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Directors' REPORT


Nature of business

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 and Communications Technology (ICT) 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 consolidated annual financial statements, as at 31 July 2020 and for the year then ended, comprise the Company and its subsidiaries (together referred to as the Group) and the Group's investments in associates and joint ventures.

Financial statements and results

The Group's results and financial position are reflected in the Consolidated Statement of Profit or Loss and Other Comprehensive Income and Consolidated Statement of Financial Position.

Stated capital


Ordinary shares: 500 000 000 no par value shares (2019: 500 000 000).

EOH A shares: 40 000 000 no par value shares (2019: 40 000 000).


Ordinary shares: 176 544 961 no par value shares (2019: 176 544 961).

EOH A shares: 40 000 000 no par value shares (2019: 40 000 000).


The list of directors for the financial year is as follows:



Andrew Mthembu (appointed as Chairman 6 February 2020)

Andrew Marshall (appointed 21 May 2020)

Bharti Harie (appointed with effect from 1 January 2021)

Ismail Mamoojee

Jabu Moleketi (appointed 1 September 2020)

Jesmane Boggenpoel

Mike Bosman

Nosipho Molope (appointed with effect from 1 January 2021)

Sipho Ngidi (appointed 20 February 2020)

Dr Xolani Mkhwanazi (Chairman deceased 4 January 2020)

Anushka Bogdanov (appointed lead independent non-executive director on 7 February 2020; resigned on 28 July 2020)

Dr Moretlo Molefi (resigned with effect from 15 December 2020)


Stephen van Coller (Group Chief Executive Officer)

Megan Pydigadu (Group Chief Financial Officer)

Fatima Newman (Group Chief Risk Officer)

Directors' AND PRESCRIBED OFFICERS interest in shares

The directors' and prescribed officers interest in shares are set out in note 36 of the consolidated annual financial statements.

Directors and prescribed officers' emoluments

The emoluments of directors and prescribed officers of the Group are set out in note 37 of the consolidated annual financial statements.

Related-party contracts

During the course of the year, no director or prescribed officer had a material interest in any contract of significance with the Company or any of its subsidiaries that could have given rise to a conflict of interest.

Transactions, defined as related-party transactions in terms of International Financial Reporting Standards, between the Company or its subsidiaries, associates, joint ventures and the directors or their associates are disclosed in note 39 of the consolidated annual financial statements.

Directors' responsibility for the consolidated annual financial statements

The directors are responsible for preparing the consolidated annual financial statements in a manner that fairly presents the financial position and the results of the operations of the Group for the year ended 31 July 2020.

The external auditor is responsible for carrying out an independent examination of the consolidated annual financial statements in accordance with International Standards on Auditing and in the manner required by the Companies Act of South Africa and for reporting its findings thereon. The auditor's report is set out here.

The consolidated annual financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS') as issued by the International Accounting Standards Board ('IASB)' and interpretations as issued by the IFRS Interpretations Committee ('IFRIC'), and comply with the South African Institute of Chartered Accountants ('SAICA') Financial Reporting Guides as issued by the Accounting Practices Committee ('APC'), Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council ('FRSC'), the Johannesburg Stock Exchange ('JSE)' Listings Requirements and the requirements of the Companies Act, No 71 of 2008 of South Africa ('the Companies Act'), which have been consistently applied in all material respects, in relation to the prior year, except for the impact of the adoption of IFRS 16 – Leases and IFRIC 23 Uncertainty over Income Tax Treatment which became effective and were adopted for the first time during the year ended 31 July 2020 and are supported by reasonable and prudent estimates where appropriate. Adequate accounting records have been maintained throughout the period under review.

Governance and internal controls

The Board is accountable for the system of internal controls for the Group.

The Board acknowledged that all the principles in the King IV Report on Corporate Governance for South Africa (King IV report) have not yet been implemented effectively, and that the recent lapses in governance were of concern to the shareholders, investors and the public. Embedding ethical leadership and building a culture of compliance are important enablers to ensure that governance is restored to credible levels.

Several steps have already been taken to improve governance and ethics. The Board, through its subcommittees, is committed to ensuring that there is an overall improvement in the effectiveness of the implementation of the King IV report during the coming year.

Going concern

Based on the going concern assessment detailed in note 1.2 of the consolidated annual financial statements, the Board is of the view that the Group has adequate resources to continue in operation for the foreseeable future and accordingly, the consolidated annual financial statements have been prepared on a going concern basis. There is material uncertainty surrounding the ability of the Group to meet its debt reduction plan by 28 February 2021, which is currently an amount of R650 million. The uncertainty only exists in that management is unable to control the process around the sale of the IP assets due to shareholder approval being required. The one asset which is close to concluding a signed SPA on will require shareholders' approval as it will be classified as a Category one transaction. The Group has mitigated this risk by approving an in principle term sheet with lenders at a Board meeting on the 27 November 2020. The in principle term sheet will allow for a 12-month bridge facility to sell the IP assets. The Board is not aware of any new material changes that may adversely impact the Group. Further disclosure is provided in note 1.2 of the consolidated annual financial statements.

Litigation statement

The Group is involved in various litigation matters arising in the ordinary course of business. Although at this stage it is not possible to predict what the outcome of the various matters will be, nor what portion of any costs will be attributable to the Group, or whether all or any portion of such costs will be covered by insurance or will be recoverable from other sources, management has no reason to believe that the disposition of these matters will have a materially adverse effect on the consolidated financial position of the Group.


The coronavirus pandemic ('COVID-19') has a significant impact across the globe, adversely affecting the lives of the Group's customers and its employees. We are now seeing the second wave of the virus hit the northern hemisphere and if and when it hits the southern hemisphere the impact remains to be seen. Although certain measures have been successful in combating the virus in the form of social distancing, wearing masks and following hygiene protocols, the effects of COVID-19 are likely to be with us for a while.

In the short term, the Group has reacted swiftly in implementing its business continuity plans well ahead of the forced lockdowns imposed by the government. The national lockdown necessitated the review and assessment of ways of working differently and to adopt a cost-conscious mindset and focus on liquidity. At the half-year results presentation the target of removing R400 million of cash costs from the business for the four months to the end of July 2020 (R100 million a month) was stated. The project has been very successful and we have substantially hit the targets through various initiatives including:

  • Salary adjustments with staff taking 20% salary cuts for two months and 10% for a further month;
  • Rental holidays and extensions with landlords;
  • Significant reduction in travel, entertainment and marketing spend;
  • Continued removal of unnecessary costs; and
  • Ensuring cost structures are as flexible as possible thereby reducing fixed costs.

The Group created a COVID-19 Risk Committee that met on a weekly basis to monitor the Group's response to COVID-19. This included staff well-being, the transition to work from home and the gradual return to offices with strict protocols in place, business continuity and that services could continue largely uninterrupted to clients.

While COVID-19 has resulted in a weaker macro-economic environment, the performance of the core iOCO business has remained relatively resilient. The total Group has, however, felt some softening at a revenue level as a result of the impact of lockdown and COVID-19.

Subsequent to year end, the Group continued to deliver sound revenue from the core iOCO business and a significant bounce back of our IP businesses has been felt, which are Business-to-Business-to-Consumer (B2B2C) facing, as we transitioned from lockdown level  5  to  level 1.

The Group has also supported various markets with relief initiatives associated with COVID-19, including getting the Solidarity Fund website up and running and has brought over 70 products to market to specifically assist them in solving their COVID-19 business challenges.

The aftermath of the virus and a weak global economy will have a negative impact on many of the Group's major customers. Weaker currencies, liquidity shortages, higher levels of unemployment, reduced consumer spending and supply chain interruptions are all expected to impact the financial performance of the Group in the medium term.

The risks above are, however, partially mitigated by the Group's quality product offering, robust cost optimisation process and diversification of customer base and positioning at the heart of the Fourth Industrial Revolution and accelerated digitisation journeys of customers. This should allow the Group to navigate these economic challenges and to continue providing acceptable shareholder returns over time. The Group also has over R900 million of cash and access to overdraft facilities in the region of R288 million that are unutilised.

Subsidiaries, joint ventures and associates

Details of the Company's investments in subsidiaries and the Group's investments in associates and joint ventures are set out in note 40 – Schedule of investments in subsidiaries and note 7 – Equity-accounted investments of the consolidated annual financial statements.

Discontinued operations and assets held for sale

The Group recently refined its operational structure into three distinct operating units to allow for leaner and more agile core businesses with separate capital and governance structures. Opportunities are being explored for the sale of certain non-core assets and as a result there are 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. These businesses are classified as disposal groups held for sale and the assets and liabilities of these disposal groups have been presented as held for sale at 31 July 2020. The businesses that were already sold during the current and previous reporting periods and business held for sale at 31 July 2020 that have met the requirements to be presented as discontinued operations have been presented as discontinued operations in the Group's statement of profit or loss and other comprehensive income. Details are reflected in note 14 and note 15 of the Consolidated annual financial statements.

Special resolutions

On 5 December 2019, shareholders approved the following special resolutions at the AGM:

  • Financial assistance in terms of section 44 of the Companies Act.
  • Financial assistance in terms of section 45 of the Companies Act.
  • Reappointment of remaining non-executive directors.
  • General authority to acquire shares.

As this approval remains only valid until the next AGM, shareholders will be asked at that meeting to consider a special resolution to renew this general authority until the next AGM, subject to a maximum extension of 15 months.

Subsequent events

Details are reflected in note 42 of the Consolidated annual financial statements – Events after reporting date.