Shares in Ayo Technology Solutions lost a quarter of their value on Tuesday, despite the company saying it managed to narrow its losses for the six months ended February due to many cost-cutting measures.
The technology group is expected to report a headline loss per share of between 25.21c and 41.03c, reflecting a decrease of between 68.14% and 48.14%, compared with the loss of 79.13c per share in the previous comparable period.
The narrower losses were “primarily as a result of the group’s continued focus on value preservation and creation”, Ayo said in a trading statement on Tuesday. “The group has continued implementing cost-saving initiatives and restructuring, which has yielded a significant decrease in overall operating expenditure.”
A little-traded stock, Ayo shares fell sharply and closed down 24% at 38c on the JSE on Tuesday. The market has not been kind to Ayo since its listing in December 2017. Since then, the company has lost 99.16% of its value. In 2024 alone, the stock has lost just less than 52%.
Part of this is down to the controversy that has surrounded the tech firm. Earlier in 2024, Ayo and African Equity Empowerment Investments (AEEI), another company associated with business person Iqbal Survé, came close to having their shares suspended from the JSE after both failed to release their annual reports within the prescribed period.
The JSE said the two companies had failed to submit their annual reports within the four-month period stipulated in its listing requirements. The companies had until end-January to comply or have their listings suspended.
Ayo courted public attention when it was fined R1.5m about a year ago by the JSE for lack of transparency. At the time, the JSE said Ayo failed to publicly disclose money that was moved between related companies. The fine related to Ayo, its holding company and major shareholder AEEI and transactions with asset manager 3 Laws Capital.
Ayo’s reputation was also sullied when the Mpati commission of inquiry into the Public Investment Corporation (PIC) showed in 2020 that the asset manager’s subscription of shares in Ayo was grossly overvalued. The PIC and Ayo have since resolved the matter.
In mid-2023, AEEI unbundled its 49.36% stake in Ayo.
For the full year to end-August 2023, Ayo reported a wider loss before taxation of R653m, from a R233m loss in the previous year, mainly due to decreased gross margins, lower fair value adjustments on investments, VAT adjustment, derecognition of derivatives and the impairment of loans.
At the time, the group said it continued to face challenges such as a subdued economic environment, negative publicity, banking challenges and lack of access to funding.
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