iOCO increased its profit by 39%, reaching 357 million Rands in the fiscal year ending July 31, 2026. However, net cash flow from operating activities decreased by 44%, amounting to 239 million Rands, as the repetition of a large client cash release that occurred in the previous year did not materialize.
These figures, presented in the audited annual financial statements published on Tuesday, align with the ranges previously indicated by EOH Holdings in a trading announcement last month. Earnings per share grew by 43%, reaching 57 cents. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), excluding stock payouts and one-off items, increased by 21%, totaling 624 million Rands.
Revenue remained largely unchanged, showing a growth of 2.7% to 5.73 billion Rands, or 2.4% excluding the MySky corporate network business, which iOCO acquired as part of its first acquisition in eight years. After consolidation since May 1, MySky contributed 18 million Rands in revenue. Gross profit decreased to 1.59 billion Rands, and the gross margin fell from 28.7% to 27.7%.
Most of the profit growth was driven by cost reductions. Personnel expenses were cut by 288 million Rands, or 11%, amounting to 2.24 billion Rands. Financial expenses dropped by 30% to 68 million Rands due to debt reduction. The effective tax rate decreased from 22.5% to 15.5%, facilitated by the group's use of previously unrecognized tax losses on its balance sheet.
There was also a shift in revenue structure. Equipment sales doubled to 737 million Rands, while software and license revenue increased by 20% to 1.09 billion Rands. Service revenue, the group's largest segment and the foundation of IT services, decreased by 6.6% to 3.9 billion Rands.
Furthermore, iOCO recognized significantly less revenue as an agent, where only its margin from the sale is recorded, and more as a principal, where the full sale value is accounted for. Agent revenue fell from 177 million to 38 million Rands, while revenue recognized as a principal rose by 288 million Rands. The reports do not specify what portion of the year's revenue growth reflects this change.
Where Did the Cash Go?
Excluding changes in working capital, iOCO generated more cash than the previous year: 585 million Rands versus 493 million Rands. Subsequently, working capital absorbed 217 million Rands, compared to an inflow of 74 million Rands in the 2025 fiscal year, leading to a 35% decrease in cash from operations to 368 million Rands.
Accounts payable decreased to 377 million Rands from 544 million Rands, and accrued salaries, including bonuses and holiday pay, reduced by 78 million Rands. However, creditor repayments depleted cash in both years: the statement of cash flows shows that accounts payable decreased by 216 million Rands in the 2026 fiscal year and by 220 million Rands in the 2025 fiscal year.
The difference arose from accounts receivable. In the 2025 fiscal year, a decrease in accounts receivable of 293 million Rands freed up cash. This did not happen again: in the current year, accounts receivable increased by 30 million Rands, mainly due to higher prepayments.
The group ended the year with 417 million Rands in cash, compared to 399 million Rands, and an unused credit facility of 250 million Rands. The company spent 69 million Rands on repurchasing 16.8 million shares, representing about 2.6% of issued capital, at prices ranging from 3.95 to 4.65 Rands per share. This exceeds the 62 million Rands repaid as debt. Interest obligations at the end of the year amounted to 607 million Rands, down from 659 million Rands.
Creditors are satisfied. Debt stood at 1.14 times EBITDA, below the two-times covenant limit. iOCO agreed to a 0.5 percentage point interest rate reduction on its term loan and revolving credit facility starting August 1 and extended both until March 2030.
International Segment Weakened
Not all divisions showed growth. Adjusted EBITDA in iOCO International, which operates in Sub-Saharan Africa, Europe, and the Middle East, decreased by 33% to 57 million Rands, and the segment's gross margin fell from 39.7% to 28.4%. The reason is not specified in the reports.
Government sector work accounted for only 9% of revenue, compared to 12% previously.