Etion’s interim earnings drop by more than 10%

JSE- LISTED technology investment company Etion yesterday saw its interim earnings fall 10.31 percent, knocked by reduced customer demand in Etion Connect due to the Covid- 19 lockdown. Its headline earnings per share and earnings per share for the six months to end September both declined to 0.87 cents a share, down from last year’s 0.97c.

The group is invested in three businesses, which are Etion Connect, Etion Create and Etion Secure, formerly Lawtrust. It said Etion Digitise remained a division within the holding company to provide ongoing support to its previous customers.

Group revenue was down by 20 percent to R247.4 million, mainly attributable to the R50m decrease in Connect due to reduced customer demand during the Covid- 19 hard lockdown from the end of March until the end of May.

Profits declined by 9.18 percent to R4.94m and cash and cash equivalents declined by 17 percent to R59.3m.

In Etion Secure, revenue was down by 4 percent to R109.4m and segment profit declined by 1 percent to R20.6m.

Secure contributes 44 percent to the group revenue while its segment profit contributes 87 percent to the group’s profit.

Etion, said digital sales and requests to partner with Secure had seen a sharp increase as Covid- 19 emphasised the need for secure digital solutions and accelerated the work from home trend.

“Secure has received increased partnership requests from African countries as well as from the US while Middle East market demand continues to increase,” the group said.

In Etion Create, segment revenue was flat at R84.3m and segment profit fell by 159 percent to a loss of R2.9m and the group said it was negatively impacted by the lower margins associated with projects executed during the period.

Create contributes 24 percent to group revenue while its segment profits makes up of 12 percent of the group’s profit.

Etion said due to the global impacts of Covid- 19, opportunities arising from the Middle East, South America and Southeast Asia within the IOT market proved challenging to realise.

“As a result, project revenues have been delayed. However, development orders have been received from the Middle East and United Arab Emirates,” the group said.

The group said profitability improved following the strategic review of the business and implementation of cost savings initiatives.