Notes to the summarised consolidated financial statements

The summarised consolidated financial statements are prepared in accordance with the requirements of the JSE Limited Listings Requirements for provisional reports, and the requirements of the Companies Act of South Africa applicable to summarised financial statements. The Listings Requirements require abridged reports to be prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34 Interim Financial Reporting.

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

The summarised 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 as explained in the accounting policies below.

The summarised 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 summarised consolidated financial statements as the directors have a reasonable expectation that the Group will continue as a going concern for the foreseeable future.

Going concern

The IFRS Conceptual Framework states that going concern 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 summarised consolidated financial statements of the Group have been prepared on the going concern basis.

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 year of R280 million, net asset value attributable to the owners of EOH Holdings Limited at the end of the year of R158 million and cash inflows from operating activities of R80 million (including continuing and discontinued operations). Details of the financial performance, condition and cash flows for the Group are explained in the 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 in October 2019, revised in April 2020 and again in November 2020. Since its announcement in October 2019, the plan has been largely executed against and the directors reasonably believe it can continue to be implemented going forward in order to ensure the Group's ability to continue as a going concern.

The key deliverables implemented by the Group in relation to the deleveraging plan have been focused around the disposal of assets. The sale of Sybrin was announced in June 2021. Currently, conditions precedent are being fulfilled and are expected to be finalised in November/December of this calendar year. This should result in approximately R334 million of funds to deleverage the debt. The remaining IP asset, InfoSys is in the late stages of being disposed and will also assist in the deleverage of a portion of the bridge facility. The Group obtained a deferral letter from its lenders relating to the repayment of the debt and a waiver of the events of default related to repayment and financial covenants which existed at 31 July 2021.

The Group has also implemented initiatives to improve liquidity. The Group also showed its ability to be agile and respond to new challenges as is evident from the liquidity initiatives implemented with the onset of COVID-19 restrictions in March 2020. The Group also has R537 million of net cash and access to overdraft facilities of R400 million.

The Group over the past year has revised its go-to-market strategy and brought in an industry veteran to spearhead the commercial strategy for the Group and improve the quality of revenue.

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. While the Group's current liabilities exceeded its current assets by R1.8 billion, with the subsequent events of signing the Common Terms Agreement this will result in current assets exceeding current liabilities refer to note 22;
3. There is an approved budget for the following 24 months;
4. There are cash flow forecasts for the following 12 months, 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
5. 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 sale of non-core assets, which are at a relatively advanced stage;
   • 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.

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

The Board, after considering the negotiated 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 consolidated financial statements.

Accounting policies

The accounting policies applied in the consolidated financial statements are consistent with those applied in the previous years.

A number of new standards and/or interpretations are effective for the annual reporting period commencing 1 August 2020, with no material effect on the Group's financial statements.

These summarised consolidated financial statements for the year ended 31 July 2021 have been audited by PricewaterhouseCoopers Inc., who expressed an unmodified opinion thereon. The auditor also expressed an unmodified opinion on the consolidated financial statements from which these summarised consolidated financial statements were derived.

A copy of the auditor's report on the summarised consolidated financial statements and of the auditor's report on the consolidated financial statements are available for inspection at the Company's registered office or can be downloaded from the Company's website: www.eoh.co.za, together with the consolidated financial statements identified in the respective auditor's reports.

Disaggregated revenue

Impairment 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 at 31 July 2021, 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 at 31 July 2020, and these continue to be measured at fair value less costs to sell at 31 July 2021. The resulting impairment has been allocated to the identified disposal groups (note 12).

Profit before taxation before including the gain/(loss) on disposal and remeasurement to fair value less costs to sell was R198.8 million (2020: R19.5 million).

The Group acquired property, plant, equipment and right-of-use assets at a value of R67 million (2020: R210 million) and intangible assets at a value of R79 million (2020: R187 million). The Group disposed of property, plant and equipment with a carrying value of R56 million (2020: R72 million) and intangible assets with a carrying value of R18 million (2020: R19 million).

An impairment charge of R21 million and Rnil (2020: R2 million and R26 million) against property, plant, equipment and right-of-use assets, and intangible assets respectively has been recognised at year-end.

A number of economic and operational events during the year ended 31 July 2021 had a negative impact on EOH's market capitalisation and certain underlying businesses. The Group's annual review of goodwill highlighted impairments of R181 million (R130 million in the iOCO segment, R15 million in the NEXTEC segment and R36 million in the IP segment).

iOCO

An impairment charge amounting to R108 million was recognised for the Compute cash-generating unit ("CGU"). The impairment was predominantly driven by lost or delayed contracts and projects as a result of challenging market conditions and the impact of COVID-19. The goodwill balance for Compute at 31 July 2021 amounts to R104 million, after recognising the impairment charge.

The Employee Benefits CGU was impaired by R15 million having been negatively impacted by part of its customer base opting out of their pension fund contributions due to the weak performance of equity markets driven by COVID-19.

An impairment charge amounting to R6 million was recognised for the Sortit CGU, with the related employees and contracts having been transferred to other businesses within the Group after the related legal entity entered a deregistration process.

During the year, In the Cloud and Coastal CGUs were merged to form a single CGU. EOH undertook a strategic business decision to use a single executive team to manage and report on the merged CGU due to the businesses having the same service offering and sharing the same markets and prospective customer base.

As part of the Group's reorganisation and structure simplification, two additional business units were incorporated into the Freethinking CGU as they are collectively managed, measured and reported on by a single management team, share the same markets and offer their services collectively to prospective customers.

NEXTEC

The ESA CGU was impaired by R9 million during 2021 due mainly to the increased risk of non-renewal of key customer contracts.

As part of the Group's reorganisation and corporate structure simplification, MBAT has been merged with the Learning and Development CGU. The performance of MBAT and the remaining Learning and Development CGU are now being collectively managed, measured and reported on by a single executive team, sharing the same markets and offering its services collectively to prospective customers.

IP

An impairment of goodwill amounting to R30 million was attributable to Sybrin as a result of its write- down to fair value less costs of disposal, which was primarily as a result of the negative effects of COVID-19 on the business, which caused a decrease in profitability as a result of delays in key projects. The Afiswitch CGU was impaired by R6 million driven mainly by increased risk of non-renewal of key customer contracts.

Prior year impairments

Prior year goodwill impairments amounted to R413 million (R110 million in the iOCO segment, R243 million in the NEXTEC segment and R60 million in the IP segment). The impairments in iOCO were largely driven by lost or unrenewed contracts, delayed projects with customers as a result of ongoing challenging market conditions, or businesses that were rendered non-operational during the year. The largest contributor to the NEXTEC impairments was the TCD CGU, which incurred an impairment of R93 million due to the effects of changes in clinical trials legislation which led to a loss of customers and consequent restructuring of the business. The PiA Solar CGU incurred a R49 million impairment to goodwill relating to renewable energy loss-making contracts. The PCI CGU incurred a R39 million impairment, primarily due to continued material delays in the commencement or award of projects in the water sector. The impairment of goodwill of R60 million in the IP segment related to key long-term contract renewal challenges. The balance of impairments sustained in the prior year related mainly to the prevailing challenging market conditions.

Impairment testing

During the financial year ended 31 July 2021, the depressed economic environment as a result of COVID-19 impacted a number of the Group's operations giving rise to impairments of goodwill in certain CGUs.

For the purpose of impairment testing, goodwill is allocated to the Group's CGUs. The recoverable amount of these CGUs were determined based on value-in-use calculations, discounting the future cash flows expected to be generated from the continuing operations of each CGU. Impairment tests on assets held for sale were based on fair value less costs of disposal.

A pre-tax discount rate was used in discounting the projected cash flows depending on the nature of business and operating markets. These calculations use cash flow projections based on financial budgets and forecasts for three years, as approved by the Board, which are based on assumptions of the business, industry and economic growth. A perpetuity growth rate is calculated using long-term growth rates, this is further applied based on conservative historical market trends and operating markets.

Key assumptions used in discounted cash flow projection calculations

The values assigned to the key assumptions represent management's assessment of future trends in the industry and are based on past experience and both external and internal data.

Changes in key assumptions, as well as the actual cash flows achieved against forecasts, may result in further impairments to the CGUs impaired during the year. The forecast cash flows of these CGUs are reliant on a certain level of anticipated improvement within the forecast period.

The assumptions below have been applied to calculate the recoverable amount of CGUs based on value- in-use calculations. The discount rates used in the discounted cash flow models are calculated using the principles of the Capital Asset Pricing Model, taking into account current market conditions.

The following key assumptions were used for the value-in-use calculations:

• Growth rates: the Group used growth rates for the forecast period based on the different industries the CGUs operate in, as well as management's views on the growth prospects of the businesses.
• Discount rates: discount rates used reflect both time value of money and other specific risks relating to the relevant CGU;
• Adjusted EBITDA margins in the following ranges: iOCO (1.5% - 43.1%) (prior year: 3.4% - 45.3%) and NEXTEC (5.1% - 23.3%) (prior year: 6.4% - 19.8%); and
• Perpetuity growth rates: a perpetuity growth rate of 4.0% (prior year: 4.0%) has been used for the Group.

Sensitivity analysis on value in use

In performing the impairment test for goodwill, EOH considered the sensitivity of the EOH CGUs to changes in assumptions around key value drivers. The key value drivers for the EOH CGUs are adjusted EBITDA margins, discount rates and revenue growth assumptions. Revenue growth and discount rate assumptions were adjusted upwards and downwards by a percentage point and the adjusted EBITDA margins were adjusted by 2.5 percentage points. The aforementioned sensitivities are considered reasonable based on the sensitivity of the models to the key drivers. The CGUs not included in the table below have sufficient headroom and are not sensitive to the changes applied to the assumptions. However, a decrease in the adjusted EBITDA margin of 2.5 percentage points resulted in the following CGUs being impaired by the values listed:

Assets held for sale

The Group tested its asset held for sale assets, for impairment in line with IFRS 5. The recoverable amount was determined as the fair value less costs of disposal which was compared to the goodwill balances for potential impairment. The fair value was determined primarily with reference to advanced offers from potential acquirers less estimated disposal costs.

During the year, goodwill from the InfoSys CGU which relates to the Afiswitch business was separated and subjected to a separate sales process as a result of a change in the sale process. Afiswitch historically formed part of the InfoSys sale assets. As a result the goodwill that historically formed part of the InfoSys CGU which was applicable to Afiswitch has been shown separately for 2021.

In assessing sensitivity for InfoSys, the advanced offer was adjusted down by 5% and sufficient headroom remained.

The Group refined its operational structure during the 2019 financial year into three distinct operating units to allow for leaner and more agile core businesses with separate capital and governance structures. On 11 December 2018, the Group announced that opportunities would be explored for the sale of certain non-core assets, of which many have been sold during the current financial year.

The Sybrin, DENIS, Syntell and InfoSys groups of companies were classified as held for sale and discontinued operations in the prior year, with DENIS and Syntell being disposed of during the current year. At the reporting date the Sybrin and InfoSys groups of companies are held for sale with sales of both groups of companies expected to finalise within 12 months. The sale of Sybrin was concluded, subject to the fulfilment or waiver of a few suspensive conditions.

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 as held for sale. Unforeseen delays, mostly due to COVID-19 related implications, outside the control of management have prevented the sale of certain businesses within 12 months from the prior year reporting date. These continue to be held for sale as both management and the prospective purchaser are committed to the sale transaction.

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. In line with this strategy the Group has disposed of its investments in a number of subsidiaries, associate and joint ventures during the year.

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

Authorised
500 000 000 ordinary shares of no par value.
40 000 000 EOH A shares of no par value.
Issued

Unissued
323 455 039 (2020: 323 455 039) unissued ordinary shares.

Interest-bearing bank loans are secured through a Security SPV which require 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 is pledged as required above and the process of providing the security is ongoing.

The interest-bearing bank loans secured through the Security SPV comprises:

• an amortising facility at an interest rate of 3-month Johannesburg Interbank Average Rate (JIBAR) + 265 basis points;
• revolving credit facility at an interest rate of 3-month JIBAR + 220 basis points;
• a bullet facility at an interest rate of 3-month JIBAR + 285 basis points; and
• a dematerialised note at an interest rate of 3-month JIBAR + 240 basis points.

From 1 April 2019 the secured lenders (excluding the note) have charged an additional 250 basis points of default interest on top of the above fully drawn facilities. The penalty interest was reduced to 170 basis points with effect from 1 September 2020.

The 3-month JIBAR referred to above is reset quarterly.

Refer to note 22 for subsequent events on the above loans.

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 2021:

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 2020:

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 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.

Financial liabilities at fair value through profit or loss

Financial liabilities measured at fair value through profit or loss, in terms of the hierarchy, are classified as level 3 as the valuation techniques used are based on unobservable inputs for the liability.

Vendors for acquisition

The balance in respect of vendors for acquisition relates to the contingent consideration where business combinations are subject to profit warranties. The profit warranties allow for a defined adjusted value to the consideration payable in the event that the warranted profit after tax is not achieved, or in the event that it is exceeded, an agreed sharing in the surplus. The fair value of the contingent arrangement is initially estimated by applying the income approach, assuming that the relevant profit warrant will be achieved. Subsequent measurement uses the income approach to calculate the present value of the expected settlement payment using the latest approved budgeted results and reasonable growth rates for the remainder of the relevant warranty periods taking into account any specific circumstances.

Profit warrant periods normally extend over a 24-month period.

Upwardly revised performance expectations would result in an increase in the related liability, limited to the terms of the applicable purchase agreement.

Fair values have been determined using discounted cash flows. Unobservable inputs include budgeted results based on margins, discount rates and revenue growth rates historically achieved by the various segments. The applicable discount rate is 7% (2020: 7%), discounting cash flows over a twoyear period. Changing such inputs to reflect reasonably possible alternative assumptions does not significantly change the fair value of the vendors for acquisition liability.

The EOH Group has an established control framework with respect to the measurement of fair values. This includes a valuation team that reports directly to the Group Chief Financial Officer who oversees all significant fair value measurements.

Vendors for acquisition reconciliation of movement

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 that are in place for each of the disposal groups that are held for sale. The total of such fair values is R834 million (2020: R1 033 million). These fair values are categorised as level 3, based on inputs used.

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 provided are for a period of years 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. While PiA had undergone some operational challenges as a result of several factors, including COVID-19, EOH has intervened in order to minimise the potential impact of these PCGs. The projects subject to these PCGs are now substantially complete, and PiA is engaging with the customer in respect of the handover of the last project. EOH thus believes that the risk presented by the PCGs, albeit still in existence is and will be, mitigated pursuant to the handover.

During the prior financial year, EOH also issued a PCG for another subsidiary, EOH Mthombo Proprietary Limited ("EOH Mthombo"), relating to the implementation of an ERP solution at the City of Johannesburg ("COJ") for a project which was signed during the 2017 financial year. The agreement terminated in early 2021 and subsequent to year-end, the PCG was returned to EOH in terms of the Exit Management Plan and has been cancelled.

Fine imposed by the JSE Limited

The JSE Limited imposed a fine on EOH on 29 July 2020 for prior period errors contained in EOH's previously published financial statements for the financial years ended 31 July 2017 and 31 July 2018. The fine was for R7.5 million of which R2.5 million is suspended for a period of five years on condition that EOH is not found to be in breach of material and important provisions of the JSE Listings Requirements. The R5 million was raised as liability at 31 July 2020, against which payments have been made, with the suspended amount being a contingent liability.

Litigation

EOH and its subsidiaries are involved in various litigation matters arising in the ordinary course of business, none of which are considered material on an individual basis or in aggregate. Management has no reason to believe that the disposition 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 one of its staff outsourcing businesses. At 31 July 2021, the Group had provided for R267 million on the PAYE liability assessed and potential future assessments, and has submitted a notice of objection to the South African Revenue Service ("SARS"). Based on internal and external legal and technical advice obtained, the Group remains confident that it has a strong legal case to contest the remaining exposure. A total of R52 million of the R267 million provision was repaid up to 31 July 2021.

Uncertain exposure due to suspect transactions

Alleged financial misconduct by a prescribed officer of the Group and director of a subsidiary within the Group

EOH became aware of alleged fraudulent conduct that was perpetrated between certain executives of a subsidiary, Cornastone Enterprise Systems Proprietary Limited ("Cornastone"), together with executives at Cell C Limited ("Cell C"), as it related to the supply of certain equipment and software licences. EOH commissioned an investigation in collaboration with Cell C, which has culminated in criminal charges being levelled against the alleged perpetrators.

The findings of the investigation identified a preliminary financial loss to Cornastone amounting to approximately R64 million relating to the cost of sales, covering a period of eight years from 2012 to 2020. The nature of the amounts was categorised as being "irregular" which relates almost exclusively to payments from Cornastone to the fictitious suppliers.

The current EOH leadership have undertaken the following corrective measures:

• The executives of the Cornastone management alleged to have been involved in the fraudulent conduct are, within effect from 2020, no longer in the employ of the Company;
• EOH has also taken legal advice in relation to its potential reporting obligations under section 34 of the Prevention and Combating of Corrupt Activities Act, 2004 in respect of the possible theft;
• This matter coming to light is evidence of the improved controls that have been introduced by the new management of the Group;
• Cases against all alleged perpetrators were reported to the South African Police Service which had led to their subsequent arrests;
• Third-party screening and procurement onboarding processes have been centralised within the Group in order to effectively exercise the necessary controls; and
• The financial department within the Group has been restructured to enhance oversight in regard to financial controls and risk management.

EOH's external auditors, PricewaterhouseCoopers Inc. ("PwC"), reported that a suspected irregularity had taken place as defined in the Auditing Profession Act, 2005 ("APA") to the Independent Regulatory Board of Auditors ("IRBA") on 13 October 2021 relating to the supply of certain equipment and software licences by Cornastone.

PwC subsequently submitted a second report to the IRBA as required by the APA, advising the IRBA that, in its view, the reportable irregularity was no longer occurring as the Company had acted on this matter as set out above.

ENSafrica assessment into contracts associated with suspicious activities

An assessment was undertaken in relation to contracts flagged by ENSafrica as being associated with suspicious activities, for purposes of determining the likelihood of a claim/s being raised against EOH Mthombo in relation to the contracts in question. The total contingent exposure identified in consequence of the results of that assessment is R48 million.

The assessments which resulted in a claim being regarded as likely and where a contingent liability was identified were in relation to the following contracts:

• Amathole District Municipality ("ADM") - SAP Implementation Contracts: there are disputes raised by ADM as to deliverables and sums payable to EOH under this contract, however, EOH maintains that it has performed substantially on the contract.
  
  Deloitte prepared a forensic report on the instruction of National Treasury (10 October 2019). The National Treasury issued an intervention and close-out report (27 February 2020). ADM did not accept the findings of the intervention and close-out report (27 February 2020). However, no further steps have yet been taken by ADM. In the event of a successful challenge to the validity of the contract, EOH would be entitled to just and equitable relief and would never be exposed for the full value of the contract.
• USAASA - SAP Implementation: In early 2021, National Treasury investigated the procurement of the SAP implementation-services by USAASA from EOH. There is a risk that there may be a finding of impropriety in the contract. This contract came to a natural conclusion at the end of 2017, with EOH having performed and with no claims or complaints having arisen since. In the event of a successful challenge to the validity of this contract, EOH, having performed under the contract, would be entitled to motivate a just and equitable remedy. It would be unlikely and certainly contrary to the principles of just and equitable relief, that EOH would have to "refund" USAASA.

Commitments

Deleveraging

A detailed action plan for deleveraging the Group to a sustainable level and resolving the capital structure was developed and committed to by the Group and its lenders in the prior financial year, with a revision in November 2020.

Term sheets were signed in April 2021 and since then, management have been engaging with lenders on the terms and conditions governing the new Common Terms Agreement ("CTA"). The CTA was signed by all parties on 20 October 2021. The refinancing contemplated by the CTA is subject to the Closing Date (as defined in the CTA) having occurred by 1 December 2021, and any other conditions of the CTA and the other legal documentation referred to in the CTA.

The new terms of the CTA outlines the following deleveraging plan:

1. A R500 million three-year term loan;
2. R1 500 million bridge facility repayable on 31 October 2022;
3. Disposal of the Sybrin Group - completion pending Competition Commission approval;
4. Disposal of the Information Services Group; and
5. Optimisation of the overall capital structure of the Group.

The refinancing of the existing debt package provides the Group with greater certainty with respect to the overall debt outstanding and provides a more stable platform for the optimisation of the capital structure.

Disposal of Energy Solutions and Analytics

Effective 23 September 2021, the Group closed a sale of business agreement to dispose of Energy Solutions and Analytics ("ESA"), a business unit of NEXTEC Industrial Technologies Proprietary Limited. The purchase consideration is expected to be between R26 million and R29 million, dependent on the final reviewed effective date accounts of ESA. The purchase consideration will be settled in two tranches, the first of which amounting to R23 million, was received on 1 October 2021.

Disposal of Afiswitch

Effective 1 October 2021, the Group concluded the sale of 100% of the issued ordinary shares of Afiswitch Proprietary Limited for a consideration of R49 million. The purchase consideration may be adjusted based on the closing date accounts. R39 million was received on 11 October 2021.

The above transactions are in line with EOH's stated strategic intent of selling non-core assets as it seeks to right-size the Group and deleverage its balance sheet. The cash consideration received by EOH will primarily be utilised to reduce debt with the remainder being utilised for the working capital requirements of the Group.