South African tech company shooting the lights out

IOCO, formerly known as EOH, has seen strong share price performance over the last year, indicating optimism about a successful turnaround.

Between 2016 and 2024, EOH shareholders had a torrid time, with the share price plummeting by 99%, destroying tremendous shareholder value.

In December 2016, the EOH share price traded at R105.50, and the ICT company was a must-own in most investment portfolios.

However, corruption and rising debt raised concerns about EOH, which has been growing revenue through acquisitions.

Stephen van Coller was parachuted into the EOH chief executive position with a mandate to create value by growing EOH and creating jobs.

However, he said what he discovered after taking the job was so concerning that he changed direction and focused on rooting out corruption and reducing debt.

When he took the reins, the company had R16.3 billion in revenue, a net profit of R288 million, equity of R8.1 billion, and 11,500 employees.

He sold numerous EOH businesses, launched a capital raise to reduce debt, and slashed costs by cutting staff and, in some cases, reducing salaries.

When he left in March 2024, EOH was a much smaller company. Revenue declined to R6 billion and it recorded a loss of R54 million for the year.

The company’s number of employees plummeted from 11,500 in 2018 to 4,600 in 2024, which shows the impact of changes at the company.

In early 2024, the EOH share price hit a low of R1.05 per share as investors lost trust in the company’s turnaround promises.

However, things started to change in May 2024 after big changes to the EOH board and management were announced.

Marius de la Rey was appointed interim chief executive, and Veronica Motloutsi, Dennis Venter, and Rhys Summerton were appointed directors.

The market loved these changes, and the EOH share price rallied. Between April 2024 and February 2025, the share price increased by 186%.

Towards the end of 2024, EOH changed its name to IOCO, signaling a break from the company that had caused shareholders so much pain.

IOCO trading statement

On 13 February 2025, IOCO released a trading statement for the interim period that ended on 31 January 2025. It was exactly what the market wanted to hear.

IOCO achieved a 220% to 240% increase in its profit per share, translating to a net profit of roughly R115 million to R134 million.

This represents a significant performance improvement, considering it was stripped of its most valuable assets.

Despite the strong performance reported in the trading statement under his leadership, IOCO revealed that De la Rey resigned as interim CEO and executive director.

He was replaced by executive directors Rhys Summerton and Dennis Venter, who now act as joint CEOs of the IOCO group.

The new appointment of joint CEOs may signal managerial conflicts and uncertainty of leadership. It may also prohibit decisive decision-making.

The group also released a statement regarding the new structure of IOCO and the management changes.

IOCO will be split into five business divisions, each independently led, with its own division CEO and set of KPIs. Therefore, it would no longer require a traditional CEO.

Summerton and Venter will focus on improving revenue growth, talent allocation and capital allocation.

A positive signal to investors is that Summerton and Venter will not receive a cash salary. They will be rewarded purely for IOCO’s share price performance.

This perfectly aligns the CEO’s interests with that of shareholders. What makes this even better is that Summerton paid for his shareholding with his own money.

Since November 2024, Rhys Summerton purchased 6.7 million IOCO shares for R11.2 million. The average price Summerton paid per share was R1.67.

Already, his R11.2 million investment has grown to R21.1 million due to the recent rise in the IOCO share price.

As of the 2024 annual report, Summerton held 1.46% of IOCOs outstanding shares directly and 2.6% indirectly.

Venter’s shareholding has not been disclosed, and it is unknown what his shareholding is and how he obtained it.

While being directors of IOCO already in 2024, Summerton and Venter were the only two directors who did not accept their director’s fees.

Having the chief executives’ interests and incentives directly aligned with those of shareholders is a positive sign.

The market had an overwhelmingly positive reaction to the trading statement and the announcement of the new CEO structure.

Since the announcement last week, the share price jumped by 25%. This shows the trust investors have in the new board and management team.

New IOCO management structure