PRETORIA – AYO Technology Solutions, one of the largest broad-based black economic empowerment (B-BBEE) information and communications technology company in South Africa announced on Monday that it now employs 1 400 people, compared with 250 in 2018.
In its unaudited interim results for the year to February, the group said it now had more than 500 clients, with operations located in South Africa, Mauritius, East Africa and the UK.
The group delivered a strong performance for the period with revenue increasing by 93 percent and profit before tax increasing by 226 percent from the prior interim period, to bring profit before tax of R266 million.
Companies assets grew to R5.2 billion from R4.6 billion in the prior period. The company invested in its working capital to deliver on the growth that it is experiencing. The company generated R277 million cash from operations before reinvesting into working capital.
AYO achieved significant organic growth during the interim period as a result of a contract with various multinational companies that commenced in July 2018. “Work on the contract is progressing very well, with positive feedback from the client and AYO expects to obtain new contracts with other multinational companies as it builds on its platforms driven by the ‘Go to Market’ strategy,” the group said in its statement.
In March AYO acquired a 24 percent equity interest in Global Command and Control Technologies (GCCT) for consideration of R3.6 million. GCCT offers full local radio frequency network planning, deployment, product support, field maintenance and logistic services. GCCT generates annual revenues in excess of R150 million and profit before interest and tax in excess of R6 million annually.
The B-BBEE tech company – also in March – signed an agreement with Bambelela and Vunani Capital Proprietary Limited in which, AYO will be a 50 percent shareholder, Bambelela a 30 percent shareholder and Vunani Capital a 20 percent shareholder in a special purpose vehicle that was formed to invest in disruptive financial services technology. AYO will provide a loan of up to R100 million to the special purpose vehicle.
An AYO spokesperson indicated that the company would be undergoing an aggressive acquisition strategy in the next 12 to 18 months to build on the platform already set. “The acquisitions will be based on a four to six times price-to-earnings multiple, depending on the strategy as well as utilising the cash that is available to create significant shareholder value in the second half of the financial year.
“The company has significant competitive advantages in that due to the new BEE ICT codes, a company needs to have at least 51 percent black shareholding and at least 30 percent female shareholding. AYO is significantly more than this in that it has more than 70 percent black shareholders and more than 35 percent female shareholders. This is significant, considering the cash available to achieve acquisitions and further organic growth as various companies need to procure from black businesses in order to improve their BEE level,” said the spokesperson.
AYO said its headline earnings a share increased by 226 percent from 17.36 cents to 56.67 cents per share as a result of the strong trading performance of the Group.
“Since listing, AYO has shown progress in delivering on the strategy presented in its pre-listing statement. AYO completed the acquisition of a 55 percent shareholding in Sizwe on 19 December 2018 for a consideration of R165 million after obtaining approval from the Competition Commission.
“Sizwe offers various ICT services to its customers, including a focused spectrum of physical infrastructure, metro and long-distance optic fibre, facility management, continuous energy supply, networking and security to hosting, storage server processing, mobility, data centre, end-user computing and associated consumables.
“Sizwe has annual revenues in excess of R1 billion, generates positive cash from operations in excess of R75 million and earnings before interest, tax, depreciation and amortisation in excess of R70 million,” the group said in its statement.
AYO declared an interim gross dividend of 35 cents a share out of income reserves in respect of ordinary shares of no par value for the six months to February.
This article first appeared on BUSINESS REPORT