Teddy Daka, the boss of JSE-listed Etion, is looking to take the company internationally as he aims to cut business risks associated with slower growth in South Africa.
The diversified digital technology company is seeking expansion opportunities in Latin America and South-East Asia. It is already testing its Internet of Things (IoT) solutions in those markets.
Etion is using lean startups to test its IoT solutions in Latin America and South-East Asia.
The aim is to support the sustainable long-term growth of its fast-growing business unit, Etion Create and Etion Secure (LAWTrust).
“There’s an opportunity, nonetheless, by internationalising and we think this will create a natural hedge in the business,” Daka told TechFinancials in a Zoom meeting call.
“We are betting on international markets, and that decision, of course, doesn’t mean we are not betting on South Africa. We are de-risking South Africa. We are augmenting growth with international markets.”
As a result, Etion said it is busy exploring growth opportunities for Etion Create in Indonesia and Mexico.
Etion Create specialises in the design, manufacturing, integration, and support of advanced technology.
In short, Etion Create is one of the world’s leading Original Design Manufacturing companies. It embraces this new world of IoT technologies, big data and the cloud, with the skills and commitment to software excellence, creating the right platforms for collecting, analysing and understanding information crucial to your business.
“The demand for digitisation presents good opportunities for Etion Create and Etion Secure,” says Daka.
The company is also eyeing growth opportunities for Etion Secure or LAWTrust.
Christi Maherry, CEO of Etion Secure, told TechFinancials that the major driver for opportunities for LAWTrust is that the world has to adapt to remote working during COVID-19.
“As a company, we provide services for on-boarding, ID proofing, cryptography, biometrics and digital signatures. LAWTrust is also part of a globally certified trust centre providing trust services. This has opened the door to taking the business internationally,” says Maherry.
He adds that there is a huge opportunity for LAWTrust to set up a trust centre in Saudi Arabia.
“The project has been going well. We see the rest of the Middle East by similar ground.”
Meanwhile, Etion reported a 4% decline in revenue to R572.9 million for the year to end-March 2020.
The group reported R64 million in one-off costs as it wrote down inventory and retrenched staff amid a reorganisation of its businesses. The company also reported an after-tax loss of R36.1 million, from a loss of R2.7 million previously.
The group’s headline loss per share came in at 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,” the group said.
The group said it made encouraging progress, albeit from a low base, in its international expansion strategy and grew its cybersecurity offering through the acquisition of LAWTrust.
Etion’s normalised profit increased to R17.1 million.
“We benefited from the strong financial performance of LAWTrust, while Etion Create remained cash-generative and continued to invest in new IP and international expansion for future growth, despite lengthy delays in major project awards,” says Daka.
Digitalisation and automation of services is a survival and growth strategy for many businesses, particularly in an economic recession, because it reduces cost and improves efficiency.
“As businesses adopt these fast-evolving technologies, their need for cybersecurity, governance and accountability enforced by digital signatures increases. Etion Secure is well-positioned to capitalise on these related trends in domestic and international markets,” Daka explains.
“Being the first trusted signature service provider to enable easy-to-enrol, high-assurance public signatures in global markets will give Etion Secure a significant competitive advantage.”