AYO Technology reduces operating expenses, improves cashflow, signalling sustainability

AYO Technology Solutions, an ICT investment group, reported a 62% reduction in operating losses for the year ended August 31, 2024, signalling a recovery despite a 17% drop in revenue to R1.9 billion.

The audited results were released on Monday after delays largely due to an external quality review.

While the group posted a R725 million loss after tax, largely due to accounting adjustments, its cash generated from operations surged by 105% to R19.1 million, reversing a R390.9m outflow from the prior year.

Gross profit margins rose to 19% from 16%, while normalised operating expenses fell 38%. However, the group reported a headline loss per share of 177.09 cents, a marginal 3% improvement, amid ongoing challenges.

AYO said the embedding of its turnaround strategy had also provided "ample safeguards and measures to ensure that it remains operationally effective and secure with its prospects for 2025 and beyond, continuing to be optimistic".

Amit Makan, the CEO of AYO, said, “The company has made significant progress in improving its financial performance this year, notably reducing operating expenses and achieving a strong turnaround in cash generation. After excluding non-operational accounting adjustments, the operating loss stands at R220.9 million, a 62% improvement from that of R582.9 million last year, highlighting the effectiveness of our operational strategies and cost management efforts."

He noted AYO's 105% improvement in cash generated from operations, saying this "underscores our focus on operational efficiency and working capital management, enabling the shift from cash utilisation to generation. These results demonstrate the resilience of our business model and provide a solid foundation for future growth and value creation. As always, AYO remains deeply committed to sound corporate governance and open engagement with all stakeholders.”

Chief financial officer Valentine Dzvova, who assumed the role on December 1, 2024, said, "Regardless of these obstacles, AYO and its subsidiaries have shown remarkable resilience, as reflected in their overall performance and generally, the operational improvements demonstrate the Group’s ability to convert performance into cash flow, reinforcing our commitment to recovery and growth."

AYO further noted that growth had been limited by a lack of access to traditional financing. However, it said this had proven to be a "double-edged sword", as it allowed the group to adopt a slow and steady growth model that had effectively driven sustainable improvements during the financial year while maintaining its debt-free position.

The company added that this had also given it the opportunity to closely observe how the global technology sector was evolving and consider how those trends could be applied to the markets it operated in.

AYO reported that this approach had led to an expansion of its products and services across Africa, which is "rapidly adopting urbanisation and a digital-centric approach to work, play and economics."

Its Unified Communications division had made good in-roads in this regard, as had its health-tech and software and consulting divisions. AYO also noted that the managed services division had experienced a stable year, despite some contracts maturing, with improved margins seen throughout.

Looking ahead, AYO said it does not anticipate its external challenges will diminish in the short-term, but is optimistic about its prospects, given the mainly positive performance of the past financial reporting period.

"Markets beyond South Africa’s borders will, therefore, remain a focus for this next growth phase, as too embedding its current contracts and structures. AYO now aims to scale its operations, focusing on unlocking its full potential and delivering sustainable value to its shareholders. By doing so, the company aims to solidify its position as a leading black-owned and managed ICT investment group, contributing meaningfully to the industry and the broader economy," it said.

BUSINESS REPORT