Etion sees decline in fibre to homes and offices
JSE-listed digital technology group Etion on Thursday (13 August) reported a decline in revenue for the year ended March 2020, while extending its losses and citing a slump in demand for installation of fibre to homes and offices in South Africa.
Formerly Ansys, Etion saw revenue decline by 4% to R572.9 million, while it reported an after tax loss of R36.1 million, from a prior loss of R2.7 million.
The group reported a headline loss per share of 0.87 cents, from a prior loss of 0.53 cents per share.
“The past financial year tested Etion’s resilience in extremely challenging operating conditions, with significant once-off operating costs being incurred following the strategic reorganisation of the Safety and Productivity Solutions and Digital Network Solutions businesses,” it said.
The group said it made encouraging progress, albeit from a low base, in its international expansion strategy and grew its cyber security offering through the acquisition of LAWTrust.
Etion Digitise and Etion Connect were heavily impacted by sustained economic weakness in South Africa, even before the impact of Covid-19 in March 2020, it said.
“The economically driven slump in demand for installation of fibre to homes and offices since 2017 caused a three-year decline in Etion Connect’s revenue, making its cost base unsustainable in the current environment. Etion Connect’s profit margin was impacted by competition and the rising cost of imported components due to the rand’s steady decline.
“Although the customer base was diversified and costs realigned, revenue generation remained a major challenge in a low-growth, highly competitive market, where the realisation of growth depends on economic recovery.”
Within this context, management proactively initiated a strategic review of Etion Connect.
Looking ahead, Etion said that while the challenges ahead are significant, “we have established the foundation for sustainable growth by preparing our businesses for leaner, less predictable times, while ensuring we capitalise on growth opportunities, particularly in international markets”.
Key focus areas are:
- Sustaining Etion post-Covid-19.
- Growing shareholder value.
- Investments in lean start-up minimum viable products in the IoT market in Latin America and Southeast Asia and tactical navigation and cyber security markets in the Middle East contributed positively to customer engagement, and the potential for substantial additional future opportunities for Etion Create.
- Incorporation of Etion Digitise into Etion Create provides opportunities to the group with a base from which to expand its offerings through upgrades, feature enhancements and improved integration of the offerings.
- Approved capital allocation to Etion Connect to return the business to profitability at a smaller scale.
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