iOCO grew profit by 39% to R357-million in the year to 31 July 2026, but net cash from its operating activities fell 44% to R239-million, as a large release of cash from customers in the previous year was not repeated.

The figures, in audited annual financial statements published on Tuesday, fall within the ranges the former EOH Holdings flagged in a trading statement last month. Headline earnings per share rose 43% to 57c. Adjusted earnings before interest, tax, depreciation and amortisation (Ebitda), which excludes share-based payments and one-off items, climbed 21% to R624-million.

Revenue barely moved. It rose 2.7% to R5.73-billion, or 2.4% excluding MySky, the enterprise networking business iOCO bought in its first acquisition in eight years. MySky contributed R18-million in revenue after it was consolidated from 1 May. Gross profit slipped to R1.59-billion, and gross margin fell to 27.7% from 28.7%.

Most of the profit growth came from lower costs. Employee costs fell by R288-million, or 11%, to R2.24-billion. Finance costs dropped by 30% to R68-million as debt came down. The effective tax rate fell to 15.5% from 22.5%, helped by the group using tax losses it had not previously recognised on its balance sheet.

The revenue mix also shifted. Hardware sales rose by half to R737-million, and software and licence revenue rose 20% to R1.09-billion. Services revenue, the group’s biggest line and the core of an IT services business, fell 6.6% to R3.9-billion.

iOCO also recognised far less revenue as an agent, where only its margin on a sale is booked, and more as principal, where the full value of the sale counts. Agent revenue fell to R38-million from R177-million, while revenue booked as principal rose by R288-million. The statements do not say how much of the year’s revenue growth reflects the change.

Where the cash went

Before working-capital movements, iOCO generated more cash than a year earlier: R585-million, up from R493-million. Working capital then absorbed R217-million, against an inflow of R74-million in FY2025, leaving cash generated from operations 35% lower at R368-million.

Trade payables fell to R377-million from R544-million, and payroll accruals, which include bonuses and leave pay, dropped by R78-million. But paying down creditors drained cash in both years: the cash-flow statement shows payables fell by R216-million in FY2026 and R220-million in FY2025.

The difference came from receivables. In FY2025, a R293-million fall in receivables released cash. That wasn’t repeated: receivables rose by R30-million this year, mainly because of higher prepayments.

The group ended the year with R417-million in cash, up from R399-million, and an undrawn R250-million overdraft facility.

It spent R69-million buying back 16.8 million shares, about 2.6% of its issued capital, at prices between R3.95 and R4.65/share. That is more than the R62-million of debt it repaid. Interest-bearing debt ended the year at R607-million, down from R659-million.

Lenders are comfortable. Debt stood at 1.14 times Ebitda, against a covenant limit of two times. iOCO negotiated a cut of 0.5 percentage points in the interest margin on its bullet term loan and revolving credit facility from 1 August, and extended both to March 2030.

International weakens

Not every division grew. Adjusted Ebitda at iOCO International, which operates in sub-Saharan Africa, Europe and the Middle East, fell 33% to R57-million, and the segment’s gross margin dropped to 28.4% from 39.7%. The statements give no reason.

Public-sector work made up just 9% of revenue, down from 12%.