CAOPE TOWN - Information and communications technology group AYO Technology Solutions (AYO), which posted moderate results for the six months to February 2021 amid the subdued Covid-19 restricted economy, expected a “far improved” second half, CEO Howard Plaatjes said yesterday.
Not beating around the bush, he said: “One can’t really expect great results from any business in this environment. The pandemic has contracted revenues across all industries, which leads to a reduction in customers’ spend on IT infrastructure and services, and has a knock-on effect on our group performance.”
He said low interest rates had also put pressure on investment income.
While the group had “taken a knock in some divisions”, there had been good demand in other divisions, as well as strong potential for the second half of the year, he said.
Revenue for the unified communications division was up 17 percent. With the completion of the acquisition of Kathea Communications, effective March 1, AYO expected further growth from the division in its full year results.
Significant revenue growth of 285 percent was also seen in the tracking solutions section, as well as in the performance of SGT Solutions with 25 percent revenue growth.
The healthcare division reported improved gross profit margins.
AYO’s asset value remained at R4.67 billion. Interest income fell 33 percent, although some of this was mitigated by the investment into equities, which were bearing returns.
AYO, with its strong balance sheet, asset value and cash of almost R3bn, declared an interim dividend of 65 cents a share, up 86 percent on the prior comparable period.
Plaatjes said the effects of Covid-19 continued to impact the technology sector, affecting raw materials supply, disrupting the electronics value chain, and causing an inflationary risk on products.
More positively, the disruption had accelerated remote working and a focus on evaluating and de-risking the end-to-end value chain. Remote work, online education and social distancing would create demand for products and services delivered by the technology industry, he said.
AYO was well-positioned to take advantage of these opportunities, he said. In terms of remote working, Kalula Communications was experiencing strong demand for communication and telecom equipment.
In cybersecurity, Puleng had products and skills to deliver critical cybersecurity solutions. Zaloserve had a nationwide infrastructure to roll out e-learning products and services to students.
In health laboratory services, HST had the software and skills to manage complex data networks in healthcare facilities; and crisis management.
GCCT meanwhile, had command and control specialist solutions for defence and monitoring of social distancing.
Due to the ongoing fall-out of the pandemic, uncertainty as to the future will also see customers postponing purchases on IT infrastructure.
“Cash flow challenges will test our companies and our businesses, but we have the plans in place to diminish any circumstances arising out of this,” said Plaatjes.
On the upside, as companies sought business solutions to address remote work and social distancing, the demand for developer and engineering talent was likely to increase.
AYO had invested in the training of personnel to fill a shortage of professional skills in this sector and to retain talent.
He said AYO was ready to move firmly into the fourth industrial Revolution (4IR), and a strong balance sheet would enable it to make strategic investments - several targets were in mind.
AYO also announced a plan to restructure its business to achieve a return on capital exceeding the market norm.
Its approach was to convert some of its equity positions to fund instrument models, and to fund black ICT entrepreneurs and companies to broaden empowerment in ICT.
It would do this with most new acquisitions and restructure existing investments to invite black groupings to share in the shareholding with AYO, he said.
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