Ayo Technology has entered a formal consultation process with its employees, regarding the restructuring of the company, which may result in retrenchments.
In its shareholders update yesterday, the JSE-listed tech firm says its board of directors had resolved to implement a seven-point strategic plan to ensure sustainability of the business.
As part of the plan, the Cape Town-headquartered company says it is planning to transform the business into an information and communications technology investment holding company and it is looking to significantly reduce operational costs in the 2023 and 2024 financial years.
This will be achieved through a combination of terminating operational vacancies and the reduction of corporate head office costs, it says.
“Shareholders are advised that the company will enter a formal consultation process with
relevant stakeholders in terms of Section 189A ("S189 process") of the Labour Relations Act No. 66 of 1995, regarding the restructuring of certain operational functions.
“The purpose of the section 189 consultation process is to engage in a meaningful joint consensus seeking process in an attempt to avoid job losses. The Company will engage with employees to provide further details on possible retrenchments.”
According to the statement, subject to the outcome of the consultation process and as part of the S189 process, Ayo Technology and affected stakeholders/employees will together consider appropriate measures to minimise retrenchments.
The Iqbal Survé-linked company had had 1 038 employees as of the end of its 2022 financial year, and had spent R422 million on salaries. The company says it is committed to following the legislative processes to ensure that all affected employees are treated fairly.
In a statement sent to ITWeb, the company says it is not able to quantify the number of jobs that will be affected, given the procedure has just started.
Responding on how well the company has performed in recent years, it explains: “As noted in the annual financial reports, the business has faced some challenges in the last few years or two, exacerbated by the global shutdown due to COVID-19, and the ongoing sensational and oft erroneous reporting on AYO, which has damaged the company’s public (although not performance) reputation.”
In August 2020 the JSE fined Ayo Technology R6.5 million, for issuing false and misleading financial reports, which were disseminated to the bourse, shareholders and investors.
Since 2021, AYO has been battling with First National Bank over their decision to close its bank accounts due to the associated reputational and business risks.
The move, according to the company has had a negative impact on the group’s ability to optimise its cash on hand and return on its investments.
ITWeb previously reported that in March 2021, AYO had called for a parliamentary inquiry into four entities that it had clashed with, accusing them of victimising and unfairly censuring the tech investment firm.
The four, the Johannesburg Stock Exchange, Companies and Intellectual Properties Commission, Public Investment Corporation and Financial Sector Conduct Authority, have all had legal clashes with AYO.
Ayo’s biggest shareholder is African Equity Empowerment Investments, and that holder’s parent company is Sekunjalo Investment Holdings.
Sekunjalo, which is also Ayo’s third-biggest shareholder, was founded and is co-chaired by Iqbal Surve.
The group’s revenue for the year ending August 31, 2022 was R1.755 billion, down from its peak level in August 2020 at R2.885 billion. It reported a full-year net loss that widened 4% from the previous year, to R270 million.
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