After plunging into the red earlier this year, JSE-listed Etion returned to profitability during the first half of the 2020 financial year as some of its initiatives started bearing fruit.

Headline earnings a share and earnings a share for the six months ended September 30 surged to 0.97c, a 294% improvement on the loss of 0.5c a share reported in the corresponding period last year.

The first-half turnaround followed a significant downturn in South Africa’s economic environment, which plunged the group into the red for the financial year ended March 31.

“Our focus on integrating the LawTrust acquisition, reducing the cost base and implementing our strategy has resulted in a significant improvement in our performance,” says Etion CEO Teddy Daka, adding that the company’s international strategy contributed significantly to the turnaround.

The group improved its working capital by reducing inventory and tightly managed capital allocation during the period under review.

“We have enhanced our cash generation and moved from making a loss to achieving a profit after tax of R5.4-million,” he continues.

Profit after tax was up 325% to R5.4-million, while earnings before interest, taxes, depreciation and amortisation increased by 152.8% to R22.5-million.

Etion earned revenue of R308.6-million, an increase of 14.7% year-on-year, owing to the impact of consolidating the results of Secure for a full six months and increased revenue realised from the internationalisation strategy.

The group’s focus on extracting operational efficiencies, costs and increased focus on managing working capital contributed to the significantly improved cash and cash equivalents position of R71.7-million.

This was an increase of 307% when compared with the first half of the 2018 financial year and 91% when compared with the first half of the 2019 financial year.

Etion Create’s revenue decreased by 19% to R84.2-million as anticipated orders were delayed in the defence sector.

During the first six months of the year, Etion Digitise recorded a 50% increase in revenue to R22.3-million, while Etion Secure increased its revenue to R114.1-million.

Revenue from Etion Connect contracted 15% to R102.2-million.

The Middle East is Etion’s second-largest market outside of South Africa, with potential for further growth, while sub-Saharan Africa has been earmarked as a new growth market with good opportunities in safety, cybersecurity and frictionless operations, digitalisation of operations and the drive towards e-government.