EOH Holdings Limited ("EOH" or "the Company") is a holding company domiciled in South Africa that is listed on the JSE Limited under the category Technology: Software and Computer Services. EOH is one of the largest information technology ("IT") services providers in South Africa and is committed to providing the technology, knowledge, skills and organisational ability critical to the development and growth of the markets it serves. The interim condensed consolidated financial statements of EOH, as at 31 January 2023 and for the six months then ended, comprise the Company and its subsidiaries (together referred to as "the Group").

The interim condensed consolidated financial statements have been prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards ("IFRS") and its interpretations adopted by the International Accounting Standards Board ("IASB") and comply with the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council, and contain at a minimum the information required by IAS 34 Interim Financial Reporting, the requirements of the Companies Act 71 of 2008 of South Africa and the JSE Limited Listings Requirements.

These interim condensed consolidated financial statements were compiled under the supervision of Megan Pydigadu CA(SA), the Group Chief Financial Officer ("CFO").

The accounting policies and methods of computation applied in the preparation of these interim condensed consolidated financial statements are consistent with those applied in the previous consolidated annual financial statements.

The interim condensed consolidated financial statements do not include all the notes of the type normally included in a set of consolidated annual financial statements. Accordingly, this report is to be read in conjunction with the consolidated annual financial statements for the year ended 31 July 2022.

The interim condensed consolidated financial statements have been prepared on the historical cost basis, except for certain financial instruments that are measured at fair value through profit or loss at the end of each reporting period.

The interim condensed consolidated financial statements are presented in South African Rand, which is the Group's presentation currency, rounded to the nearest thousand except for when otherwise indicated. The going concern basis has been used in preparing the interim condensed consolidated financial statements as the directors have a reasonable expectation that the Group will continue as a going concern for the foreseeable future. Refer to note 4 for further information.

The interim condensed consolidated financial statements have not been audited or reviewed by the Group's external auditor.

The IFRS Conceptual Framework states that the going concern concept is an underlying assumption in the preparation of IFRS financial statements. Therefore, the financial statements presume that an entity will continue in operation in the foreseeable future or, if that presumption is not valid, disclosure and a different basis of reporting are required. The Board of Directors ("Board") believes that, as of the date of this report, the going concern presumption is still appropriate and accordingly the interim condensed consolidated financial statements have been prepared on the going concern basis of accounting.

IAS 1 Preparation of Financial Statements ("IAS 1") requires management to perform an assessment of the Group's ability to continue as a going concern. If management is aware of material uncertainties related to events or conditions that may cast significant doubt upon the Group's ability to continue as a going concern, IAS 1 requires these uncertainties to be disclosed.

In conducting this assessment, the Board has taken into consideration the following factors:

The financial performance, condition and cash flows for the Group reflect a loss for the period of R5 million compared to the prior year, which had a profit of R22 million, net asset value at the end of the period of R21 million (31 July 2022: R60 million), and cash outflows from operating activities of R138 million (2022: inflow of R124 million), (including continuing and discontinued operations). Details of the financial performance, condition and cash flows for the Group are explained in the interim condensed consolidated financial statements. A detailed action plan for deleveraging the Group to a sustainable level and resolving the "fit-for-purpose" cost structure was developed by the Group and its lenders and committed to. Since its announcement in October 2019, and subsequent revisions, the plan has been largely executed. Non-core businesses identified to be sold, have been successfully disposed of and proceeds received from these disposals have been repaid to lenders as part of the Group's deleveraging strategy and commitment. Further to this, the rights issue and the specific issue was successfully implemented during February 2023, through which R600 million was raised. R555 million of capital outstanding to the lenders was repaid.

On 1 April 2022, the Group refinanced the R1.9 billion debt and existing facilities available into:

1. A R1.4 billion senior bridge facility originally repayable on or before 31 December 2023;
2. A R500 million three-year senior term loan, due on 1 April 2025; and
3. A R250 million direct overdraft facility, of which R45 million was drawn down at the reporting date, and R250 million in indirect facilities (including guarantee facilities, credit card, fleet management, vehicle and asset finance and trading facilities).

Proceeds from the sale of the Network Solutions business and Hymax (SA) Proprietary Limited ("Hymax SA") during the period have reduced the senior bridge facility to R728 million. Subsequent to period end, the rights issue and specific issue was concluded, further reducing the bridge facility by R555 million to R173 million.

With the completion of the rights issue subsequent to 31 January 2023, the Group has concluded a term sheet with The Standard Bank of South Africa Limited (acting through its Corporate and Investment Banking division) to refinance the remaining debt into the following package:

• R200 million four-year amortising term loan;
• R250 million three-year bullet term loan;
• R250 million four-year revolving credit facility; and
• R500 million general banking facilities which will include a working capital facility and ancillary banking facilities.

As at period end, the Group had R227 million of cash available (continuing and discontinued operations), including foreign and restricted cash but excluding the undrawn portion of the direct overdraft facility of R205 million, which was available at reporting date and remains at EOH's disposal. The Group expects to be in a positive free cash flow position in the forthcoming financial year.

The directors' assessment of whether the Group is a going concern was considered and the directors concluded that:

1. The Group is solvent and is expected to remain solvent after considering the approved budget and expected performance;
2. Net asset value as at 31 January 2023 was R21 million, which subsequently changed to R592 million as at the end of February 2023, due to the rights issue and specific issue;
3. The Group's current liabilities exceeded its current assets by R499 million at 31 January 2023, but subsequent to the rights issue and specific issue, current assets exceeded current liabilities by R56 million;
4. There is an approved budget for the following 30 months;
5. There are monthly cash flow forecasts for the following 12 months to 31 January 2024 and annual forecasts for the 30 months to 31 July 2025, which were interrogated and adjusted for anomalies for each of the periods under review together with a detailed review of one-off cash payments; and
6. The Group has sufficient access to facilities and liquidity events to fund operations for the following 12 months based on the following assumptions:
   • Improved operational performance;
   • The Group's assets are appropriately insured; and
   • There is currently no outstanding litigation, that the directors believe has not been adequately provided for, that could pressurise the Group's ability to meet its obligations.

At the time of approval of these interim condensed consolidated financial statements for the period ended 31 January 2023, the Board has a reasonable expectation that the Group has sufficient resources to continue in operation for the foreseeable future, which is not less than 12 months from the date of approval of these interim condensed consolidated financial statements.

The Board remains focused on and committed to the turnaround strategy and improving the capital structure.

The Board, after considering the renegotiated funding terms and mitigating actions described above, has concluded that the Group should be able to discharge its liabilities as they fall due in the normal course of business and is therefore of the opinion that the going concern assumption is appropriate in the preparation of the interim condensed consolidated financial statements.

Certain amendments to accounting standards became effective from 1 August 2022. These did not have a material impact on the Group.

Disaggregated revenue

* Rentals recognised are excluded from revenue from contracts with customers and accounted for under IFRS 16 Leases.

The Group recognised revenue as principal of R352 million and as agent of R12 million for software/licence contracts; as well as revenue as principal of R429 million and as agent of R6 million for hardware transactions.

* Comparative figures previously reported have been amended to reflect disaggregated reconciling amounts gross and net of taxation.

Impairment reversals/(losses) on financial assets recognised in profit or loss from continuing operations were as follows:

Identification and classification of discontinued operations

There were a number of businesses that were approved for sale and for which the sale is expected to be completed within 12 months from the reporting date, as well as businesses that were already sold during the current and previous reporting periods that have met the requirements to be presented as discontinued operations and have accordingly been presented as such.

Judgement was applied in determining whether a component is a discontinued operation by assessing whether it represents a separate major line of business or geographical area of operations or is part of a single plan to dispose of a separate major line of business or geographical area of operations.

The Group's intention to dispose of these non-core assets triggered an initial impairment assessment on the underlying assets and these continue to be measured at fair value less costs to sell in the current reporting period. As at 31 January 2023, no impairment was recognised for disposal groups classified as discontinued operations. Impairment recognised in the 2022 interim period was allocated to the identified disposal groups. Refer to note 13.

(Loss)/profit before taxation before including the gain/(loss) on disposal and remeasurement to fair value less costs to sell was R10 million (2022: R49 million).

The Group acquired property, plant, equipment and right-of-use assets at a value of R23 million (year ended 31 July 2022: R81 million) and intangible assets at a value of R26 million (year ended 31 July 2022: R66 million). The Group disposed of property, plant, equipment and right-of-use assets with a carrying value of R1.7 million (year ended 31 July 2022: R35 million) and intangible assets with a carrying value of R2.5 million (year ended 31 July 2022: R2 million).

An impairment charge of R0.02 million and R0.91 million (year ended 31 July 2022: R6 million and R2 million) against property, plant, equipment and right-of-use assets and intangible assets respectively has been recognised during the period.

Impairment of goodwill

During the six months ended 31 January 2023, the Group performed a review of goodwill impairments in certain cash-generating units ("CGUs"). Where impairment indicators were identified, the carrying amounts of the CGUs were compared to their respective recoverable amounts. These recoverable amounts were determined through value-in-use calculations, discounting estimated future cash flows using a pre-tax discount rate. Impairment tests on assets held for sale were based on their fair value less costs of disposal.

NEXTEC

Goodwill impairment amounting to R2 million was attributable to Employee Benefits group as a result of its write-down to fair value less costs of disposal. The main driver for the goodwill impairment was a revised downward selling price adjustment as a result of an amendment to the commercial terms of the sale agreement.

Write-down of inventories of R5 million (2022: R14 million) to net realisable value were recognised as an expense during the period and included in costs of sales in the statement of profit or loss and other comprehensive income.

Over the past three years, EOH has embarked on a strategic journey to refine its operational structure, deleverage and create a sustainable capital structure. A key part of the Group's deleveraging strategy has been the disposal of non-core businesses and the Group has, over the past years, identified and sold a group of assets in line with this strategy.

There continues to be a number of businesses approved for sale and for which the sale is expected to be completed within 12 months from the reporting date. These businesses are classified as disposal groups held for sale and the assets and liabilities of these disposal groups have been presented separately as held for sale in the statement of financial position.

As at 31 January 2023, four disposal groups have been classified as held for sale. The material disposal group Network Solutions, in the iOCO segment, which was classified as held for sale in the prior financial year, has been sold in the current financial period. Refer to note 14 for more information on its disposal. Network Solutions is also classified as discontinued operations.

The major classes of assets and liabilities of the disposal groups, per reportable segment, classified as held for sale are as follows:

On 11 December 2018, the Group announced that opportunities would be explored for the sale of certain non-core assets to assist with its plan to deleverage and remove unnecessary complexity within the Group. In line with this strategy, the Group has disposed of certain investments in subsidiaries during the period.

* Consideration reflected does not include extinguishment of debt on sale.

Reconciliation of cash received from disposal of businesses

The carrying amounts of major classes of assets and liabilities, associated with subsidiaries disposed of during the current period, are as follows:

Authorised
7 500 000 000 ordinary shares of no par value
40 000 000 EOH A shares of no par value
Unissued
7 323 455 039 (2022: 323 455 039) unissued ordinary shares
Issued

The Group undertook a renounceable rights offer to raise up to R500 million, to qualifying shareholders. The rights offer comprised 384 615 384 rights offer shares in the ratio of 227 rights offer shares for every 100 EOH ordinary shares held at the close of trade on Friday, 27 January 2023 and at a price of R1.30 per rights offer share. The total number of rights offer shares subscribed for and excess allocations applied for was 522 229 452 ordinary shares. On completion of the rights offer, the total number of ordinary shares in issue (including treasury shares) was 561 160 345 ordinary shares. An aggregate amount of R500 million was raised.

As the rights issue price per share was below the market value of the shares on the effective date, a bonus element is inherent in the rights offer. This is determined as the fair value per share before the exercise of rights as a proportion of the theoretical ex-rights value per share. The bonus element is 102 619 561 shares and has been taken into account as an adjustment when restating earnings/loss per share and headline earnings/loss per share for the current and prior period. Further detail regarding this transaction can be found in note 22.

* Ring-fenced debt owing to the Industrial Development Corporation.

Interest-bearing bank loans are secured through a Security SPV which requires that all the South African wholly owned subsidiaries of the Group provide a pledge and cession of:

• all shares in, and claims on loan account against, any member of the Group incorporated in South Africa;
• cash;
• cash equivalents;
• bank accounts;
• investments;
• claims;
• disposal proceeds;
• any other amounts, of any nature whatsoever, now or from time to time in the future owing to that Obligor by any third person arising out of any cause of action whatsoever, including, without limitation, all amounts owing or becoming payable to that Obligor by any of its debtors; and
• related rights.

South African wholly owned subsidiaries contributing more than 80% of the Group's adjusted EBITDA are pledged as required above and the process of providing the security is ongoing.

The following interest-bearing bank loans were in place and secured through Security SPV:

• a senior amortising term facility of three-month JIBAR + 545 basis points repayable on 1 April 2025; and
• a senior amortising bridge facility of one-month JIBAR + 842 basis points repayable on 31 December 2023.

The Group has the following continuing debt covenant limits in respect of the above mentioned loans:

• debt to EBITDA ratio of 2.25x or lower, whereas the actual ratio was 2.45x;
• debt to free cash flow ratio of 6x or lower, whereas the actual ratio was 7.74x; and
• interest cover ratio of 3.5x or higher, whereas the actual ratio was 6.49x.

Subsequent to the period end, the lenders provided consent to waive the quarterly covenant compliance.

With the completion of the rights issue subsequent to 31 January 2023 the Group has concluded a term sheet with The Standard Bank of South Africa Limited (acting through its Corporate and Investment Banking division) to refinance the remaining debt into the following package:

• R200 million four-year amortising term loan;
• R250 million three-year bullet term loan;
• R250 million four-year revolving credit facility; and
• R500 million general banking facilities which will include a working capital facility and ancillary banking facilities

Refer to note 22 for additional information.

Cash-based long-term incentive

Members of the Group's executives, divisional executives and management are granted cash-based unit long-term incentives ("CBLTIs") settled in cash. These awards vest subject to the achievement of designated performance criteria (non-market performance conditions) and subject to an employment condition. The employment condition is deemed to have been satisfied if the grantee remains in the employ of the Group on vesting of the units. The awards vest in a three-year period subject to the meeting of performance and employment conditions. The Board initially approved the award of CBLTIs during the current period.

The liability for the CBLTIs is measured, initially, and at the end of each reporting period, until settled, at the fair value of the CBLTIs, applying an appropriate valuation model taking into account the terms and conditions under which the CBLTIs were granted, the expected achievement of non-market performance conditions, and the extent to which services have been rendered by the grantees to date.

The expense recognised during the period arising from the CBLTIs cash-settled share-based payment transactions amounted to R8 million (2022: Rnil).

There have been no cancellations or modifications to the awards during the reporting period.

A reconciliation of the movement of the CBLTIs is detailed below:

Cash-based long-term incentives

At the initial stage of the ENSafrica investigation, three contracts were identified as having apparent irregularities including collusion to bypass the State Information Technology ("SITA") process to enable over-invoicing. The provision for the over-invoicing was raised in 2019.

During the current period the Group, the Special Investigating Unit ("SIU") and the Department of Water and Sanitation ("DWS") have concluded an agreement regarding payment of a settlement amount by the Group to the DWS of:

• An initial upfront payment of R65 million which relates to duplicated software licences which will be refunded; and
• The remainder of an amount of R112 million to be paid over a period of 36 months commencing in January 2023.

The remaining balance was accordingly transferred out of provisions to trade and other payables as there is no longer uncertainty over the timing or amount payable.

The PAYE provision relates to a PAYE dispute which the Group is contesting. Further detail around the contingency is disclosed in note 21.

Provisions also include onerous contract provisions, where there is uncertainty on the final amount, which is the lower of the cost of fulfilling the contract and any compensation or penalties arising from failure to fulfil the contracts, with the timing of outflow expected to be in the next financial period.

Financial risk management and fair value disclosures

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy at 31 January 2023:

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy at 31 July 2022:

The Group does not have any financial instruments that are subject to offsetting.

All cash and cash equivalents, short-term receivables and short-term payables carrying amounts approximate their fair values due to their short-term nature.

Other financial liabilities and assets, and lease receivables and payables carrying amounts approximate their fair values due to the nature and contractual terms of the instruments.

There have been no transfers between levels of the fair value hierarchy.

Non-recurring fair value measurements

Disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. The fair values are determined based on sales agreements and offers that are in place for each of the disposal groups that are held for sale. The total of such fair values is R54 million (year ended 31 July 2022: R195 million). These fair values are categorised as level 3, based on inputs used.

* Comparative amounts of impairment losses on non-financial assets, have been disaggregated to disclose such impairments related to IAS 36 impairments of goodwill and IFRS 5 remeasurements to fair value less costs to sell, to more accurately reflect the nature of impairment losses on non-financial assets.

The Group entered into various transactions with related parties.

Parent company guarantees

EOH issued parent company guarantees ("PCGs") during May 2019, as required by a client for a wholly owned subsidiary, PiA Solar SA Proprietary Limited ("PiA"). The guarantees were provided during both construction and after handover, including an operation warranty guarantee, which by nature could (in the event of underperformance by PiA) compel EOH to either ensure physical performance or settle such underperformance in cash terms. The continued provision of these guarantees is being discussed with the relevant clients. While PiA had undergone some operational challenges as a result of several factors, EOH has intervened in order to minimise the potential impact of these PCGs. All the projects subject to these PCGs are now substantially complete and have been handed over to the client. EOH will continue to proactively manage these projects to ensure that the risks presented by the PCGs are mitigated.

Litigation

EOH and its subsidiaries are involved in various litigation matters, which are at varying stages in the litigation process, and most of which arise from the ordinary course of business. None of these matters are considered material on an individual or in aggregate basis. Management has no reason to believe that the outcome of these matters will have a materially adverse effect on the consolidated financial position, financial results or cash flows of EOH.

Uncertain indirect tax exposure

The Group has an ongoing tax dispute dating back to 2012 related to a PAYE dispute in two of its staff outsourcing businesses. At 31 January 2023, the Group had provided for R179 million on the PAYE liability assessed and is in ongoing discussions with SARS, regarding the potential settlement of this matter, in line with the requirements of the Tax Administration Act. To date, the settlement discussions with SARS have not been successful, as the EOH Group has made six different settlement offers, that have all been declined by SARS and the Group has subsequently filed an application in the High Court to have the SARS decisions set aside, on the basis of irrationality. The Group remains confident that it has a strong legal case to contest the remaining exposure, based on internal and external legal and technical advice obtained. A total of R98 million for the period 2020 to 2022 of the initial provision of R277 million was repaid up to 31 January 2023. Refer to note 17 for additional information.

Department of Home Affairs – ABIS (Biometric) arbitration

In November 2017, EOH and the Department of Home Affairs ("DHA") concluded a contract for the migration of certain biometric data for the DHA. EOH experienced significant difficulties attempting to achieve the contracted deliverables. On 31 March 2021, the aforementioned contract was assigned to a third party and the fulfilment of such contractual deliverables is no longer an EOH obligation. An arbitration process between EOH and the DHA, relating to the delay of the project and an EOH counter-claim for damages sustained in attempting to comply with the contract, is currently underway and yet to be finalised. The amount claimed by the DHA is approximately R44 million and the amount claimed by EOH is approximately R47 million. In May 2021, XON Systems Proprietary Limited ("XON") brought an application to set aside the award of the contract to EOH and the assignment to the third party. XON has since abandoned the application. It has been assessed, based on the DHA's claim that a contingent liability exists. Based on legal advice, the Group does not consider an outflow to be probable and is currently assessing whether or not to proceed with the arbitration.

Mehleketo Resources Proprietary Limited – in liquidation

Mehleketo Resources Proprietary Limited ("Mehleketo") was a wholly owned subsidiary which was placed into liquidation in 2019, due to its inability to pay its financial obligations as they became due. The liquidators of Mehleketo held certain section 417 and 418 (in terms of the Companies Act 71 of 2008) inquiries. In 2022, the liquidators issued a summons against various companies within the EOH Group, for a total amount of approximately R136 million on the basis of voidable/collusive preferences. EOH disagrees with the liquidators' position and has defended the court action instituted by the liquidators and the litigation proceedings are currently underway. In a related matter, in November 2022, EOH received a letter from the Directorate for Priority Crime Investigation ("DPCI") requesting information relating to the liquidation of Mehleketo. EOH responded to the DPCI, sharing with them the information relating to the liquidators' summons.

Alteram Municipal Services Proprietary Limited – litigation

In 2017, EOH and Alteram Municipal Services Proprietary Limited ("Alteram") concluded an agreement in terms of which EOH subcontracted certain services to Alteram in relation to EOH's Department of Water and Sanitation contract. It was subsequently established that the ultimate beneficial owner of Alteram was the same party who helped facilitate the historic fraud and corruption within EOH. EOH, upon seeking expert legal advice on the matter, terminated the aforementioned contract with effect from February 2020. Alteram has since issued a summons against EOH for approximately R35 million claiming unlawful termination. EOH defended Alteram's action and that matter is set down for arbitration in the current financial year. It has been assessed in light of the Alteram's claim that a contingent liability exists. Based on legal advice, the Group does not consider an outflow to be probable.

Shema Power Lake Kivu ("SPLK")/Digital Industries Limited ("DI") " Dispute

EOH, via DI, concluded an agreement with SPLK for certain services, goods and equipment to be delivered to SPLK's site in Rwanda. SPLK's allegation is that the services and equipment provided by DI were deficient in that it failed to provide proper advice and to properly instruct the installation of the equipment, resulting in the equipment being damaged and rendered unfit for purpose. SPLK instituted a summons against DI and its claim equates to approximately R53 million. EOH has defended the action and has instituted certain counterclaims in relation to the matter. The litigation proceedings are ongoing.

Commitments

Disposal of NuvoteQ

Effective 1 March 2023, the Group concluded the sale of 100% of the issued ordinary shares of NuvoteQ Proprietary Limited ("NuvoteQ") for a purchase consideration of R21 million. An amount of R35 million was received on 1 March 2023 which included an amount of R14 million for the settlement of outstanding EOH loan payable at time of disposal.

Disposal of Triclinium Clinical Development Proprietary Limited

Effective 1 February 2022, the Group concluded the sale of business of Triclinium Clinical Development Proprietary Limited ("TCD") for a purchase consideration of R44.6 million. Pursuant to the sale agreement, R15 million of the purchase consideration was retained in an interest-bearing escrow account for a period of 18 months. On 8 February 2023, being twelve months post the effective date of sale, R5.7 million of the escrow balance was received.

Disposal of Network Solutions and Hymax SA

Effective 1 September 2022, the Group concluded the sale of its Network Solutions business and of the entire issued share capital of Hymax SA for a purchase consideration of R136.9 million. Pursuant to the sale agreement, 20% of the purchase consideration was retained in an interest-bearing escrow account for a period of 12 months. On 2 March 2023, being six months post the effective date of sale, 50% of the escrow balance amounting to R13.7 million was received.

Disposal of Employee Benefits

On 16 March 2023, the Group entered into a share purchase agreement ("SPA") to dispose of 100% of the issued shares of CSO Employee Benefit Services Proprietary Limited, EOH Employee Benefits Proprietary Limited, Scientia Optimate Financial Services Proprietary Limited and HCI Financial Services Proprietary Limited (together "Employee Benefits"). The purchase consideration payable on the closing date amounts to R21 million. As agreed, an additional amount of R8.9 million relating to the non-restricted cash less working capital is also payable by the purchaser to the Group on closing date. The sale transaction is subject to the fulfilment or waiver of the suspensive conditions contained in the SPA.

Deleveraging

The proceeds (less transaction costs) of the rights offer and related transactions detailed below were used to repay amounts due to lenders. To date R558 million has been repaid in this regard of which R3 million related to interest.

On 22 March 2023, the lenders provided consent to waive the quarterly covenant compliance as at 31 January 2023.

With the completion of the rights issue subsequent to 31 January 2023 the Group concluded a term sheet with The Standard Bank of South Africa Limited (acting through its Corporate and Investment Banking division) on 31 March 2023 to refinance the remaining debt into the following package:

• R200 million four-year amortising term loan;
• R250 million three-year bullet term loan;
• R250 million four-year revolving credit facility; and
• R500 million general banking facilities which will include a working capital facility and ancillary banking facilities.

Rights offer and related transactions

The Group undertook a renounceable rights offer to raise R500 million, to qualifying shareholders. The rights offer comprised 384 615 384 rights offer shares in the ratio of 227 rights offer shares for every 100 EOH ordinary shares held at the close of trade on Friday, 27 January 2023 and at a price of R1.30 per rights offer share. In addition, the Group undertook a specific issue of ordinary shares at the above mentioned rights offer share price of R1.30 per share for cash to Lebashe. An amount of R100 million was raised from this specific issue and Lebashe was issued with 76 923 076 ordinary shares.

The rights issue closed on 10 February 2023 with the results thereof released on 13 February 2023. The rights issue is therefore considered to be a non-adjusting event after the reporting period. The total number of rights offer shares subscribed for and excess allocations applied for was 522 229 452 ordinary shares. On completion of the rights offer, the total number of shares in issue (including treasury shares and the specific issue to Lebashe) was 638 083 421 ordinary shares. An aggregate amount of R500 million was raised from the rights issue and R100 million from the specific issue.

As the rights issue price per share was below the fair value of the shares on the effective date, a bonus element is inherent in the rights offer. This is determined as the fair value per share before the exercise of rights as a proportion of the theoretical ex-rights value per share. The bonus element is 102 619 561 shares and has been taken into account as an adjustment when restating earnings/loss per share and headline earnings/loss per share for the current and prior period.

In keeping with the 2018 empowerment transaction, the Company and Lebashe have amended the A Share terms by: