AYO’s Financial Shock: Projected 200% Surge in Losses Sends Ripples Through Markets

  • Anticipated Losses: AYO projects a substantial increase in losses, with LPS and HLPS expected to surge by 121%-204%.
  • Contributing Factors: Decreased gross margins, lower fair value adjustments, derecognition of derivatives, and loan impairments are key contributors.
  • Auditor Caution: Financial information hasn't been audited, emphasizing the preliminary nature of the disclosed figures.
By Lethabo Ntsoane

AYO TECHNOLOGY SOLUTIONS LIMITED has released a trading statement revealing anticipated financial results for the year ending 31 August 2023. The statement, in accordance with JSE Listings Requirements, indicates a substantial increase in both basic and headline losses per share (LPS and HLPS) compared to the previous corresponding period.

Financial Projections

AYO projects a basic loss per share ranging between 173,60 and 189,32 cents, reflecting a significant surge of 121% to 141% when compared to the LPS of 78,60 cents reported for the fiscal year ending 31 August 2022. Similarly, the headline loss per share is expected to fall between 171,36 and 183,41 cents, indicating a remarkable increase of 184% to 204% from the HLPS of 60,25 cents reported in the previous financial period.

Factors Behind the Losses

The substantial increase in losses is primarily attributed to several key factors impacting the group’s financial performance:

  1. Gross Margin Decrease: AYO cites a decrease in gross margins across subsidiaries as a significant contributor to the anticipated losses.
  2. Fair Value Adjustments: Lower fair value adjustments on investments have also played a role in the challenging financial outlook.
  3. Derecognition of Derivatives: The trading statement mentions the derecognition of derivatives as a contributing factor to the expected losses.
  4. Impairment of Loans: AYO reports the impairment of loans as another element impacting the group’s financial health.

Auditor Confirmation

The financial information provided in the trading statement has not undergone review or reporting by AYO’s auditors, emphasizing the preliminary nature of the disclosed figures. Investors are advised to await the official audited financial results for a more comprehensive and accurate assessment.

Financial Results Release

The official audited financial results for the year ending 31 August 2023 are scheduled for release on SENS (Stock Exchange News Service) on or about 1 December 2023. The release is highly anticipated as it will provide a detailed analysis and insights into the specific areas contributing to the group’s challenging financial performance.

Conclusion

AYO TECHNOLOGY SOLUTIONS LIMITED’s trading statement paints a challenging financial picture for the fiscal year 2023. The official release of audited financial results in the coming days will provide a more detailed understanding of the specific challenges faced by the group and its strategies for moving forward in the South African market.

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Lethabo Ntsoane

Lethabo Ntsoane holds a Bachelors Degree in Accounting from the University of South Africa. He is a Financial Product commentator at Rateweb. He is an expect financial product analyst with years of experience in reviewing products and offering commentary. Lethabo majors in financial news, reviews and financial tips. He can be contacted: Email: lethabo@rateweb.co.za Twitter: @NtsoaneLethabo