AYO’s HEPS about 80% lower than forecast
The investment vehicle of Independent Media Group's Dr Iqbal Survé, Ayo Technologies, says a delay in a contract ‘with a multi-national company’ is the main cause
Ayo Technologies’ headline earnings per share (HEPS) will be about 80% lower than forecast in its prospectus, the investment vehicle of Independent Media Group proprietor Dr Iqbal Survé said in a trading update on Tuesday.
Reasons for Ayo’s figures coming in far lower than claimed when the Public Investment Corporation (PIC) controversially invested R4.3bn for a 29% stake in December 2017, include a delay in a contract “with a multi-national company”.
A single Ayo share had traded by 1pm on Tuesday, raising its price by 4% to R24.94 — reducing the PIC’s loss to 42% from the R43 per share it paid ahead of Ayo’s initial public offering (IPO).
In May, Ayo announced it had been awarded a contract to “provide and manage Sasol’s entire global network, communications and security services from SA”.
“A contract with a multi-national company was scheduled to commence earlier in the reporting period, which was delayed and only commenced in the latter part of the financial year,” Tuesday’s statement said.
Once-off costs involved in preparing for the Sasol contract also hurt earnings, Ayo said.
Another reason for HEPS only coming in at a fifth of that promised before the IPO was “the delay in an acquisition ... which has revenues in excess of R1bn, strong cash generation with cash from operations of R75m and earnings before interest, taxes, depreciation, and amortisation (ebitda) of R70m.”
When Ayo was unbundled from African Equity Empowerment Investments (AEEI), it proposed acquiring 30% of British Telecoms’s South African business from its erstwhile parent for R990m.
In August, AEEI and Ayo announced this proposed related-party deal had lapsed, and that Ayo CEO Kevin Hardy who was the MD of British Telecoms Africa had quit.
The proposed-related party deal between AEEI and Ayo came under scrutiny because both groups are investment vehicles of Survé, whose efforts to list what he termed a “multi-sided platform”, Sagarmatha Technologies, with PIC backing, failed.
Tuesday’s trading update follows a warning Ayo gave on October 9 that earnings in its maiden results would be at least 61% lower than forecast in its prospectus.
In its earlier trading statement, Ayo said it expected to issue its results on November 6. This was delayed to Thursday, November 8, in Tuesday’s statement.
AEEI is scheduled to release its results on Wednesday.