AYO Technology Solutions last week withdrew a trading cautionary after it released its long-awaited audited results for the six months to February 2019, which showed headline earnings per share increasing by 90 percent to 28.56 cents a share despite a challenging operating and economic environment. Photo: Ian Landsberg/African News Agency (ANA)
AYO Technology Solutions last week withdrew a trading cautionary after it released its long-awaited audited results for the six months to February 2019, which showed headline earnings per share increasing by 90 percent to 28.56 cents a share despite a challenging operating and economic environment. Photo: Ian Landsberg/African News Agency (ANA)

AYO withdraws cautionary, audited interims show 90% growth in earnings

By Philippa Larkin Time of article published Apr 14, 2020

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JOHANNESBURG – AYO Technology Solutions last week withdrew a trading cautionary after it released its long-awaited audited results for the six months to February 2019, which showed headline earnings per share increasing by 90 percent to 28.56 cents a share despite a challenging operating and economic environment.

AYO released the audited interim 2019 results with a clean "unqualified" audit report following the release of the audit of its 2018 interims, which was completed last month.

The JSE last year requested AYO’s external auditors, BDO South Africa, to perform a factual findings report on the 2018 interim financial results as a result of management having identified certain amendments. These were all accepted amendments as the results were released according to factual findings at that time.

AYO also cleared its name after corporate governance allegations were raised at the Public Investment Corporation (PIC) Commission of Inquiry held in 2019.

AYO subsequently received unqualified and clean audited opinions from the auditors on its February 2019 interims as well as its comparative figures being the 2018 interim results.

AYO on the stock exchange news service (SENS) last week said its management believed that its improved governance processes had ensured that no irregularities exist.

“Management is of the opinion that the issues noted are isolated to the 2018 interim financial period,” it said, adding that the audit of the 2019 interim results was complete.

“Subsequent to the factual findings report from BDO, several enquiries were received from the JSE, either in relation to the accounting treatment in terms of IFRS of the matters identified and the governance of AYO, or the continued listing of AYO on the JSE.

“AYO has worked with and addressed the JSE’s concerns on the governance of the company and remains committed to continue to improve its governance processes,” it said.

AYO also noted that the improved financial performance in its 2019 interims was predominately achieved by significant organic growth as well as acquisitive growth in relation to the procurement of Sizwe IT Proprietary and SGT Solution Proprietary.

The broad-based black empowerment information and communication technology group said its revenue rose by 98 percent to R690 million, while profit before tax increased by 113 percent to R166m.

However, the company warned that its operating expenses had increased significantly during the period, mainly as a result of the inclusion of the results of Sizwe and SGT Solutions as well as the increase in the operational capacity of AYO in anticipation of obtaining new contracts.

Total operating expenses of R45m had been included in the current year from Sizwe and SGT Solutions, the company confirmed.

As a result of listing in the prior financial year, AYO had a once-off equity-settled share-based payment expense of R12m, goodwill impairment of R5m, listing costs of R7m and a loss from disposal of a subsidiary of R5m.

It also incurred once-off expenses of R3m related to the acquisitions of subsidiaries and R4m on legal costs.

As regards litigation, AYO was opposing a legal action by the PIC to set aside a R4.3 billion subscription agreement.

Looking ahead, the group said it continued to focus on additional acquisitions and increasing the diversification of its service and product offerings.

BUSINESS REPORT

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