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ETION yesterday returned to profitability in the year to the end of March, boosted by a strong second-half performance after it was negatively impacted by the Covid-19 outbreak in the first half of the financial year.
As a result, the group reported a profit after tax of R52.6 million, an improvement of 245 percent compared with the loss of R36.1m a year earlier.
Etion said the 2021 financial year was one of two distinct halves as the group responded to the effects of the Covid-19 pandemic.
The group reported total comprehensive income of R4.9m at half-year, while the total comprehensive income for the full year was R52.6m.
“All of the businesses emerged stronger during the second half of the financial year as demand for their products and services returned. The group also restructured corporate to align the cost base with that of an investment holding company. The increase in profit after tax was attributable to a combination of revenue growth and cost realignment,” it said.
Revenue increased by 20 percent to R692.1m, up from R572.9m compared to last year. Headline earnings per share rose 1 171 percent to 9.32 cents a share compared with a loss of 0.87c last year.
Etion said during the year it restructured its businesses, Etion Digise and Etion Connect, to align the cost base with their respective business models and related revenue.
“Following the outcome of the strategic review by the Etion board, Etion Digitise was restructured. The non-profitable lines of business were closed down, and the original core rail business operationally consolidated into Etion Create.
“This made strategic sense, as Create, the group’s original design manufacturer, had taken over the core products from a manufacturing and distribution perspective.”
Etion sold its digital trust services and cyber information security solutions company, Lawtrust, to Altron for R245m in April. After the restructuring, the group now consists of three operating businesses, which are Etion Connect,
Etion Create and Etion Secure, as well as a corporate head office.
Looking ahead, Etion said that it experienced a hard lockdown in South Africa from April to May last year, followed by a gradual reopening of the economy.
“During this time, the group undertook a review of all its business units to restructure the cost base, defer investment and conserve cash until a clearer path to an economic recovery became apparent. The results show that this was the right decision, as the group has emerged more focused, leaner and able to capitalise on the opportunities we see to return to growth,” the group said.
Etion shares closed 7.69 percent higher at R0.42 on the JSE yesterday.