Overcoming significant challenges no corporate should face in South Africa, JSE-listed investment holding company Ayo Technology Solutions (AYO) reported lower profit in the year to end-August 2023, but generated a strong 28% increase in revenue, boding well for the future of the group’s technology stack.
The results were posted late due to several factors, not least of which was the need for the new management team to interrogate every aspect of the operations.
CEO Amit Makan said: “As the new management team coming into AYO already six months into the financial year and during a major restructure, we wanted to ensure we spent the necessary time being thorough, to present to the market a set of audited results that can be relied on, and onto which we can set the foundation for growth in 2024 for increased shareholder value creation.”
Acknowledging the extra work the results had required, chief financial officer Pride Guzha thanked auditors for their dedication and the group’s shareholders and the market for their patience.
The subsidiaries performed well, particularly the unified communications division, along with the managed services division that generated better revenues compared to the prior period, the group said.
Other positives included the settlement with a major shareholder, the Public Investment Corporation on behalf of the Government Employees Pension Fund, which allowed the parties to work together on rebuilding value in AYO.
However, AYO’s overall performance reflected the tough times it had experienced during the past year, including an economy characterised by high interest rates, stubborn inflation, political instability, a lack of clear policy direction, and record levels of unemployment.
Added to this were long-standing battles with South Africa’s major banks, that had systematically sought to shut the group out of the economy by closing the various group and company bank accounts.
“The ensuing legal costs have put a strain on the company’s resources, as did the higher than expected once-off costs related to the restructuring of the company,” the group said yesterday.
The losses incurred in the 2023 year were also due to the decrease in gross margins across subsidiaries, lower fair value adjustments on investments, the de-recognition of derivatives and impairment of loans.
Two board members tragically and unexpectedly passed during the year: AYO chairperson Dr Wallace Mgoqi, and Dr Dennis George.
“Both gladly gave their considerable wisdom and expertise to AYO, and both are sorely missed,” the group’s board said.
AYO chairperson Professor Louis Fourie said the group embraced transformation.
“We perceive transformation as an essential business mandate with social, moral, and strategic dimensions. By continually transforming our business and implementing initiatives, we contribute to the development of a more equitable and inclusive society.”
Part of the operating strategy to realise this transformation was to ensure efficiencies across the group, which by and large, had been achieved during the 2023 financial year, said Fourie.
“The rightsizing and restructuring has laid the foundation for a more streamlined and agile operation for 2024. The group will seek to resolve its impasse with the banks, whilst still focusing on growing revenues and improving margins. It will also continue to look for compatible investments to further diversify its basket,” said Fourie.