Wrap Text
Summarised Reviewed Consolidated Annual Financial Results For The Year Ended 31 August 2018
AYO Technology Solutions Limited
(Incorporated in the Republic of South Africa)
Registration number 1996/014461/06
JSE share code: AYO
ISIN ZAE000252441
("AYO" or the "Group" or the "Company")
SUMMARISED REVIEWED CONSOLIDATED ANNUAL FINANCIAL RESULTS FOR THE YEAR ENDED 31 AUGUST 2018
Financial highlights
- Revenue increased by 33% from R478m to R639m
- Profit before tax increased by 390% from R40m to R196m
- Earnings per share increased from 7.86 cents to 47.20 cents
- Total assets increased from R292m to R4 671m
- Net asset value increased from R67m to R4 469m
- Net cash generated from operating activities increased by 243% from R40m to R137m
Overview
AYO is a leading Broad-Based Black Economic Empowerment ("B-BBEE") information and communications technology ("ICT") company, servicing customers in
Southern and Northern Africa, Europe and Mauritius.
AYO is fully compliant in terms of the new B-BBEE Act, 53 of 2002 as amended, ICT Sector Codes, and has exceeded the minimum ownership requirements of
the new codes by having about 75% black ownership and more than 35% black female ownership. AYO's empowerment is one of many key competitive
advantages and has positioned itself well for the acquisition of large multinational customers based locally in various sectors where the empowerment
codes for procurement have been amended and have become significantly more onerous but advantageous for AYO. This was evidenced by the organic growth
in revenues of 33% from R478 million to R639 million which includes the procurement of a major oil and gas multinational contract during the
latter part of the year under review. The full benefit thereof will flow over future years.
AYO has a clear strategic roadmap, which includes building products and services both organically and through acquistions. The strategy is driven by the
"Go to Market" strategy focusing on offering customers platforms via on premises, hybrid and cloud based models (AYO Platforms) as well as innovative
digital offerings (AYO Digital). These offerings are then presented to market verticals via AYO industry. The organic build up and acquistions strategy
has been enabled through the capital raised during its listing in December 2017, with AYO holding signficant growth capital planned for the deployment
of its strategy in future. Since listing, AYO has shown progress in delivering on the strategy presented in its Pre-listing Statement ("PLS").
While certain key projects and transactions are still being finalised, numerous processes and timelines have been delayed and the variance in the results
compared to the forecasted profits are mainly attributable to the following:
- a contract with a multi-national company was scheduled to commence earlier in the reporting period which was delayed and only commenced in the latter
part of the financial year. The contract has gone well since commencement;
- preparation work for the implementation of the above contract whereby the Company incurred significant once-off contract costs;
- significant costs have been absorbed in the operating costs line which are as a result of further once off costs of the listing and capital raised; and
- acquisitions which were not concluded within the expected timelines however one of the planned acquisitions was subsequently announced on SENS on
11 September 2018. Zaloserve Proprietary Limited ("Zaloserve"), being the acquire, has revenues in excess of R1 billion, generates positive cash from
operations of R75 million and an EBITDA of R70 million.
Extensive market engagement and a positive reception to AYO's strategy by customers and acquisition targets have now seen continued growth in customers
and the target pipeline which is expected to come to fruition during the 2019 financial year.
One of AYO's major competitive advantages is that it has no legacy business or overhead structures preventing it from building a market-leading digital
capability for its customers, thereby creating broad-based stakeholder value.
Reporting entity
The summarised consolidated annual financial statements for the year ended 31 August 2018 comprises of AYO and its subsidiaries. The comparative
results reflect the 12 months ended 31 August 2017, which were prior to the listing on the JSE.
As a result of the listing, the ordinary issued share capital increased from 244 342 539 to 344 125 194 ordinary shares.
SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
Notes 31 August 2018 31 August 2017
Assets
Non-Current Assets 72,782 78,401
Property, plant and equipment 7,170 7,118
Goodwill 1 35,248 43,411
Intangible assets 2 17,742 12,506
Investments in joint ventures 33 33
Financial assets 4 8,879 5,299
Deferred tax 3,710 10,034
Current Assets 4,598,350 214,010
Inventories 12,378 9,702
Trade and other receivables 3 183,222 110,428
Financial assets 4 93,391 19,266
Current tax receivable 661 384
Cash and cash equivalents 4,308,698 74,229
Total Assets 4,671,132 292,411
Equity and Liabilities
Equity
Equity Attributable to Equity Holders of Parent
Share capital 5 4,444,409 184,129
Reserves 11,777 (4)
Accumulated loss (7,502) (151,787)
4,448,684 32,338
Non-controlling interest 20,294 34,752
4,468,978 67,090
Liabilities
Non-Current Liabilities 575 83,196
Financial liabilities - 80,647
Finance lease liabilities 575 2,549
Non-current liabilities of disposal - -
Current Liabilities 201,578 141,765
Trade and other payables 6 132,927 108,502
Financial liabilities 7 6,133 5,761
Finance lease liabilities 389 259
Operating lease liability 47 305
Deferred income - 2,981
Current tax payable 41,636 8,372
Provisions 15,390 12,473
Bank overdraft 5,056 3,109
Liabilities of disposal groups - 360
Total Liabilities 202,154 225,321
Total Equity and Liabilities 4,671,132 292,411
Net asset value per share (cents) 1,292.75 15.23
Net tangible asset value per share (cents) 1,277.35 (11.10)
Number of shares in issue 344,125,194 212,382,539
SUMMARISED CONSOLIDATED GROUP STATEMENT OF COMPREHENSIVE INCOME
Reviewed Audited
31 August 2018 31 August 2017
Notes R'000 R'000
Revenue 8 638,893 478,663
Cost of sales (440,935) (319,921)
Gross profit 197,958 158,742
Other income 3,292 5,493
Other operating (losses)/gains (7,321) 7,780
Operating expenses (195,297) (125,263)
Equity-settled share-based payment 9 (11,809) -
Warranty expense 9 (4,239) -
Goodwill impairment 9 (4,957) -
Listing costs 9 (6,831) -
Investment revenue 226,954 2,400
Finance costs (1,754) (8,804)
Loss from equity accounted investments - (679)
Profit before taxation 195,996 39,669
Taxation (48,040) (12,822)
Profit from continuing operations 147,956 26,847
Discontinued operations - -
Profit from discontinued operations - 2,810
Profit for the year 147,956 29,658
Other comprehensive income for the year net of taxation - Exchange differences on translating foreign operations (28) (4)
Total comprehensive income for the year 147,928 29,653
Profit attributable to:
Owners of the parent:
From continuing operations 144,284 13,861
Profit from discontinued operations - 2,810
144,284 16,671
Profit attributable to:
Owners of the parent 144,284 16,676
Non-controlling interest 3,671 12,982
Total comprehensive income attributable to:
Owners of the parent 144,256 16,671
Non-controlling interest 3,671 12,982
Basic and diluted earnings per share (cents) 47.20 7.86
Headline earnings and diluted headline earnings per share (cents) 48.32 5.66
Weighted (and fully diluted) average number of ordinary shares in issue 305,700,253 212,078,657
SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Total
attributable to Non-controlling
equity holders total equity
of the Group interest Total equity
R'000 R'000 R'000
Balance at 01 September 2016 (749) 17,852 17,103
Profit for the year 16,676 12,982 29,658
Other comprehensive income (4) - (4)
Total comprehensive income for the year 16,672 12,982 29,654
Dividends - (5,985) (5,985)
Share issue on acquisition of subsidiary 15,301 - 15,301
Acquisition of subsidiary with non-controlling interest 1,115 9,902 11,017
Total contributions by and distributions to owners of company recognised directly in equity 16,416 3,917 20,333
Balance at 01 September 2017 32,339 34,751 67,090
Profit for the year 144,285 3,671 147,956
Other comprehensive income (28) - (28)
Total comprehensive income for the year 144,257 3,671 147,928
Issue of shares 4,338,594 - 4,338,594
Capitalised listing costs (78,314) - (78,314)
Equity settled share-based payment 11,809 - 11,809
Dividends - (17,646) (17,646)
Changes in ownership interest - disposal of subsidiary (483) (483)
Total contributions by and distributions to owners of company recognised directly in equity 4,272,089 (18,129) 4,253,960
Balance at 31 August 2018 4,448,685 20,293 4,468,978
SUMMARISED CONSOLIDATED GROUP STATEMENT OF CASH FLOWS
Reviewed Audited
31 August 2018 31 August 2017
R'000 R'000
Cash flows from operating activities
Cash generated from operations (58,931) 53,170
Finance income 215,243 2,579
Finance costs (2,220) (8,804)
Tax paid (16,735) (6,954)
Net cash from operating activities 137,357 39,991
Cash flows from investing activities
Net purchase and sale of property, plant and equipment (4,578) (3,288)
Increase in internally generated intangible assets (6,053) (1,205)
Proceeds from sale of assets held for sale 827 -
Business combinations - (1,559)
Net cash outflow on disposal of subsidiary (314)
Proceeds from disposal of subsidiary - 17,140
Proceeds from loans to group companies 3,029 10,483
Investment in financial assets (79,560) (13,611)
Proceeds on disposal of financial assets 15,728 -
Net cash from investing activities (70,921) (7,960)
Cash flows from financing activities
Net proceeds on share issue 4,338,594 -
Transaction costs related to share issue (78,314) -
Repayment of loans from shareholder (77,424) -
Proceeds from shareholder 5,000
Net proceeds from other financial liabilities - 265
Purchase of other financial assets - 3,256
Advance of staff loans (108)
Repayment of financial liabilities (4,583) -
Repayment of shareholders loan 1,950 (530)
Finance lease payments (1,384) (886)
Dividends paid (17,646) (5,985)
Net cash from financing activities 4,166,085 (10,392)
Total cash movement for the year 4,232,521 37,558
Cash at the beginning of the year 71,120 33,562
Total cash at end of the year 4,303,641 71,120
Group performance
The Group delivered satisfactory organic revenue and profit growth as a result of the strong contributions from all its underlying operations and
investment activities for the year under review. Group revenue increased organically by 33% from R478m to R639m, compared to the prior year with all
divisions starting to benefit from the Group's synergies, empowerment credentials and excellent management expertise as well as gaining significant
clients in various sectors.
The Group incurred significant once-off cost for its expansion of operational activities and listing costs. Note 9 has a detailed breakdown of the costs.
Profit before tax for the period increased by 390% from R40m to R196m, as a result of organic revenue growth and investment income from the capital
raised on listing.
Cash generated from operations decreased from R53m in 2017 to an outflow of R59m due to significant once off cost for its expansion of operational
activities and listing costs. However net cash generated from operating activities increased by 243% from R40m to R137m.
Headline earnings per share ("HEPS") increased from 5.66 cents to 48.32 cents and earnings per share ("EPS") increased from 7.86 cents to 47.20 cents
for the year under review.
The Group's asset base increased from R292m to R4 671m, which includes the capital raised from the listing.
Net asset value ("NAV") increased from R67m to R4 469m due to the capital raised from the listing and the asset growth of the underlying investments.
The NAV per share increased from 15.23 cents to 1 292.75 cents.
As AYO embarked on the execution of its strategy, various costs increased to cater for the expected growth and the operational activities which
commenced during the year under review.
Software, Consulting and Support
The software, consulting and support division, focused mainly on digital consulting engagements and transformation projects, with revenue increasing by
6% from R69m to R73m.
Head office
Revenue improved significantly due the investment holding company becoming operational in the latter part of the financial year.
Security Solutions
The security division focused on offering information technology security solutions to enterprises, with the key focus mainly on Identity and Access
Governance Management. Revenue increased by 34% from R251m to R335m mainly due to new contracts based on improved and competitive BBBEE credentials.
Unified Communications
The unified communications division is a reseller of telecommunications and gaming equipment from globally recognised brands. Revenue increased by
12% from R67m to R76m as a result of better alignment and leverage with its principal supplier and customer requirements. This division incurred
initial setup costs relating to the establishment of a Mauritian subsidiary which will be utilised to service the rest of Africa in the future.
Healthcare and support
The healthcare segment provides software and support in the health care industry having clients ranging from the private sector to government.
Revenue increased from R91m to R101m as a result of the ever improving products offered by the division.
RECONCILIATION OF HEADLINE EARNINGS
Reviewed Audited
31 August 2018 31 August 2017
R'000 R'000
Earnings attributable to ordinary equity holders from continuing operations 144,285 13,861
Discontinued operations - 2,810
Adjusted for:
Loss/(profit) on sale of property and equipment (9) 8
Loss/(profit) on disposal of discontinued operations - (4,670)
Profit on sale of associate (1,073) -
Loss/(profit) on disposal of subsidiary 1,429 -
Goodwill impairment 3,084 -
Headline earnings 147,716 12,010
Continued operations 147,716 9,200
Discontinued operations - 2,810
Weighted average number of shares 305,700,253 212,078,657
Headline earnings per share (cent) 48.32 5.66
Continued operations 48.32 4.34
Discontinued operations - 1.33
SUMMARISED SEGMENTAL REPORT
Software,
consulting & Security
support Head office solutions
31 August 2018 31 August 2018 31 August 2018
R'000 R'000 R'000
Revenue 73,414 82,794 335,352
External sales 73,414 54,915 335,310
Intergroup sales - 27,878 42
Material items included in operating profit/(loss)
Equity settled share-based payment expense - (11,809) -
Listing costs - (6,831) -
Carrying amount of assets 20,718 4,949,645 73,793
Carrying amount of liabilities 8,715 102,502 58,059
Unified Healthcare and
Communication support Group
31 August 2018 31 August 2018 31 August 2018
R'000 R'000 R'000
Revenue 75,552 100,975 668,088
External sales 75,552 99,701 638,893
Intergroup sales - 1,599 29,519
Material items included in operating profit
Equity settled share-based payment expense - - (11,809)
Listing costs - (6,831)
Carrying amount of assets 22,304 63,850 4,671,131
Carrying amount of liabilities 16,937 16,899 202,153
Software,
consulting & Security
support Head office solutions
31 August 2017 31 August 2017 31 August 2017
R'000 R'000 R'000
Revenue 71,106 21,381 251,134
External sales 68,974 248 251,134
Intergroup sales 2,132 21,133 -
Material items included in operating profit
Carrying amount of assets 47,536 31,067 121,343
Carrying amount of liabilities 14,333 91,183 79,473
Unified Healthcare and
Communication support Group
31 August 2017 31 August 2017 31 August 2017
R'000 R'000 R'000
Revenue 67,207 91,100 501,927
External sales 67,207 91,100 478,663
Intergroup sales - - 23,265
Material items included in operating profit
Carrying amount of assets 27,563 56,999 284,508
Carrying amount of liabilities 20,016 19,954 224,958
RECONCILIATION OF REPORTABLE SEGMENTS PROFIT OR LOSS
Reviewed to Audited to
31 August 2018 31 August 2017
R'000 R'000
Profit before taxation 195,996 39,670
Taxation (48,040) (12,822)
Profit for the period and total comprehensive income from continuing operations 147,956 26,848
Profit from discontinued operations - 2,810
Profit for the period and total comprehensive income 147,956 29,658
Notes to the summarised annual financial statements
1. Goodwill
During the current year the goodwill in software, consulting & support segment was impaired as the carrying value was more than the recoverable amount.
In addition, the Group disposed of its interest in one of the subsidiaries in the software, consulting & support resulting in the reduction of the
goodwill by R3.2m.
Goodwill relates to the Group's interest in Health System Technologies Proprietary Limited, Software Tech Holdings Proprietary Limited Group,
Puleng Technologies Proprietary Limited and Kalula Communications Proprietary Limited. The Group performs an annual valuation for purposes of
determining the fair value in its investments. The valuation method is the basis for valuing the goodwill which is allocated to cash generating
units (CGU).
The value of the CGU to which the goodwill was allocated has been determined based on the value in use calculations using cash flow projections.
The carrying value of Afrozaar Proprietary Limited, one of the CGU's, in the current year for Software Tech Holdings Group was more than the
recoverable amount and an impairment loss of R1.173m was recognised in the Group.
During the current year, goodwill in Software Tech Holdings Company of R3.784m was impaired as the carrying value was more than the recoverable
amounts. The carrying value of all the remaining CGU's has been calculated to be less than the recoverable amount and therefore no impairment has
been recognised.
Goodwill acquired through business combinations has been allocated to individual cash-generating units for impairment testing as follows:
2018 2017
Investment in Health System Technologies Proprietary Limited 2,157 2,157
Investment in Software Tech Holdings Group - 3,784
Investment in Software Tech Holdings subsidiaries 2,351 6,730
Investment in Puleng Technologies Proprietary Limited 22,274 22,274
Investment in Kalula Communications Proprietary Limited 8,465 8,465
35,247 43,410
2. Intangibles
The intangible assets are classified as follows:
Internally generated intangibles:
- Billing system
- Software development
- eCCR system
Other intangible assets
- Distribution rights
Billing system
Based on the terms of the service contract to which the billing system relates, a notice period of 1 year is required to terminate the contract.
The billing system has a residual value of R70 977 which will be amortised when the service contract is terminated.
The Healthcare and support segment embarked on a process of developing the following different software systems:
eCCR system
The electronic Continuity of Care Record (eCCR) project is aimed at improving the continuity of care between hospitals and primary healthcare.
It is a collaborative project by Health Impact Assessment, Information Management and Health Systems Technology with an initial focus of establishing
a web-based Electronic Discharge Summary. The eCCR system was internally developed and phase 1 was completed in the 2016 financial year. The product
went live on 01 March 2016. Phase 2A began in October 2016 which entails further ongoing development of the product. The team has started preparing
for phase 2B of the project in 2018. Management has assessed that the eCCR system has a useful life of three years.
Software development
Software development relates to 3 different programs currently being developed: The first being the Health Information System Technology refresh.
This is a technology refresh and modernisation of the existing Health Information System platform. The second is the Health Benefit Protocol and Plan
Management. The outcome of this project is the ability to share patient information and care paths between the health insurance agency and healthcare
providers in an accurate and reliable manner which supports better patient outcomes through guided information capture and standards-based data
management and interoperability. The third is the Free Bed Enquiry system which allows ambulances to assess the availability of beds at hospitals.
Costs of R3.1m were capitalised to software development. Amortisation of the software will commence once the programmes are available for use.
There are no research and development expenses recognised in profit or loss in the current year. Management will assess the useful life of the
intangible asset under development once it is ready for use.
Following initial recognition, software is carried at cost less any accumulated amortisation and any accumulated impairment losses. The useful life
of software is assessed as finite and is reassessed, with the amortisation method, at least at each financial period-end. The amortisation of
software is recognised in profit or loss in the period to which it relates.
Distribution rights
The distribution rights arose during the prior year from the acquisition of Kalula Communications Proprietary Limited. The distribution rights
regulates the purchase of Plantronics products for resale by the Group.There is no limit on the number of times the above distribution right
can be renewed and based on historical information no distribution rights have been revoked. Additionally the cost to renew the distribution rights
are insignificant in relation to the economic benefits that are expected to arise from the assets and the distribution rights are expect to be
renewed without any cost and therefore have an indefinite useful life. This intangible asset has an indefinite useful life and was allocated to the
unified communications cash generating unit. Management assessed the recoverable amount of the intangible asset at reporting date, which exceeded
the carrying value by using the forecast cash flows focusing on profitability and constant gross profit margins which have been maintained.
Licenses
The licenses relate to ServiceNow licences purchased during the reporting period, which is a service management software.These licenses have a
useful life of three years based on the license agreement, which commenced on 1 July 2018.
3. Trade receivables
During the current year the head office which was previously an investment holding company became operational. The operations have contributed to
the increase in the trade receivables amount.
Forty one percent of the Group's trade receivables stems from Head office. The credit risk for this segment has been assessed as low by the
divisional management as the majority of the receivables are classified as current and based on the recent payment history of the debtors.
Thirty one percent of the Group's trade receivables stem from the Group's security segment. The credit risk for this segment has been assessed as low
by the divisional management based on the ageing of the receivables (majority of the receivables are classified as current) and the recent payment
history.
Eight percent of the Group's trade receivables stem from sales within the Unified communications segment. The credit risk for this segment has been
assessed as low by the divisional management as the majority of the receivables are less than 60 days overdue and the segment currently has insurance
on receivables.
Eighteen percent of the Group's trade receivables stem from sales within the healthcare and support segment. These sales are predominantly to state
institutions and the recoverability of these customers are extremely good. The credit risk has been assessed as low by divisional management at
year-end based on recent payment history. Credit concentration is high as sales are to a few customers. However, these are mainly public sector
clients and there have been low defaults in the past.
Two percent of the Group's trade receivables stem from sales within the software and consulting segment. The credit risk for this segment has been
assessed as low by divisional management based on the recent payment history of the debtors.
Trade and other receivables impaired
As of 31 August 2018, an allowance for credit losses of R7.352m (2017: R 5.674m) was recognised on an overall trade debtors book of R143m.
In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date
credit was initially granted up to the reporting date.
Fair value of trade and other receivables
The fair value of trade and other receivables approximates their carrying value due to the short-term nature.
4. Financial assets
The Group invested in a variety of funds particularly in an enterprise supplier development fund and in a private diversified portfolio fund for
better returns. The financial assets consist of loans receivable and other financial assets.
Non Current assets
Other financial assets 6,890 747
Current assets
Loans receivable 4,464 19,266
Other financial assets 88,827 -
5. Share capital
On 21 December 2017, the Group listed on the JSE. Prior to the listing, the Company issued 31 960 000 shares to a B-BBEE Consortium at an issue
price of R1.50 per share as per the circular issued on 27 November 2017. Share issue costs were incurred on listing, which were made up of sponsor
and placement fees.
6. Trade payables
The trade and payables amount increased as a result of the operating activities of the holding company. Head office was previously an investment
holding company and became operational during the last quarter of the financial year. The operations have contributed to the increase in the trade
and other payables amount. Head office has amount of about R45m as their trade payables.
The average credit period on purchases of certain goods is between 30 - 45 days. No interest is charged on trade payables. The Group has financial
risk management policies in place to ensure that all payables are paid within a reasonable time in terms of the credit frame. The fair value of
trade and other payables approximates its carrying value due to its short-term nature.
7. Financial liabilities
The financial liabilities comprise of loans provided to the Group by shareholders.
Non Current liabilities
Other financial liabilities - 50
Current liabilities
Loans payable 1,133 5,692
Loans from shareholders 5,000
8. Revenue
Revenue improved as a result of the company becoming operational during last quarter of the financial year and also factoring the organic growth from
the existing segments.
9. Material non-operating expenditure
During the year the Group incurred material non-operating costs namely an adjustment of equity-settled share-based payment, listing fees, goodwill
impairment and warranty expenditure as a result of the Company's listing as well as the disposal of its interest in a subsidiary.
Prior to listing, the Company issued 31 960 000 shares to a B-BBEE Consortium at an issue price of R1.50 per share as per the circular issued on
27 November 2017. The shares were issued for cash and the B-BBEE Consortium is restricted from the selling the shares for a period of 5 years from
the issue date. The fair value of the shares at the date of issuance was R1.87, which was determined using the discounted cash flow valuation
technique. In line with IFRS 2, an adjustment of R11.809m was recognised to account for the difference between the issue price and the fair value of
the shares. The adjustment was recognised as an expense in the Statement of Comprehensive Income, with the contra recognised directly in equity.
The other costs were incurred directly for the listing. Costs of approximately R78m incurred on listing were capitalised to share capital.
The warranty expenses relates to the acquisition of a subsidiary acquired in 2017.
R'000
Equity-settled share-based payment 11,809
Warranty expense 4,239
Goodwill impairment 4,957
Listing costs expensed 6,831
27,836
Significant events during the reporting period
1. Equity based share payment:
AYO issued 31 960 000 shares at an issue price of R1.50 per share to a B-BBEE Consortium prior to its listing.
2. Listing on the JSE:
AYO listed on the JSE on 21 December 2017, resulting in the issued share capital increasing from 244 342 539 to 344 125 194.
3. Changes in the Board of directors and company secretary
Messrs. Kevin Hardy and Siphiwe Nodwele have resigned as executive directors of the Company during the current financial year, following which
Ms. Naahied Gamieldien was appointed as acting chief executive officer.
Dr. Wallace Mgoqi, Dr. Dennis George, Mr. Sello Rasethaba and Ms. Rosemary Mosia were appointed as independent non-executive directors to the
Board of AYO, following the resignation of Messrs. Khalid Abdulla, Walter Madzonga, Telang Ntsasa and Ms. Mbuso Khoza from the Board. Mr. Salim Young
has stepped down as the independent non-executive chairman of the Board but remains an independent non-executive director. The board subsequently
approved the appointment of Dr. Mgoqi as chairman of the Board.
Ms. Nobulungisa Mbaliseli resigned as the company secretary of AYO on 20 August 2018. Ms. Rodanchia Nock was appointed as the company secretary of
AYO on 12 November 2018.
Events after the reporting period
AYO entered into a binding offer agreement with Loxisource Proprietary Limited and Alexisource Proprietary Limited to acquire 55% of the share capital
of Zaloserve. Zaloserve is an investment holding company which is the sole shareholder of Opiwize Proprietary Limited,
which in turn holds 100% in Sizwe Africa IT Proprietary Limited.
As per IFRS 3 B64 the acquisition is supposed to be disclosed as a business combination but due to the fact that the timing between when the deal was
finalised and the issue date of the financial statements initial accounting for a business combination was incomplete.
On 21 August 2018, the Board of Directors approved the Company entering into a joint venture with the Vunani Group an independent managed diversified
financial services group. The formation of a R100 million fintech joint venture to expand the fintech platform and financial services activities of
Vunani further diversifying the portfolio of AYO.
Basis of preparation
The summarised consolidated annual financial statements are prepared in accordance with the JSE Limited ("JSE")Listings Requirements for provisional
reports and the requirements of the Companies Act of South Africa, 2008 as amended. The JSE requires provisional reports to be prepared in accordance
with the framework concepts, the measurement and recognition requirements of International Financial Reporting Standards ("IFRS"), the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards
Council and also that they, as a minimum, contain the information required by IAS 34 'Interim Financial Reporting'. The accounting policies applied in
the preparation of the summarised consolidated annual financial statements are in terms of IFRS and are consistent with the accounting policies applied
in the preparation of the previous audited consolidated annual financial statements.
This summarised report is extracted from the reviewed consolidated financial statements but is not itself audited.
The summarised consolidated annual financial statements were prepared under the supervision of the Group chief financial officer, Ms. Naahied Gamieldien.
The external auditor, BDO, reviewed the provisional condensed consolidated statement of financial position of AYO as at 31 August 2018 and the related
condensed consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, and other explanatory notes.
The review has been conducted in accordance with the International Standard on Review Engagements 2410. Copies of the unqualified report of BDO are
available for inspection at the registered office of the Company. The independent reviewer's report does not necessarily report on all of the
information contained in this announcement. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the
auditor's engagement they should obtain a copy of the auditor's report together with the accompanying financial information from the Company's
registered office. The directors take full responsibility for the preparation of the summarised consolidated annual financial statements which has been
extracted without adjustment from the underlying reviewed consolidated annual financial statements.
Any reference to future financial performance included in this announcement is the responsibility of the directors and has not been reviewed or
reported on by the Company's auditors.
Use of judgments and estimates
In preparing these summarised annual financial statements, management has made judgments, estimates and assumptions that affect the application of the
accounting policies and the reported amounts of assets and liabilities, income and expenses. Due to the assumptions and judgments, actual results may
differ from these estimates.
The significant judgments made by management in applying the Group's accounting policies and the key sources of estimation uncertainty are consistent
with those applied to the reviewed consolidated financial statements for the year ended 31 August 2018.
Prospects
AYO's acquisition strategy is on track to complement and augment its current businesses, the alliance with partners as well as enhance its vertical
industry "Go to Market" strategy.
The directors are excited about the future prospects. At the reporting date, the group is in a strong position to utilize the R4,3bln available cash for
further value creating acquisitions as a significant increase in deal flow is being experienced.
Current target companies have been engaged in three key focus areas, being disruptive IT platform services, digital transformation and specific
industry vertical expertise. AYO's Digital Ecosystem will focus on these areas through, AYO Platforms, AYO Digital and AYO Industries.
Divisionally, we expect to be reporting under these focus areas in the future.
AYO Platforms will focus on attracting disruptive platform businesses which will give customers the ability to source various, data, network,
communications and security services through various consumption models including on-premise, hybrid and cloud.
AYO Digital is building distinct areas of expertise including Internet of Things (IOT) Platforms, Big Data Analytics, Artificial Intelligence (AI) and
Business Process Innovation and Transformation skills. AYO is in advanced discussions with target companies who are recognised leaders in this field.
AYO Industries is focused on attracting companies that have leading offerings and significant contracts in particular vertical industries. In the
short-term, the Company will be looking to add to its already comprehensive intellectual property in the health, mining, oil and gas industries with
additional competencies in the financial services and public sector verticals. AYO is in advanced discussions with targets in each of these industries.
On the successful completion of certain acquisitions, AYO will be strongly positioned to win significant market share in its industry and to challenge
and disrupt the ICT landscape that has been dominated by the same brands.
Through the above strategies, AYO's product and service portfolio and Digital Ecosystem, should be able to service a substantial customer base and
capture 5 - 8% of the South African market by 2022. Management remains confident that the forecasts in the PLS for 2019 remain achievable with new
contracts and the expected acquisitions that AYO will be announcing in due course. The exciting growth prospects that these target businesses will enjoy
within the AYO Digital Ecosystem will have a compounding effect on the Company's organic growth through to 2019 and beyond.
The Group's auditors have not reviewed nor reported on any comments relating to this announcement.
Dividends
R'000 R'000
Dividend declared after reporting date* 103 238 -
Dividends per share (cents) 30 -
*These dividends were declared subsequent to the annual financial year-end.
CASH DIVIDEND DECLARATION
The Board of directors are pleased to announce that it has approved and declared a gross final dividend of 30 cents per share for the year ended
31 August 2018 from income reserves. The final dividend amount, net of South African dividend tax of 20%, which equates to 6 cents per share, is
therefore 24 cents per share for those shareholders that are not exempt from dividend tax.
The number of ordinary shares in issue at the declaration date is 344 125 194 and the income tax number of the Company is 9389007031.
The salient dates of the dividend distribution are as follows:
Gross dividend (cents per share) 30.00
Dividend net of dividend withholding tax (cents per share) 24.00
Announcement date Monday, 12 November 2018
Last date to trade cum dividend Tuesday, 27 November 2018
Trading ex-dividend commences Wednesday, 28 November 2018
Record date Friday, 30 November 2018
Date of payment Monday, 3 December 2018
Share certificates may not be dematerialized between Wednesday, 28 November 2018 and Friday, 30 November 2018, both days inclusive.
Appreciation
We wish to thank our employees, Group executives, management, our Board of directors as well as our strategic partners, stakeholders and business
partners for their loyalty and dedication in contributing to the success of the Group.
Dr. Wallace Mgoqi Ms. Naahied Gamieldien
Independent non-executive chairman Acting chief executive officer
Cape Town
12 November 2018
Directors: Dr. WA Mgoqi (chairman)*#, N Gamieldien (Acting chief executive officer & chief financial officer), S Young, CF Hendricks*,
AB Amod*#, Advocate Dr NA Ramatlhodi*#, Dr. DH George*#, RP Mosia*# and SM Rasethaba*#
* non-executive
# independent
Company secretary: R Nock
Rodanchia.nock@ayotsl.com
Registered address: Quay 7, East Pier, V&A Waterfront, Cape Town 8001
Email: info@ayotsl.com
Transfer secretaries: Link Market Services South Africa Proprietary Limited
13th Floor, 19 Ameshoff Street, Braamfonein, 2001
Auditors: BDO Cape Incorporated
6th Floor, 123 Hertzog Boulevard, Cape Town, 8001
(PO Box 2275, Cape Town, 8000)
Sponsor: PSG Capital Proprietary Limited
1st Floor, Ou Kollege Building, 35 Kerk Street, Stellenbosch, 7600
Date: 12/11/2018 05:50:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
