Ayo warns shareholders of fall in earnings

Ayo Technology has warned shareholders of the likelihood of a decrease of as much as 80.86% in full-year basic earnings per share because of a contract delay.

Though earnings per share for the year to August are expected to rise to between 46.45c and 52.99c a share from 7.86c a share in 2017, this figure will be down from the 242.86c a share it predicated in October.

The technology group said a delayed contract with “a multinational company” that commenced only in the latter part of the financial year was the main reason it would not meet its forecasts. However, the company said the contract had gone well since its commencement.

One-off costs relating to this contract, and several acquisitions that were not concluded within expected timelines, also played a part in the expected fall in earnings.

Ayo took a controlling interest in Zaloserve, a company that owns Sizwe Africa IT, for R165m in September.

This is Ayo’s first major deal since listing in December 2017, and is expected to double its revenue. In October, the group announced a R100m joint venture with financial services group Vunani to expand Vunani’s fintech platform and financial services activities.

Ayo Technology has revenue in excess of R1bn, strong cash generation with cash from operations of R75m, and earnings before interest, tax, depreciation and amortisation of R70m. The group’s shares closed up 3.95% to R2.49 with 2,001 shares traded in two deals.

Ayo said in October it planned to participate in the government’s long-delayed spectrum auction, using a portion of the R4.3bn it raised in December 2017 from the Public Investment Corporation.