EOH is pleased to report a continued improvement in performance with a 35% increase in operating profit from continuing operations

Highlights for the year ended 31 July 2023 include:

• EOH generated a 35% increase in operating profit from continuing operations to R135 million
• The successful rights issue and capital raise allowed for R678 repayments in debt and the restructuring of debt facilities with a single lender at significantly reduced interest rates
• Group net debt now stands at R683 million.
• Gross margins maintained at 28% for the year despite deteriorating market conditions
• R94 million invested in growth initiatives
• Restructured operations into key pillars aligned with executives responsibilities under new long-term contracts

Despite a deteriorating local economy and significant headwinds in the public sector, EOH’s continuing operations managed to deliver revenue growth of 3%, an increase in operating profits of 35% and a halving of net loss after tax from R160 million in FY2022 to R81 million for the year ended 31 July 2023.

At a divisional level, the International business delivered excellent growth of 23% in revenue largely driven by the Group’s Middle East operations. This solid performance flowed through to an EBITDA level with a 41% increase to R56 million. The IT Infrastructure business has also delivered good growth of 15% driven by new client acquisitions in the mid-market space as the business continued to tailor its offerings. Our Digital Enablement business also showed good growth at 7% as it continued to see customers accelerate their digital strategies.

The turnaround in the EasyHQ business was completed during the year and this division recorded a 33% increase in EBITDA to R121 million despite experiencing a 5% reduction in revenue as unprofitable contracts were closed out over the 12 month period. EasyHQ houses the Group Risk and Compliance “as-a-service” IP that has been created over the past four years and is an exciting business for EOH’s platform growth.​

The biggest remaining challenges are in the Enterprise Applications and Software Reseller Business and the Nextec Infrastructure and Consulting businesses. Both these divisions have new leadership and are core focus areas for 2024.

Stephen Van Coller, group CEO, commenting on the results said “It has been another year of improvement and great change at EOH with the successful capital raise and restructuring of our debt facilities, re-alignment of our operations into autonomous pillars and over R90 million invested into growth initiatives. Despite the deteriorating market conditions and lack of public sector spend and SOE technology investment, our businesses have delivered solid  improvements in profitability and are well positioned to continue this trend as our growth strategy and operating model gain traction.”

Van Coller has agreed to extend his initial five year contract for another six months but has asked the Board not to consider an extension beyond the 31^st of March 2024 at which time he will officially retire from the Board. Van Coller says: “It has been quite a journey and not what I expected when I accepted the CEO role in 2018. Nevertheless I am immensely proud of what we have achieved as a team. EOH today is a sustainable company which lies at the heart of South Africa’s ICT ecosystem and plays an important role in everyone’s lives. It has great potential both locally and internationally, and now is an appropriate time to hand over to new leadership to guide the company through this next chapter.”

Stephen will, however, remain available to the Board after the 31^st of March, as required, to help with a smooth leadership transition and to complete any projects that require his continued involvement.

Following group CFO, Megan Pydigadu’s resignation, as announced on the 25^th of  July 2023, the Board has appointed Marialet Greeff as the Interim Group Chief Financial Officer. Greeff has been with the Group since 2019 and is currently the Group Executive for Treasury, Tax and Regulatory Finance. Marialet is a CA(SA) and has played an integral role in both the finance function and the restructuring and turnaround process since joining EOH in 2019.

The successful rights offer has, in addition to largely rectifying EOH’s capital structure, has also given the EOH Board the freedom to consider the next chapter for the Group. EOH Board Chairman Andrew Mthembu says:  “We are hugely grateful to both Stephen and Megan for their leadership which has resulted in a sustainable, growing business. As EOH has changed its strategic focus and significantly decentralised its head office functions over the past year the Board has the necessary time to undertake a thorough skills assessment as part of the recruitment of a new CEO and CFO. Importantly to ensure business continuity the Board has signed four year contracts with the heads of the respective operational businesses namely Marius De Larey, Brian Harding and Fatima Newman.”

Please see attached the full SENS announcement.

For media enquiries please contact:

Janine Gertzen Janine@theNielsenNetwork.com +27829238054

EOH is pleased to report sustained operating profitability during the 6 months ended 31 January 2023 and the subsequent deleveraging of the Group’s balance sheet post the capital raise after the half year end.

Highlights for the period include:

• R110 million in operating profit from continuing operations, compared to the R100 million for the full year end 31 July 2022
• Revenue from continuing operations increased 8% despite a challenging local operating environment
• Gross profit margins remain stable at 29%
• R48 million invested into the business as part of our GET strategy
• R600 million new capital raised post half year end used to reduce debt levels to R673 million, creating an efficient capital structure and a significantly reduced interest charge going forward
• Cash balances at 31 January 2023 of R234 million and a normalised debt structure with a single bank

Despite the challenging operating environment EOH achieved revenue growth of 8% for the period with sustained operating profitability. The largest operating division, Digital Enablement led the way with a 20% increase in revenue and 24% increase in EBITDA at improved margins. The international diversification strategy delivered benefits with the Middle East, Europe and UK businesses showing excellent growth of over 45% to R257 million. At 33% of our Digital Enablement revenues, the international operations are becoming key contributors.

The IT Infrastructure Services, Enterprise Apps & Software and Infrastructure Solutions divisions all saw pleasing revenue growth over 10%. The Operational Technologies business had a challenging trading period primarily due to delays and the inability to close SOE contracts, resulting in a 10% reduction in revenue. This business is fairly reliant on SOE’s and mining in South Africa but diversification initiatives have started with investments into West and East Africa through the exclusive AVEVA rights, as well as a focus on manufacturing and FMCG clients in South Africa.

With the improved operating performance and outlook in FY2022, the Board was able to approve an R80 million strategic investment into the  business of which R48 million has been invested in the first 6 months. Additionally the recent successful capital raise significantly reduces interest charges. Going forward, EOH will further accelerate its organic growth strategy, especially on the back of the pleasing results being seen on the initial investments.

Looking forward, the EOH executive and Board is excited with the momentum that has built over the past 6 months. Compared to the previous six month period (H2-2022) all key metrics have improved, with revenue increasing 5%, gross profit 13%, adjusted EBITDA 112% and profit after tax 82%.

Furthermore, with the completion of the asset disposal process to deleverage the company, EOH now 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. The International business outside of Sub-Saharan Africa will focus mainly on Digital Enablement and selling of own IP Platforms. The Executive Committee has also been aligned along these pillars, improving efficiency and accountability in our reporting structures.

Stephen van Coller, EOH Group CEO commented: “Having successfully completed our capital raise to normalise EOH’s capital structure, I am excited we can now turn our full attention to our Growth-Efficiency-Talent strategy. Our initial growth investments are showing great results and we will continue to build on this momentum, whilst maintain our focus on cost efficiencies and making EOH the employer of choice in the IT industry. We look forward to the next phase of our journey working with our many clients to enhance their business through industry leading information and digital technologies.”

For the SENS announcement please follow the link https://www.eoh.co.za/investor-relations/sens/ and to view our results presentation please follow the results presentation link

Ends.

5 April 2023

For any media queries please contact:

Aprio Strategic Communications

Michael Rubenstein

michael@aprio.co.za

0829037797

Megan reveals the potential of ChatGPT, and how it can help businesses navigate the new future.

ChatGPT has brought the possibilities of AI into the public arena and fired up the imagination of the world in doing so. “It is an exciting proposition of the potential of what AI may be able to do in the future,” says EOH group FD Megan Pydigadu.

She explains that, while it is still largely focused on word and natural language content, if you could take it and overlay it in large, structured data fields, the opportunities and efficiencies for business could be significant.

“The technology’s natural language understanding and ability to quickly generate content has made it one of the fastest adopted technologies ever, offering businesses the possibility of doing some of their manual and repetitive tasks much faster, saving costs and improving efficiencies,” she adds.

Megan explains that the generative AI can offer shortcuts, especially in the areas of large text analysis, data capture, idea generation, marketing and even IT development services. “As an organisation, we offer training and assistance in using ChatGPT most effectively, and where the tech has sparked businesses’ interest in AI in general, our data division can train machine learning models to deliver results and insight that cater to their specific business needs.”

EOH can also help to build and improve chatbots by linking them to natural language AI application programming interfaces (APIs).

“However, I must highlight that ChaptGPT’s responses are based on pattern recognition,” Megan cautions. “This means that, while it provides answers that sound convincing, they are not necessarily accurate. One can often spend more time on validating information than doing the work manually to begin with.”

She adds that ChatGPT is also only as good as the prompts you give it. “If you don’t specify the audience, goals or full parameters, you will get limited results.”

That said, ChatGPT is only one of a vast pool of AI resources available, and specialist AI models and programmes should be used for specialist tasks and industries.

“ChatGPT is not going to replace the workforce, but as the technology improves, it, and similar tools, will vastly improve the efficiency of business,” Megan concludes.

This article was NOT written by ChatGPT.

19 January 2023, Johannesburg: Today EOH released the final terms of its rights offer and its specific issue of shares to its strategic investment partner Lebashe Investment Group.

Salient points

• On 13 December 2022 at the Company’s EGM, EOH shareholders voted unanimously for EOH to proceed with the rights offer.
• The combined capital raise from the rights issue and specific issue will amount to R600 million.
• EOH has received irrevocable undertakings from existing shareholders representing 30% of the issued shares to follow their rights in full.
• EOH has underwriting agreements with Aeon Investment Management Proprietary Limited, Anchor Capital Proprietary Limited and Visio Capital Management Proprietary Limited to subscribe for any shares that have not been subscribed for by existing shareholders.
• The irrevocable undertakings to follow rights and underwriting commitments have de-risked the process and guarantees that R600 million will be raised.
• The rights offer issue price of R1.30 represents a discount of approximately 30% to the theoretical ex-rights price (“TERP”) which is in line with the average discount to TERP of the last ten rights offers of similar sized offerings relative to market capitalisations.
• Given the structure of the rights issue all existing shareholders who follow their rights will experience no dilution in their shareholding.
• The proceeds of the rights offer and specific issue will be used to settle the majority of the senior bridge facility, reducing interest payments by approximately R100 million per annum. Further, Standard Bank of South Africa Limited (acting through its Corporate and Investment Banking division), has, subject to a successful conclusion of the capital raise and fulfilment of conditions precedent, approved new long-term facilities of R700 million and general banking facilities of R500 million to replace the existing debt, which significantly reduces the margin above JIBAR that EOH pays (for details click here). This brings the facilities in line with normal corporate facilities available in the market and significantly reduces the onerous administration of a four-lender syndicate.

EOH Group CEO Stephen van Coller said “We are excited to have secured the success of the capital raise through the support of our major shareholders and interested underwriters. In the context of the legacy issues that the existing business has had to solve, namely the significant debt burden complicated by rising and onerous interest rates, repayments to OEM’s and the Special Investigating Unit (SIU), the significant support shown by existing and new shareholders is testament to the turnaround of EOH and the quality of the underlying core remaining businesses. It was always a strategic imperative to fix the capital structure of the business in order to take full advantage of the opportunities EOH has through its leading technology offerings and world class skills base. The rights issue and the resultant refinancing of the debt package as outlined will normalise the capital structure for EOH as promised to the market. Furthermore, our international certification as a TOP EMPLOYER underlines our global standard of people practices and further reinforces our ability to attract and retain great talent.”

EOH’s results for the financial year ended 31 July 2022 demonstrated a continued significant improvement in the financial performance of the business and its return to operating profitability, which has continued into the first five months of the 2023 financial year. Key highlights are: –

• An 80% increase in continuing operating profit from FY21 to FY22 to R100 million
• Continuing Revenue increase of 17% in H2 2022 compared to H2 2021
• Continuing Revenue for the five months to December 2022 is ahead of budget and grown in excess of inflation
• Continuing Gross Margins and adjusted EBITDA margins for the five months to 31 December 2022 remain in line with FY22

As a result of this financial performance the Board and management considered it appropriate at this time to complete the turnaround and solve for the inefficient capital structure through an equity capital raise, which was unanimously supported and approved by shareholders.

EOH is pleased to report that the rights issue has been de-risked through the support of major shareholders providing irrevocable undertakings to follow their rights, as well as underwriting commitments from both existing and new shareholders to subscribe for any shares not taken up by EOH shareholders.

Over and above their commitment to follow their rights, Lebashe has signed an irrevocable undertaking to subscribe for R100 million new EOH shares, being 76,923,077 shares at the rights offer issue price of R1.30. Lebashe’s shareholding in EOH after the rights issue and specific issue will be approximately 23.5%.

The terms of Lebashe’s A-share shareholding have been amended and extended to 30 September 2028, enabling and incentivising Lebashe to add value as a strategic partner to EOH and extending the life of the empowerment transaction, and the resultant benefits thereof to EOH, by five years. Lebashe’s voting interest including its A-shares will be approximately 30%, further securing EOH’s Level 1 BBBEE status.

Andrew Mthembu, Chairman of the EOH Board, said “I am extremely proud of this team and thrilled by the vote of confidence in EOH demonstrated by all stakeholders, including our existing shareholders, the underwriters and our now single banker. EOH has a strong investment case and I urge shareholders to consider following their rights and maintain their economic interest in EOH. I would particularly like to thank the Lebashe Investment Group for their continued support and belief in EOH. As a Board, we are looking forward to this next stage of our journey unhindered by the large legacy debt and interest burden and focusing on the growth of the business for the first time in many years.”

Megan Pydigadu, EOH CFO, added “Securing the success of the rights issue and capital raise will bring significant and immediate benefits to EOH. We will save approximately R100 million per annum in interest charges based on current interest rates, freeing up resources to invest in numerous exciting growth opportunities. It has been an arduous journey to get here, and I would like to thank all our stakeholders, in particular our customers and partners who have supported us throughout together with our 5000-plus staff members for their patience and tenacity in continuing to deliver world class technology solutions under very trying and uncertain circumstances.”

For the full terms of the rights offer please refer to the SENS announcement on 19 January 2023, here.

For Media queries or interviews please contact:

Aprio Strategic Communications

Michael Rubenstein

michael@aprio.co.za

0829037797

Johannesburg – The EOH Group is proud to announce that it has received Top Employer certification from the Top Employers Institute, the global authority on recognising excellence in people practices. The accolade demonstrates that EOH is succeeding in building a forward-thinking workplace that allows its diverse People to grow and thrive. It also signals that the Group is well-equipped to implement its growth strategy in 2023.

“It is a great honour for EOH to receive this coveted certification,” says EOH CEO Stephen van Coller. “The award indicates that our improved people and culture practices are in line with the highest global standards and that we are well on our way to making EOH one of the coolest places to work in the tech industry.”

“The Group is committed to building a culture and work environment where our people feel valued and have the opportunity to realise their potential. We have worked hard on our Employee Value Proposition as we believe our people are our key asset. So we are delighted that we have been recognised by a reputable global organisation as a business that puts its people first.”

EOH participated in the Top Employer programme to benchmark itself against international best people practices and obtain a roadmap for continuous improvement of its employee value proposition.

Malisha Awunor, EOH Group Head People and Culture, says this is only the start of EOH’s journey to become the most attractive place to work in the tech industry. “In future, EOH will work on enhancing these people best practices, and tailoring our culture to support our diverse people. The Group recognises the individuality of its people and follows a personalised approach to meeting their needs.”

“This award adds further credibility to the Group’s People survey results that showed 88% of respondents are proud to work at EOH and 84% of leavers would return to EOH for the right role.”

The certification as Top Employer is no mean feat. The process involves a detailed audit of a company’s performance across six Human Resources elements made up of 350 sub areas based on supporting evidence.

What is highly encouraging is the Group’s performance against global best practices in the following areas: business strategy, people strategy and leadership; and ethics and integrity and diversity and inclusion.

The Group’s outperformance in the areas of business strategy, people strategy and leadership can be attributed to its programmes and initiatives aimed at supporting and developing people in the company.

In the area spanning diversity and inclusion, EOH shone for its efforts to create a workplace where everyone is respected for being their true selves and doing their best work as a result. The Group has established an array of forums and platforms to this end, and it is a signatory to leading United Nations principles which promote these objectives.

“The Group considers all facets of its people in engaging them,” says Awunor. “EOH is building a workplace where we enable, grow, include and care for our people.”

MEDIA RELEASE ENDS

For media enquiries, contact:

Tessa.Kruger@eoh.com