Our opinion on the current state of AYO

AYO is a black-owned technology company that was spun out of AEEI, which still holds a 49.4% stake. The company has been mired in controversy, notably due to a massive R4.3 billion investment by the Public Investment Corporation (PIC), which led to a court action by the PIC. This was finally settled on 31st March 2023, with AYO paying the PIC R619 million. Essentially, PIC pensioners appear to have lost billions of rands. AYO shares listed at R43, fell to as low as 105c, but are now around 305c after their latest results. Volumes traded are very thin, with many days where it does not trade at all. The company has 1,400 employees. Its income appeared to come from interest on the remainder of the PIC loan.

This share is difficult to assess and potentially dangerous, especially after the testimony from the former financial director, Siphiwe Nodwele, before the Mpati Commission, that the company is probably only worth R700 million, and the testimony of Naahied Gamieldien, previously the CFO, who said she had to "...adjust margins to increase the company's profit," which resulted in the profit doubling. In October 2019, the Financial Sector Conduct Authority (FSCA) conducted a raid on Survé's offices as part of an ongoing investigation. FNB has closed AYO's bank accounts, citing reputational risk. AYO is opposing this in a court action and, in an announcement on 30th April 2021, claims to have put in place "alternative third-party solutions" to enable the company to continue trading.

We advise investors to stay well clear of this share until the uncertainties surrounding the Mpati commission can be resolved. On 1st June 2021, British Telecom (BT) announced that it was severing ties with Sekunjalo due to "misrepresentation of facts" before the standing committee on finance in parliament. On 10th February 2022, the JSE announced that two AYO directors had been barred from being directors of a listed company for five years due to failing to carry out their oversight duties, leading to incorrect, false, or misleading financial statements. On 22nd December 2022, the JSE published a censure of AYO for their involvement in related party transactions without complying with the JSE rules on such transactions. On 24th March 2023, the company announced that it had reached an undisclosed out-of-court settlement with the PIC, but it seems unlikely that the PIC will recover the R4.3 billion which it advanced to AYO.

In its results for the six months to 29th February 2024, the company reported revenue up by 0.19% and a headline loss per share of 33.12c compared with a loss of 79.13c in the previous period. We cannot recommend this share to private investors because we do not trust its reporting. On 6th September 2023, the JSE publicly censured a director of AYO, Khalid Abdulla, for breaching the listing requirements and failing to exercise his fiduciary duties. He was fined R2 million, and AYO was fined R6.5 million.