Improved specialist group Etion ‘secures’ a return to profitability

SPECIALIST technology group Etion returned to profitability in the six months to end September after an improved operational performance, boosted by its division Etion Secure.

Its profit after tax improved by 325 percent to R5.4 million from a loss of R2.4m compared to last year.

Chief executive Teddy Daka said yesterday that the group’s focus on integrating the LawTrust acquisition, reducing the cost base and implementing its strategy had resulted in significant performance improvement.

“As promised, we have improved working capital by reducing inventory and have tightly managed capital allocation. We have enhanced our cash generation and moved from making a loss to achieving a profit after tax of R5.4m. We are also seeing the benefits of the investment in our own targeted intellectual property,” Daka said.

Etion acquired cyber-security company LawTrust in 2017 for R108.5m.

Etion Secure was a star performer, contributing 37 percent to the group’s revenue and 85 percent to its profit.

Etion Secure revenue rose to R114.1m due to the increased focus on growing international markets and the impact of consolidating revenue for the full six-month period after its acquisition and generated a segment profit of R20.9m during the period.

The group’s revenue increased by 14.7 percent to R308.6m, driven mainly by consolidating the results of Secure for the full six months and increased revenue realised from the internationalisation strategy.

The group said its performance had benefited from the roll-over of revenue from a key project in the Etion Digitise business, but slow revenue growth from Etion Connect had continued due to reduced project spend from its key clients, who had invested less, due to macro and micro economic factors.

Its earnings before interest, tax, depreciation and amortisation increased by 152.8 percent to R22.5m while headline earnings per share and basic earnings per share surged by 294 percent to 0.97 cents a share.

Etion’s share price closed unchanged at R0.24 yesterday.