JSE-listed Etion reported a decline in net profit to R4.9-million for the six months ended September 30, 2020, from R5.4-million reported in the corresponding six months last year.
The group’s profit before tax increased by 45% from R5.4-million in the first half of 2019 to R7.9-million during the six months under review.
While the diversified digital technology investment holding company’s gross profit declined by R21-million to R85.6-million, the gross profit margin was maintained year-on-year at 34.6%.
Etion, which invests in businesses Etion Connect, Etion Create and Etion Secure, with Digitise as a division within the holding company, reported a 20% decline in revenue from R308.6-million in the half-year to September 2019 to R247.4-million in the current six-month period under review.
This was mostly attributable to a R50-million decrease from Etion Connect owing to reduced customer demand during the Covid-19-related lockdown and subsequent restrictions from the end of March to the end of May.
Further, in line with the group strategy, Digitise scaled down significantly and is no longer a core business unit, resulting in a decrease in revenue of R20.7-million.
However, Etion ended the half-year under review with a total contracted order book of R890-million.
“During the previous financial year, we repositioned Etion as a technology investment company that invests in digital technologies that advance humanity. This shift required that head office streamline its operations and that one of its business units, Etion Digitise, be restructured,” the group said.
The strategic restructures of Digitise in September 2019 and Connect in March 2020, realised respective cost savings of R11.9-million – excluding one-off restructuring costs of R3.7-million – and R6-million.
“In addition, the corporate office reduced its marketing and human resource capabilities to align with the business strategy, which reduced corporate costs by R3.1-million.”
Further, lower rand/dollar volatility and effective hedging contributed to lower forex losses, leading to a 13% increase in operating profit to R11.3-million during the first half of the year.
“There is a clear demand for Create's and Secure's products and services in the global market. This indicates a positive outlook for the group in the medium term with the drive into the Middle East and Africa and other markets.
“All businesses in the group show healthy forward-looking order books, and we remain optimistic about the second half of the financial year,” Daka concludes.