iOCO co-CEO Rhys Summerton. (Photograph supplied)
Listed technology solutions company iOCO has swung to profit after last year’s loss, reporting that both earnings and headline earnings per share have moved into the black for the year to July.
However, the market showed little reaction to the news, with shares flat this morning.
In its full-year results to end-July, released this morning, the company said earnings per share improved to 40c from a loss of 10c a share in the prior year.
ITWeb’s research shows the company last reported a profit in 2019, when it was still EOH and in the midst of a scandal over financial misconduct.
iOCO’s annual profit followed it delivering its first gainful interim period in three years for the six months to January, as it drove disciplined execution, strategic cost management and a streamlined operating structure, which it said was yielding benefits.
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For the full year, headline earnings per share – a key measure of profitability that strips out non-operational revenue – came in at 40c per share, compared with a loss of 0.21c a share previously.
“This year is a turning point as we move to sustainable profitability and focused delivery,” says co-CEO Rhys Summerton in a statement. “We changed how we operate, applying institutional knowledge and a return to what we know works, and stopping what does not,” he says.
iOCO rebranded from EOH last December 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.
It says after selling assets to reduce legacy debt, it now has a stable set of offerings.
iOCO’s market strategy now centres on six areas: Digital, Intelligent Technology Solutions, Connected Industrial Ecosystems, Cloud, Outsourced Knowledge Solutions, and iOCO International. The company’s geographic footprint spans Africa, the UK and Europe.
Summerton adds that iOCO is focused on “further growth and improved performance” in the next financial year. He notes the company is “actively exploring a targeted pipeline of acquisitions designed to strengthen our capabilities, expand market share, and accelerate growth in high-priority digital segments”.
The market was unmoved by the results. iOCO’s share price was flat at R4.25 at 9am this morning. Its 52-week high was R46.40, while its low over the past year was R18.
iOCO’s shares are up 43.8% over the past five years.
The company, worth R2.49 billion on the JSE, has not declared a dividend – which was the case with previous reporting periods during which it made a loss.
iOCO is still involved in litigation dating back to at least 2023, when it raised a R45 million provision. This year, it added R4 million to that amount, all of which has been transferred to trade and other payables.
The provision relates to a dispute over an alleged storage array issue that resulted in damages being claimed by a client, the company says in its financial results report. “The provision recognised reflects the group’s obligation to cover the insurance excess associated with the claim. The matter remains ongoing, and developments continue to be monitored,” it says.
For the full year, iOCO reported revenue excluding sold entities of R5.58 billion, down 1.2% year-on-year on a continuing operations basis.
The company was net cash flow positive compared with the prior period, when this figure was negative. However, it continues to see a net cash outflow from both investing and financing activities.
