JSE-listed AYO Technology Solutions says the banking crackdown facing the group hampered its ability to optimise its cash on hand and return on its investments.
Since last year, AYO has been battling with banks over their decision to close its bank accounts.
AYO’s parent company, Sekunjalo Group, and 43 other companies and several prominent individuals related to Sekunjalo are fighting the banking matter.
On Friday, AYO reported on its performance for the six months ended February, showing widening losses and decrease in revenue.
In an update to shareholders, AYO laments the knock-on effect the closure of its transactional banking facilities has had on the group.
AYO also said the ongoing litigation with the Public Investment Corporation (PIC) and negative media coverage dented its operations.
“The current banking crisis the group faces has resulted in a significant amount of management’s time and focus on managing the banking situation and litigation, and has had a negative impact on the group’s ability to optimise its cash on hand and return on its investments,” AYO says.
“The ongoing litigation with the PIC, as well as the PIC voting against special resolutions to provide financial assistance to subsidiaries, has affected the company’s ability to fund its subsidiaries’ growth initiatives. The negative media and PIC litigation also impacted the company’s ability to acquire other companies.”
In the six months, AYO’s key financial metrics came in negative, with revenue decreasing by 8% to R792 million, from R859 million in the prior corresponding period.
Loss before tax increased by 29% to R85 million, from R66 million in the previous corresponding period.
The loss per share increased by 14% to 34.31c per share, from 30.11c; headline loss per share increased by 43% to 35.90c per share, from 25.09c; and gross dividend per share decreased by 46% to 35c, from 65c.
The company says despite the negative impact of COVID-19 and the current negative operating environment caused by its “banking crisis” and the PIC’s litigation, its board believes AYO’s investments are resilient and well-positioned for growth in the future.
“The group expects to nurture relationships with current customers and suppliers to ensure it grows current contracts and exploits its current opportunities to the best of its abilities. In line with its go-to-market strategy, the group will continue to look for opportunities to acquire or partner with companies in disruptive technologies.”
It adds: “As an ICT investment holding group, AYO is ready with a strong balance sheet to make strategic acquisitions. Company valuations are becoming more attractive for investments and the group has several targets in mind.
“AYO continues to seek commercial engagement with one of its significant shareholders, the PIC, to ensure continued support for AYO’s vision.”
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