JSE penalises Ayo Technology R6.5m over false financials
JSE-listed tech firm Ayo Technology has been publicly censured and fined for making false and misleading financial reports, which were disseminated to the bourse, shareholders and investors.
The censure concerns breaches of Johannesburg Stock Exchange rules in connection with previously published unaudited 2018 and 2019 interim results that did not “comply with the requirements of International Financial Reporting Standards (IFRS) and were restated due to numerous adjustments and material errors”.
The JSE says the company failed to exercise the highest standards of care when disseminating financial information to the market.
Ayo is the latest company in the ICT sector to be punished by the JSE in recent weeks. In July, technology services firm EOH was penalised R7.5 million for publishing false information in its 2017 and 2018 financial results.
Announcing Ayo’s breaches today, the JSE says: “The company published the unaudited 2018 and 2019 interim results to the market despite knowledge of deficient internal and financial controls, insufficient staff in the finance team, as well as staff with insufficient historical and technical knowledge of the company, which led to the numerous and material corrections to the 2018 and 2019 interim results.
“Additional errors in the company’s 2018 and 2019 audited interim results were identified post the audit and therefore not included in the audited 2018 and 2019 interim results published to the market; and the company published the audited 2019 annual financial statements (AFS) and omitted therein several disclosure notes, resulting in the company having to publish a supplement to the audited 2019 AFS and the auditor having to withdraw and re-issue the audit report in respect of the 2019 AFS.”
According to the JSE, the accuracy and reliability of financial information published by companies are of critical importance in ensuring a fair, efficient and transparent market.
For these reasons, the JSE has decided to impose a public censure and the maximum fine of R6.5 million on Ayo as a result of its failure to comply with important provisions of the listings requirements.
The JSE initiated an investigation at the beginning of 2019 following the increased media publicity surrounding Ayo, the uncertainty regarding the accuracy of the company’s 2018 interims, and the accuracy of financial information released to the market.
In response, Ayo says it is not pleased with the outcome of the JSE investigation and the penalty imposed on the company but it remains fully committed to adhering to the JSE listing requirements.
Therefore, Ayo says it accepts the JSE’s findings that the financial results did not comply with IFRS and that it failed to observe the highest standards of care in the dissemination of the financial information into the marketplace.
“These aforementioned items have in fact been remedied and Ayo has fully co-operated with both the auditors and the JSE throughout this process. Ayo’s board of directors understands there is much room for improvement and remains committed to putting additional procedures and processes in place going forward in order to disseminate financial information which is accurate and complete.
“The board has taken significant remedial steps to prevent a recurrence of such errors in its financial reporting, which the board admits was challenging while at the same time being subjected to three simultaneous audits.”
The company says it is committed to establishing “robust financial processes and procedures to enhance transparency within the group in order to ensure the accuracy and reliability of financial information disseminated into the market”.
Ayo is a broad-based black economic empowerment ICT group offering end-to-end solutions to various industries.
It was previously called Sekunjalo Technology Solutions and is a subsidiary of JSE-listed African Equity Empowerment Investments. Ayo listed in the computer services sector of the JSE in December 2017.