On 20 December 2019 Ayo Technology Solutions released an interim set of financial statements for the year to the end of August.<\/p>\n
It coyly noted that an unnamed \u201csignificant customer\u201d had \u201cpurported\u201d to cancel its deal with Ayo, giving the embattled company a six-month notice period, set to run out at the end of March 2020.<\/p>\n
The significant customer is Sasol and the deal is a seven-year contract worth R2.3-billion that has been providing a huge chunk of Ayo\u2019s income.<\/p>\n
Ayo is already defending a high court bid by the Public Investment Corporation (PIC) to claw back the R4.3-billion invested in Ayo\u2019s controversial \u201cprivate placement\u201d, which the public pension fund manager now alleges took place under false pretences.<\/p>\n
Clinching the Sasol deal was ostensibly the whole reason that the listing of Ayo had to be rushed through in December 2017 \u2013 causing the PIC to flagrantly upend its usual due process to invest R4.3-billion for overvalued shares, now worth only R131-million at Monday\u2019s share price.<\/p>\n
The PIC claims the investment was irregularly approved by among others its former CEO Dan Matjila.<\/p>\n
Sasol\u2019s identity as the\u00a0 <\/span>\u201csignificant customer\u201d is thinly disguised in Ayo\u2019s financials, which have yet to be fully audited,.<\/p>\n They mention that Ayo and the customer \u201cconcluded an ICT Master Service Agreement in May 2018 whereby Ayo would render to the significant customer a host of ICT services effective from 1 July 2018\u201d.<\/p>\n Those dates correspond exactly to the jubilant announcement of the Sasol deal in the Independent News and Media newspapers controlled by Surv\u00e9. The papers also called it a \u201cmaster services agreement\u201d.<\/p>\n An insider with extensive knowledge of Ayo\u2019s workings confirmed that \u201cit\u2019s definitely Sasol\u201d.<\/p>\n In sworn testimony before the Mpati Commission of Inquiry<\/a> into the affairs of the PIC, Surv\u00e9 himself said<\/a> that Sasol was the reason for Ayo embarking on an \u201caccelerated listing\u201d.<\/p>\n Former Ayo chief executive Kevin Hardy similarly testified at the commission that<\/p>\n \u201cSasol was instrumental in the process and to the value of Ayo.\u201d<\/p>\n Hardy told the commission the contract went live with Sasol in July of 2018, again matching the date given for Ayo\u2019s \u201csignificant customer\u201d that is now trying to get out of its contract.<\/p>\n Ayo\u2019s financials state that Ayo \u201cdisputes this significant customer\u2019s right to cancel the agreement\u201d and that it has invoked the arbitrations provisions under the agreement.<\/p>\n Sasol declined to comment. \u201c<\/span>Please will you contact Ayo in respect of their disclosures,\u201d spokesperson Matebello Motloung said in response to amaBhungane\u2019s questions.<\/p>\n Ayo, by way of spokesperson Kaz Henderson, said that it \u201cis currently not able to reveal who the client is or comment as the matter is following due process\u201d.<\/p>\n Losing Sasol would be a major blow.<\/p>\n When Ayo listed, it had two major plans on the horizon. It was going to spend R1-billion of the PIC\u2019s money buying a 30% share in British Telecoms South Africa (BTSA) from its own parent company, the Surv\u00e9-controlled African Equity Empowerment Investments (AEEI).<\/p>\n Surv\u00e9 family investment company Sekunjalo Investment Holdings owns 60% of AEEI.<\/p>\n After acquiring the BTSA stake, Ayo was going to conclude a parallel \u201calliance agreement\u201d with BTSA whereby Ayo would bid for the Sasol work using BTSA as its subcontractor. Sasol was already a BTSA client, but the new arrangement still had to go through a bidding process with six other companies in the running.<\/p>\n The alliance agreement went ahead, but BTSA baulked at the sale of its shares to Ayo after the first negative reports about the PIC investment started appearing in media. It is the Sasol work being done in terms of this alliance agreement that Ayo now stands to lose.<\/p>\n In the interim financials, Ayo disclosed that a significant portion of its increased earnings flowed from \u201cthe contract with a multinational company [commencing] in July 2018\u201d.<\/p>\n \u201cRevenue of R430-million was generated in relation to this contract, of which the gross margin amounted to R121-million.\u201d<\/p>\n At the Mpati commission, Hardy said that there was panic about getting the Sasol job clinched.<\/p>\n \u201cThe business was heading towards its first reporting period at the end of March 2018 and there were concerns that we had not closed the Sasol deal yet and that we needed to announce something positive to the market to justify the investment the PIC had made,\u201d he said.<\/p>\n \u201cUnfortunately due to all the media noise, Sasol were also getting nervous about the contract to the extent that we were sent a note by Sasol putting the contract on hold until further notice\u2026 [N]umerous emails were written and commitments made to Sasol. Sasol would not allow Ayo to announce the deal until all their concerns had been addressed.\u201d<\/p>\n Losing its most prominent customer is just the latest in a series of set-backs for the company.<\/p>\n Like this story? Be an amaB Supporter<\/a> <\/span>to help us do more. Sign up for our newsletter<\/a><\/span> to get more.<\/em><\/p>\n Ayo has also lost its auditor, BDO, which decided to abandon ship at a number of Sekunjalo companies late last year. The Financial Services Conduct Authority has also raided the major Sekunjalo companies\u2019 offices, including Ayo, in relation to apparent share price manipulation.<\/p>\n Worst of all, the PIC is suing to get its entire R4.3-billion back, with interest, while Ayo has only R3.68-billion cash left after making a number of acquisitions, paying out R221-million in dividends as well as making a number of loans to related companies.<\/p>\n Another R55-million in dividends was declared in the new financial report while Ayo also announced some new acquisitions made after the end of the period covered by the financials.<\/p>\n AEEI released its own financial statements on the same day as Ayo and it appears that the Ayo dividend is simply being passed on to AEEI shareholders. AEEI, which owns 49% of Ayo, declared a dividend of R29.5 million, 60% of which goes to the Surv\u00e9 family, via Sekunjalo.<\/p>\n *Additional reporting by Sam Sole<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" Iqbal Surv\u00e9\u2019s Ayo Technology Solutions already faces an existential threat from the PIC and now has to contend with a new blow \u2013 its most important client, Sasol, is running for the hills.<\/p>\n","protected":false},"author":8,"featured_media":21602,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2],"tags":[288,126,256,52,289,49,290,259],"class_list":["post-10470","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stories","tag-aeei","tag-ayo","tag-independent-group","tag-iqbal-surve","tag-mpati-commission","tag-pic","tag-sasol","tag-sekunjalo"],"acf":[],"_links":{"self":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/10470","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/comments?post=10470"}],"version-history":[{"count":1,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/10470\/revisions"}],"predecessor-version":[{"id":30271,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/10470\/revisions\/30271"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/media\/21602"}],"wp:attachment":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/media?parent=10470"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/categories?post=10470"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/tags?post=10470"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n