TECHNOLOGY company Ayo Technology Solutions (AYO) generated R2.3 billion in the full year period to end August, about 28% on the prior year’s revenue after a restructuring exercise and despite tough economic conditions in South Africa.
AYO has been reconfigured into an investment holding company and trades through its portfolio of investments in various technology units. The rise in revenue for the period under review has been attributed to “improved revenue generation from the managed services and unified communications” divisions.
The Sizwe IT Group, which falls under AYO’s managed services division, weighed in with a revenue contribution of R1.2bn compared to R933 million a year earlier. AYO has attributed the stronger revenues from Sizwe IT.
Moreover, AYO’s unified communication division comprised of Kathea and Kalula performed well. Kathea Communications raised revenue for the 2023 full year from R236m to R324m while Kalula’s revenues surged from R134m to R223m over the same period.
AYO interim chairperson Louis Fourie said: “Revenue growth for the two entities in the unified communication division is attributed to companies either moving back permanently to office or adopting a hybrid working environment and expansion into new territories.”
Despite the stronger revenue generation during the 2023 full year, gross profit percentage for AYO decreased from 22% in the prior year to 16% in the current year. This has been attributed to “lower margins achieved in the managed services divisions as result of less service contracts and more procurement of equipment distribution contracts” in the public sector
In December last year, AYO announced a restructuring exercise at its corporate head office with the aim to reduce costs. It also started implementing cost saving initiatives, took a prudent approach to impair non-performing investments and focused on stabilising ongoing investments geared towards a decrease in operating expenditure.
Operating gains from this also included fair value adjustments on investments and derivatives while AYO also invested some of its funds in the stock market to yield better returns.
“The stock portfolio earned dividend income of R7 million and had fair value gains of R10 million from its investments in the stock market during the current year under review,” the company said.
It added: “Furthermore, the Group generated interest income and investment income totalling R150 million in the current year under review as compared to interest income and investment income of R147 million in the prior financial year.”
The increase in overall interest and investment income has mainly been attributed to prime rate increases.
In the year ahead, AYO aims to strengthen underlying investments and improve margins as well as scaling up its technology stack of subsidiaries into new markets. This is in addition to nurturing “relationships with current customers and suppliers” to ensure that it strengthens existing contracts and maximises its current opportunities.