JSE-listed iOCO this morning reported profit of R180 million, an increase of 45.6%, from revenue of R2.8 billion in the first half, as its three-step strategy starts to bear fruit.
As part of this strategy, iOCO made its first acquisition in eight years, says CEO Rhys Summerton, who became sole CEO following the planned departure of co-CEO Dennis Venter earlier this year.
Summerton adds that the company has the appetite for more deals, although it will be cautious. ‘We are not making huge bets at the moment.”
Deals, debt and dollars
The group is buying the MySky Group of Companies, a provider of enterprise networking and managed infrastructure services. The transaction includes an initial R52 million payment (R47 million in cash and R5 million in shares) with additional payments subject to the business achieving agreed performance targets.
Founded in South Africa, MySky delivers enterprise connectivity and infrastructure solutions to businesses across the country. The company is recognised as one of only two HP Enterprise (HPE) Aruba Platinum Support Partners in South Africa and is also the recipient of the 2025 HPE Managed Service Provider award.
“Partnering with iOCO marks an exciting next phase for the business,” founders brothers Dylan (CEO) and Dean Horsten (CTO) say. “Being part of a diverse and exciting company such as iOCO allows us to scale further, while continuing to deliver high-quality services to our customers.”
Looking ahead, iOCO expects to continue building on the momentum achieved in the first half of the year and has revised its guidance upward.
“With a stronger operating platform, a clear roadmap and a competitive market position, we are confident in delivering sustainable growth and long-term value,” Summerton says.
Buying back, not paying out
Shareholders reacted positively to the results during a period when iOCO has a plan to buy back its own shares. By mid-morning, its stock was up 4.76%, while peer Altron was up 2.71%.
During the period, iOCO moved on its share buyback plan and repurchased 6.4 million shares to the value of R27 million.
Summerton notes the company is highly unlikely to pay dividends at all, as it intends to return cash to shareholders through share buybacks, which has the effect of decreasing the number of shares in issue, theoretically pushing up the value of each share.
iOCO says its results reflect the early benefits of implementing its three-step strategy of cost rationalisation, a decentralised operating model that empowers business units to lead market growth, and disciplined capital allocation.
The first two stages – cost rationalisation and decentralisation – are now substantially complete and embedded, with measurable efficiency gains, iOCO adds.
During the half, it shifted its focus to the last stage of its turnaround plan, which is capital allocation. To this end, it decreased net interest-bearing debt to R512 million, having repaid R58 million in capital and interest with cash generated from operations.
At the end of the period, it had no overdraft and decreased interest paid on bank debt to R27 million for the half-year compared to R39 million paid in the comparative period a year ago.
CFO Ashona Kooblall says the group’s strengthened financial position enables it to pursue targeted growth opportunities.
“iOCO is strongly positioned to invest in growth initiatives that expand our capabilities and strengthen our market position, and we look forward to continuing this momentum into the future,” she says.
From the ashes
Describing the operating environment as “difficult”, iOCO said its strong group performance was driven by continued revenue growth across its IT services and international businesses.
“There is notable improvement in securing multi-year contracts with both existing and new clients, strengthening the company’s forward order book as well as market expansion,” it notes.
In its prior interim results, for the six months ended January 2025, its profit came in at R179.8 million, its first profitable period since it was EOH. For the full year, its first full-year profitable period, earnings per share came in at 40 cents, driven by strategic restructuring and cost management.
iOCO rebranded from EOH in December 2024 as it sought to reinvent itself after a 2019 ENSafrica investigation revealed governance failings and wrongdoing. The probe found around R1.2 billion worth of suspicious transactions at EOH, which mostly involved transactions within public sector contracts.
Over the past two years, iOCO has streamlined its products and services, while sharpening its market focus. iOCO sold eight legacy companies – all inherited from EOH – between November 2023 and July 2024. The disposals were completed at a net loss, according to its 2024 annual financial statements.
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