AYO’s inorganic growth objectives have not changed since our listing in late 2017. We pursue diversification into new, niche, fast-growing and high-margin ITC market segments via targeted acquisition strategy.

In the past year, AYO purchased:

• A controlling (55%) stake in Sizwe Africa IT Proprietary Limited – an important player in the ICT infrastructure space (which as mentioned is a segment with very positive growth outlook in the short and medium-term) as well as the data storage and server space (another fast-growing segment fuelled by the popularisation of data storage outsourcing).
• 40% interest in SGT Solutions Proprietary Limited – a turnkey solutions integrator providing multitechnology communications systems for mobile broadband and networking with an impressive client list including mobile network operators, large multinational businesses and SOEs.
• 24% interest in Global Command and Control Technologies – a company specialising in developing niche technologies for the military, defence and navy domains, as well as security and private commercial enterprises.

We also concluded the acquisition of 43% equity interest in Puleng Technologies, increasing AYO’s shareholding in the company to 100%.

Looking forward:

We will continue to actively seek and acquire an interest in progressive ICT businesses to further diversify our Group’s portfolio, and industries reach. Our guiding principles for our acquisition strategy are:

• Pricing: AYO does not overpay for acquisitions. We determine fair pricing through due diligence.
• Client Portfolio: The future growth and earnings of a company are directly related to the industries in which its clients operate. We focus on acquisitions that open new industry verticals for the whole Group.
• Strategic Fit: Through acquisitions, we strive to penetrate niche ICT segments, where we currently do not have operations and capabilities. This way, we can quickly increase our market share and diversify our offerings.
• Profitability and Earnings Outlook: We assess the viability of potential acquisitions through strict inspection of past financial performance, profitability and revenue outlook going forward.

Key risks in implementing this strategy:

Penetration into the local ICT market through acquisition of operational, scalable and profitable growing companies has been adopted as a strategic business model by a number of large international players. This increased competition may lead to over-bidding and ultimately over-paying for auspicious subsidiary targets. We acknowledge the importance of due diligence in the acquisition process, to avoid the risk of errors by both omission and misinterpretation, and strictly adhere to our integrated risk management model during the evaluation.

The quality of our operations, from how well we manage our resources to how efficient we are in what we do, directly impacts on our financial and non-financial performance. Therefore, operational excellence is imperative in our business.

During the reporting period, we:

• Appointed a new executive management team which in a short space of time has managed to align our internal processes to our vision, thus enabling us to deliver on our strategy and commitments.
• Improved and streamlined many of our internal processes (including risk assessment, financial reporting and internal auditing amongst others) and introduced standard policies and operating procedures to prepare ourselves to operate more efficiently as we grow as a business.
• Hired new employees in response to the increased capacity requirements on our business that come with new contracts and growth we achieved during the period.

Looking forward:

In 2020 we will continue to focus on “doing the right things well” with critical priorities being:

• Carefully managing our resources – both financial and other resources.
• Hiring talent of the right skill and expertise to address the growing requirements of the business.
• Implementing green initiatives to reduce waste of natural resources.
• Implement technologies that streamline our operations.

Key risks in implementing this strategy:

It is very important for a business to manage the fine balance between building up capacity for growth and over-investing in the process. We are cognisant of this fact and carefully measure up the size of each opportunity we pursue to the associated cost for the business. Our Board plays an active role in evaluating how we manage resources and ensures that we invest responsibly and operate cost-effectively.

Solid relationships with clients, subsidiaries and suppliers have been the cornerstone of AYO’s strategy since inception. We believe that the value we create through collaboration is far higher than every single organisation can deliver on its own.

On this note, we are happy to report that the contract we commenced at the beginning of the reporting period with a large multinational oil and gas client has given AYO not just significant revenue growth but also another solid partner for our stable.

Looking forward:

Our focus areas for 2020 are to:

• Preserve existing and pursue future relationships with large organisational clients that drive organic growth and consistency of revenues.
• Preserve existing and pursue more partnerships with leading international suppliers, including Microsoft Corporation, Cisco Corporation, Oracle, Amazon Web Services and others that will provide us with continuous access to the latest global technologies.
• Create a robust collaborative platform for our subsidiaries to encourage knowledge sharing and cross-pollination of technologies across industry verticals.

Key risks in implementing this strategy:

While we strive to acquire subsidiaries based on their niche expertise in a specific ICT field, which fosters value creation through collaboration within the Group, we acknowledge that some skill overlap will inevitably exist, which may lead to competition amongst partners. Thus, we base all significant partnerships and collaborations in written agreements, stipulating each party’s contribution, agreed mutual benefits and collaborative advantage.

Without the correct leadership, a company cannot create value. To deliver on the commitments, we’ve made to our stakeholders, in 2019 we appointed a new executive management team. With a combination of diverse professional backgrounds and soft skills, this new executive team has quickly identified the company’s strengths and areas needing improvement and implemented changes to prepare us for accelerated growth in the short and medium-term. Changes were also made to our Board, and we are now confident that AYO is guided by a team of directors with the requisite knowledge, skills and industry experience, as well as impeccable business and personal reputation.

Looking forward:

Looking forward to 2020 we will:

• Continue our emphasis on ethical and transparent governance with regular Board communications.
• Continue to streamline our internal auditing process to ensure our governance complies with all regulations and proactively adhere to relevant rules.
• Increase and improve communications with all stakeholders to both inform and seek feedback and suggestions.

Key risks in implementing this strategy:

Amplified communications, particularly financial ones as they are subject to high level of legal requirements, carry heightened compliance risk. Miscommunication or erroneous messaging has the ability to impact share price, brand reputation and other company valuation metrics.

Our focus on intensified communications in 2020 will be subject to strict compliance verification with close cooperation between our communications and risk management/compliance teams facilitated by the office of corporate affairs.

We recognise that proactivity is required to ensure a steady supply of fitting talent, especially as new roles with scarce skill requirements are introduced in our fast-growing business. We seek to create a rich talent pipeline through skills development and opportunity creation, providing the stepping stones for our employees and potential employees to gain productive employment, training and experience. With abundant skills and personal development prospects, continually improving employee value proposition and better corporate brand positioning, we aim to become an employer of choice in the ICT industry.

Looking forward:

Our key deliverables for 2020 in this regard include:

• Continual focus on talent and skills development within the Company and in our communities through the AYO Academy.
• Facilitation of varied and consistent opportunities for re-skilling and up-skilling staff in both technical and soft skills for positive impact on employees’ overall well-being and prospects.
• Continual improvements to our employee value proposition to become the ICT employer of choice.

Key risks in implementing this strategy:

Investment in staff development is inherently a long term endeavour and carries an associated risk while appearing as a significant trade-off in the short term. We acknowledge that risk but are of the view that an investment in people is always a positive investment and are confident that our strong employee value proposition and focused corporate communications will catapult AYO into the coveted ICT employer of choice position, thus mitigating the risk of high staff turnover.