Iqbal Survé-controlled Ayo Technology Solutions’ cash balance is declining at a rapid rate according to financial results for the year ending August published on Friday.

Ayo’s cash balance fell by R628m during the year, from R4.3bn at the end of 2018, to R3.68bn at the end of this financial year. During the year, cash generated from operations fell by 35% to R88.9m, yet the company paid R223m in dividends.

Most of Ayo’s cash stockpile was the result of a controversial investment by the Public Investment Corporation (PIC), which saw the state-owned asset manager acquiring 29% of the company for R4.3bn in December 2017.

Ayo is locked in litigation with the PIC, which oversees the investments of the Government Employees Pension Fund (GEPF), following allegations that surfaced during hearings at the commission of inquiry into affairs of the PIC held earlier in 2019.  

A number of PIC employees described serious irregularities in the decision by the money manager to invest in the Survé-controlled business. The PIC and GEPF now want the money returned.

Ayo’s reviewed annual results were overseen but not audited by BDO SA, which notified investors in October that they would not be seeking a renewal of its contract with the company when it comes to an end this month.

Headline earnings per share for the period rose by 11% to 53.53c.

Revenue increased by 207% to R1.9bn through both an increase in the rendering of services and the sale of goods. The rendering of services is by far the biggest contributor, accounting for 65% of the top line.

Cost of sales rose slightly faster, increasing by 217% to R1.4bn. But it appears it was only the interest earned on the funds contributed by the PIC that pushed Ayo into the black. Profit before tax came in at R288m for the year, in part due to the R316.3m the company earned in finance income.

Despite holding so much cash, Ayo incurred finance charges of R10.9m, almost half of which was paid to Sars. 

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