INTERIM RESULTS For the six months ended 31 January 2019 April 1 6 th 2019
AGENDA Strategic and Financial Looking operational overview forward overview Stephen van Coller Megan Pydigadu Stephen van Coller Group CEO Group CFO Group CEO 2
STRATEGIC AND OPERATIONAL OVERVIEW Stephen van Coller Group CEO
EOH CONTINUES TO BE A KEY PLAYER We remain an ICT leader … entrenched in …employing the in SA and beyond… our society… best tech minds Continue to deliver right-first-time to our clients Cleaning up the past Building EOH future Aligning financials 2019 H1 RESULTS PRESENTATION 4
TOUGH TIMES DON’T LAST TOUGH PEOPLE DO 5
KEY FEATURES Completed strategic Significantly enhanced Strengthened review governance leadership Normalised revenue stable Normalised EBITDA Resolving past mistakes R8,194 million R387 million with appropriate action 2019 H1 RESULTS PRESENTATION 6
PRIORITIES TO BUILDING THE FUTURE Clients Reorganisation People Governance Capital structure Partners 2019 H1 RESULTS PRESENTATION 7
EVOLVING OPERATING STRUCTURE EOH Holdings ICT NEXTEC IP Smart/ Digital infra. CCS 1 Sybrin 1 safe city Private Knowledge Smart utility Information Data World 2 Services 3 People Health tech. development Syntell 2 New IP Public Advisory Feeds IP business Feeds IP business End-to-end ICT systems Specialised domain and industry Mature IP business ready for scaling by 3 rd party partners integrator focused technologies and solutions with a on EMEA region focus on IP incubation (equity and other) 1 Included in Nextec and IP segment reporting; 2 Included in Nextec; 3 Included in ICT 2019 H1 RESULTS PRESENTATION 8
CLIENT-CENTRIC, SOLUTIONS-LEAD ICT STRATEGY DIGITAL #devanything CLOUD APPS #OpenSI #Anything-as-a-service #fastdata DATA DESIGN & MANAGE & BUILD OPERATE IT TURNKEY, #multicloud COMPUTE FUTURE-FIT ICT SECURITY OFFERINGS DIGITAL SOLUTIONS HY 2019 revenue 1 : R4 572 million HY 2019 EBITDA 1 : 7% 1 Based on operating segment analysis 2019 H1 RESULTS PRESENTATION 9
NEXTEC DOMAIN SPECIALISATION AND IP INCUBATION Incubation Productization Scaling Growth communities NON-EXHAUSTIVE: IP INTENSIVE NEXTEC BUSINESSES/SOLUTIONS Digital industries Smart/ safe cities Smart utilities E N E R G Y T R A D I N G S Y S T E M Knowledge People development Health tech. Advisory Focusing on IP intensive businesses with scale potential Portfolio management Platform - aaS Go-to-market co-ordination HY 2019 revenue 1 : R3 622 million HY 2019 EBITDA 1 : 3% 1 Based on operating segment analysis 2019 H1 RESULTS PRESENTATION 10
SCALING IP INDEPENDENTLY 3 3 4 2 3 4 2 1 HY 2019 revenue 1 : R953 million HY 2019 EBITDA 1 : R201 million 21% 1 Based on EOH of tomorrow. For segment reporting included in 2 Nextec; 3 ICT 4 IP 2019 H1 RESULTS PRESENTATION 11
PEOPLE MAKE IT HAPPEN … New EOH leadership: Dealt with implicated staff Key people remain committed Megan Pydigadu – CFO Debbie Millar – Treasury & IR Fatima Newman – Chief Commercial Officer Commitment to King IV and JSE compliance Lufuno Nevhutalu – Public sector 2019 H1 RESULTS PRESENTATION 12
BUILDING AN ETHICAL FRAMEWORK Investigations to be completed ISO37001 compliance by 31 May Due diligence Findings to be made public Risk assessment 3rd party oversight of public New policies sector bid review process Align to King IV, JSE & Companies Act Assisting with due diligence and internal audit set up Conflict of interest framework GRC framework defined Appointed for strategic reorganisation Launched whistleblowing app 2019 H1 RESULTS PRESENTATION 13
FIT FOR PURPOSE CAPITAL STRUCTURE Sale ales process st s stage Non-binding Initialise process Due diligence Binding offer Closure offer Asset 1 Asset 2 Non-core asset sales Total expected Asset 3 proceeds Asset 4 > R 1 billion Asset 5 over the next Asset 6 3 – 12 months partnerships Strategic Asset 7 Asset 8 2019 H1 RESULTS PRESENTATION 14
WHAT WOULD THE BUSINESS OF TOMORROW LOOK LIKE TODAY … HY Sustainable 1 results Normalised HY results HY Normalised results HY2019 Revenue HY2019 Revenue IP IP Margins 15% R8,194mn Circa R6,500mn Nextec 44% 24% Nextec ICT 56% 62% ICT HY2019 EBITDA 2 HY2019 EBITDA 2 R387mn Circa R600mn Nextec IP 26% 30% 5% 9% 21% 57% 5% 3% 74% 13% ICT ICT Nextec 7% 9% Notes: 1 Excludes non-core. 2 Graph excludes Corporate 2019 H1 RESULTS PRESENTATION 15
KEY FEATURES OF THE LAST SIX MONTHS Cleaning up the past Building EOH future Aligning financials 2019 H1 RESULTS PRESENTATION 16
FINANCIAL REVIEW Megan Pydigadu Group CFO
OVERVIEW OF THE FIRST 90 DAYS… Balance sheet review Better Governance a priority team and compliance System and Cash of c. R1billion process overhaul 2019 H1 RESULTS PRESENTATION 18
BALANCE SHEET REVIEW COMPLETED Asset Equity and liabilities Restated Restated Unaudited at unaudited Unaudited at unaudited ZAR ‘000 31 Jan 2019 31 Jul 2018 Diff ZAR ‘000 31 Jan 2019 31 Jul 2018 Diff PPE 745 823 742 983 2 840 Equity 4 574 479 7 461 885 (2 887 406) Goodwill 3 185 719 4 255 281 (1 069 562) Other financial liabilities 2 143 395 3 208 415 (1 065 020) Intangible assets 751 922 1 265 220 (513 298) Finance lease payables 45 613 56 388 (10 775) Equity accounted investments 281 921 530 861 (248 940) Deferred taxation 243 249 388 042 (144 793) Other financial assets 146 006 534 561 (388 555) Non-current liabilities 3 652 845 (1 220 588) 2 432 257 Deferred tax 222 718 327 270 (104 552) Trade and other payables 3 450 960 2 760 283 690 677 Finance lease receivables 119 081 140 511 (21 430) Deferred income 266 299 422 937 (156 638) Non-current assets 5 453 190 7 796 687 (2 343 497) Other current liabilities 1 325 142 1 080 771 244 371 Trade and other receivables 4 834 248 5 374 665 (540 417) Current liabilities 5 042 401 4 263 991 778 410 Inventories 317 729 431 609 (113 880) Other current assets 486 864 357 441 129 423 Total equity and liabilities 12 049 137 15 378 721 (3 329 584) Cash & cash equivalents 957 106 1 418 319 (461 213) Current assets 6 595 947 7 582 034 (986 087) Net asset value of R 4,574 million Total assets 12 049 137 15 378 721 (3 329 584) 2019 H1 RESULTS PRESENTATION 19
NON-CASH IMPAIRMENTS AND WRITE OFFS UNPACKED Once-off adjustments Other financial assets 4% Non-cash flow Inventory Goodwill impairments R1,138 million Equity accounted 4% investments ICT R311 million 5% Nextec R827 million Intangible asset impairments R481 million ERP templates in discontinuing ops R265 million Internally generated payroll and infrastructure management R1,874 million software R108 million Other internally generated software, customer contracts and customer relationships R108 million Equity accounted investments R100 million Impairment of goodwill in investments Intangible asset Other financial assets R69 million impairments 26% Goodwill GCT R69 million impairments Inventory R 86 million 61% Write off of licences 2019 H1 RESULTS PRESENTATION 20
ADJUSTMENTS TO OPENING BALANCE SHEET IFRS 9 adoption - R211 million Prior year adjustments - R666 million Provision Provision Difference to under under opening 31 July ZAR ‘000 IAS39 IFRS9 equity ZAR ‘000 2018 Impairment Net Trade receivables 447 574 127 GCT other financial assets 424 (124) 300 Other financial assets 167 203 36 31 July Contract assets 38 38 TTCS 2018 Impairment Net Financial lease receivables 10 10 Equity accounted investment 453 (291) 162 Total 614 825 211 Other financial assets 87 (43) 44 Trade receivables 424 (208) 216 TTCS total amount 964 (542) 422 Trade receivables and contract assets (unbilled WIP) Impairment provision in terms of IAS39 for other financial assets and trade receivables Simplified approach to lifetime expected loss Based on shared credit risk characteristics and days past due TTCS impairment was re-evaluated Specific provisions also raised Other financial assets carried at amortised cost 2019 H1 RESULTS PRESENTATION 21
CONTEXT OF THE NUMBERS… SEPERATED FROM NORMALISED IN: Financial report Operating segments Business of tomorrow Assets held for sale Mehteketo Group (Nextec) Discontinuing Large scale Public Sector Non-Core ERP Implementations (ICT) Middle East and Selected BPO African ERP businesses Electrical infrastructure projects in implementation (Nextec) water industry (Nextec) business (ICT/Intl) Industry, technology related to certain infrastructure projects (Nextec) 2019 H1 RESULTS PRESENTATION 22
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