on cash and cash equivalents | (2 965) | (6 462) | |
| Cash and cash equivalents at the end of the period | 244 075 | 192 046 |
| * | Cash and cash equivalents at the beginning of the period is the balance as at 1 August 2023 (1 August 2022). |
Cash and cash equivalents includes bank overdrafts of R167 million (period ended 31 January 2023: R45 million). |
The Group has spent significant time over the last two years optimising and aligning its suite of products and services and refining how it approaches the market. With the asset sale process aimed at reducing legacy debt largely complete, EOH has a stable portfolio of products and services. The Group approaches the market now through four key product pillars; namely Digital Enablement, IT Infrastructure Services, Operational Technologies and EasyHQ. The International business outside of sub-Saharan Africa focuses mainly on digital enablement and selling of own-IP platforms. The Group Executive Committee, which is the Chief Operating Decision Maker (“CODM”), was also aligned along these pillars, improving efficiency and accountability in our reporting structures.
Digital Enablement is at the heart of the Fourth Industrial Revolution (“4IR”) as well as our clients’ digitisation journeys and includes application development, AI and automation, data and analytics, and cloud solutions. It also houses our RocketLab ventures, which is where the Group develops and scales exciting own-IP applications.
IT Infrastructure Services includes our Manage-and-Operate or Infrastructure-as-a-Service offering. This includes data centre and workspace services, network, connectivity and security solutions, enterprise applications, and software reseller businesses.
The Operational Technologies business specialises in the provision of operational and industrial technology solutions to customers across the industrial and commercial markets. The solutions include operational software, process automation, critical connectivity and managed services and support for critical infrastructure and systems. Enhanced with the provision of power infrastructure management, energy information systems and energy management systems, connected by critical wireless communications infrastructure, tailored for heavy industries, utilities and energy-intensive users, the business can provide solutions for the complete industrial operation of a client.
EasyHQ is the pillar focusing on head office solutions for our clients. As EOH developed solutions internally to rectify its own shortcomings over the last few years, it ensured that all these solutions were digitised so that they could be used by its clients in the future. There has been a very positive response in the pilot rollouts and EOH believes that EasyHQ will become a key contributor to our clients’ efficiency gains over the coming years. EasyHQ solutions include governance, risk, compliance, recruitment, training and HR management, attestations and digital signature solutions, among others.
The International business provides digital enablement solutions for new markets, expanding access to talent pools and attracting new clients in Europe and the Middle East.
The CODM is not presented with secondary information in the form of geographic information, and therefore geographic information is not disclosed in the segment results. Liabilities and assets are also not regularly provided to the CODM and are not disclosed in the segment results. The CODM reviews revenue, gross profit and adjusted EBITDA as profit measures.
Adjusted EBITDA is defined as profit/loss before depreciation, amortisation, share-based payments, gain/loss on disposal of subsidiaries and associates, impairments of non-financial assets, loss on disposal of assets, interest income, interest expense, corporate overheads and current and deferred tax.
Revenue, gross profit and adjusted EBITDA
| Unaudited for the six months to 31 January 2024 | |||||||
| Figures in Rand thousand | Digital Enablement |
IT Infrastructure Services |
Operational Technologies |
EasyHQ | International | Reconciliation^ | Total |
| External revenue | 881 894 | 982 218 | 617 945 | 381 891 | 281 807 | — | 3 145 755 |
|---|---|---|---|---|---|---|---|
| Hardware sales | 34 298 | 212 493 | 120 002 | — | 379 | — | 367 172 |
| Services | 801 061 | 598 855 | 380 854 | 381 891 | 202 293 | — | 2 364 954 |
| Software/licence contracts | 41 593 | 170 870 | 117 089 | — | 79 135 | — | 408 687 |
| Rentals | 4 942 | — | — | — | — | — | 4 942 |
| Intersegment revenue | 35 879 | 33 841 | 5 659 | 49 287 | 16 480 | (141 146) | — |
| Hardware sales | 765 | 26 845 | 756 | — | — | (28 366) | — |
| Services | 16 912 | 6 759 | 4 893 | 49 287 | 16 480 | (94 331) | — |
| Software/licence contracts | 18 202 | 237 | 10 | — | — | (18 449) | — |
| Rentals | — | — | — | — | — | — | — |
| Gross revenue | 917 773 | 1 016 059 | 623 604 | 431 178 | 298 287 | (141 146) | 3 145 755 |
| Cost of sales | (671 281) | (742 990) | (461 562) | (289 502) | (200 551) | 58 681 | (2 307 205) |
| Gross profit | 246 492 | 273 069 | 162 042 | 141 676 | 97 736 | (82 465) | 838 550 |
| Gross profit (%) | 26.9% | 26.9% | 26.0% | 32.9% | 32.8% | — | 26.7% |
| Unaudited restated* for the six months to 31 January 2023 | |||||||
| Figures in Rand thousand | Digital Enablement |
IT Infrastructure Services |
Operational Technologies |
EasyHQ | International | Reconciliation^ | Total |
| External revenue | 790 163 | 1 031 329 | 727 745 | 429 321 | 265 260 | — | 3 243 818 |
| Hardware sales | 52 245 | 168 673 | 212 610 | — | 1 764 | — | 435 292 |
| Services | 671 763 | 658 961 | 438 810 | 429 321 | 231 168 | — | 2 430 023 |
| Software/licence contracts | 56 490 | 198 988 | 76 325 | — | 32 328 | — | 364 131 |
| Rentals | 9 665 | 4 707 | — | — | — | — | 14 372 |
| Intersegment revenue | 53 632 | 68 104 | 42 842 | 16 905 | 3 923 | (185 406) | — |
| Hardware sales | 1 198 | 18 918 | 11 063 | — | — | (31 179) | — |
| Services | 42 490 | 42 495 | 31 779 | 16 905 | 3 923 | (137 592) | — |
| Software/licence contracts | 9 869 | 6 013 | — | — | — | (15 882) | — |
| Rentals | 75 | 678 | — | — | — | (753) | — |
| Gross revenue | 843 795 | 1 099 433 | 770 587 | 446 226 | 269 183 | (185 406) | 3 243 818 |
| Cost of sales | (619 951) | (769 360) | (547 106) | (282 017) | (173 268) | 81 828 | (2 309 874) |
| Gross profit | 223 844 | 330 073 | 223 481 | 164 209 | 95 915 | (103 578) | 933 944 |
| Gross profit (%) | 26.5% | 30.0% | 29.0% | 36.8% | 35.6% | — | 28.8% |
| * | Comparative figures previously reported were restated to reflect the changes to reportable segments as a result of the changes to the Group’s internal organisational structure for the period ended 31 January 2024. |
| ^ | Reconciliation comprises elimination of intersegment transactions and includes head office expenses. |
The above table comprises both continuing and discontinued operations.
| Unaudited for the six months to 31 January 2024 | |||||||
| Figures in Rand thousand | Digital Enablement |
IT Infrastructure Services |
Operational Technologies |
EasyHQ | International | Reconciliation^ | Total |
| Adjusted EBITDA | 65 408 | 75 556 | 24 236 | 9 341 | 35 287 | (112 495) | 97 333 |
|---|---|---|---|---|---|---|---|
| Adjusted EBITDA (%) | 7.1% | 7.4% | 3.9% | 2.2% | 11.8% | — | 3.1% |
| Material expenses included in adjusted EBITDA: | |||||||
| Employee costs | 438 955 | 459 299 | 236 103 | 255 772 | 78 140 | 131 741 | 1 600 010 |
| Unaudited restated* for the six months to 31 January 2023 | |||||||
| Figures in Rand thousand | Digital Enablement |
IT Infrastructure Services |
Operational Technologies |
EasyHQ | International | Reconciliation^ | Total |
| Adjusted EBITDA | 51 688 | 78 038 | 29 232 | 45 283 | 36 681 | (70 360) | 170 562 |
| Adjusted EBITDA (%) | 6.1% | 7.1% | 3.8% | 10.1% | 13.6% | — | 5.3% |
| Material expenses included in adjusted EBITDA: | |||||||
| Employee costs | 407 531 | 455 215 | 239 355 | 223 942 | 84 964 | 157 977 | 1 568 984 |
| * | Comparative figures previously reported were restated to reflect the changes to reportable segments as a result of the changes to the Group’s internal organisational structure for the period ended 31 January 2024. |
| ^ | Reconciliation comprises elimination of intersegment transactions and includes head office expenses. |
The above table comprises both continuing and discontinued operations.
Adjusted EBITDA reconciliation
| Figures in Rand thousand | Notes | Unaudited for the six months to 31 January 2024 |
Unaudited for the six months to 31 January 2023 |
| Operating profit | 9 439 | 141 962 | |
|---|---|---|---|
| Operating profit from continuing operations | 9 439 | 110 356 | |
| Operating profit from discontinued operations | 9 | — | 31 606 |
| Depreciation | 41 831 | 50 836 | |
| Amortisation | 13 331 | 11 872 | |
| IAS 36 net impairment reversals of intangible assets and property, plant and equipment | (2 492) | — | |
| IAS 36 impairment of goodwill | 19 780 | — | |
| IFRS 5 remeasurement to fair value less costs to sell | — | 2 616 | |
| Loss on disposal of intangible assets and property, plant and equipment | 1 720 | 592 | |
| Share-based payment expense | 10 955 | 4 835 | |
| Write-off of vendors for acquisition | 16 | — | (188) |
| Loss/(profit) on disposal of subsidiaries and equity-accounted investments | 2 769 | (41 963) | |
| Adjusted EBITDA | 97 333 | 170 562 |