Diversified digital technology group, Ansys has announced its annual financial results for the year ending 31 March 2018.
Due in part to challenging trading conditions throughout the year, EBITDA and HEPS are considerably lower than they were in the previous financial period. The decrease in these key indicators is also partly due to the fact that FY2017 was an exceptional year and the business is now experiencing an anticipated correction.
The group, which recently rebranded as Etion, continues to be profitable in accordance with the business transformation and growth strategy introduced in 2012.
More specifically, EBITDA dropped by 46% to R60,7-million in Y2018 (2017: R113,1-million), but nevertheless continued a growth path, with a CAGR of 46% over the past three years. HEPS dropped by 50% to 7.29 cents (2017: 14.72), but earnings also continue to reflect a positive trend with a CAGR of 18% over the past three years.
In contrast, gross margin improved to 28,3% (2017: 26.3%) due to the implementation of an extended product mix and various efficiencies. Tangible net asset value also increased by 22% to 39.9 cents (2017: 32.6 cents) and the group’s liquidity ratio improved from 1.7 to 2.1.
Ansys CEO Teddy Daka says that 2018 results demonstrate the group’s resilience in the face of difficult macroeconomic conditions, which saw several large clients either postpone or cancel orders during the reporting period. They also reflect its successful efforts to improve margins, its stringent cost management measures, and its commitment to delivering meaningful value for its clients through an integrated and expanded solutions-based offering.
Mindful of changing market conditions and customer needs, Ansys has recently restructured and rebranded to create an enhanced platform for future growth. Transitioning from its heritage as a provider of products and services to specific market sectors, it has repositioned itself as a full-service provider of digital technology solutions that can be used both within the sectors it already serves as well as in new market sectors.
To reflect this, the group is now called Etion, a name which reflects its core ethos of innovation, energy and action.
“Under the new brand name, the group is strongly positioned to take advantage of new opportunities as the digital revolution gains momentum both locally and internationally,” says Daka.
Etion’s vision is to create, digitise, connect and secure both generic and bespoke digital technology solutions to improve the safety, productivity, connectivity and cybersecurity of its customers. It aims to do this by creating and leveraging off its own IP and by strengthening its customer-focused approach to doing business.
In the greater socio-economic environment, the group intends to continue creating value for all stakeholder groups, including shareholders, employees, debt providers, suppliers, government and the communities in which it operates. It will continue to do this in several number of ways, including through investment and capital expenditure.
A notable outcome of the value creation strategy is the recent acquisition of Law Trusted Third Party Services (LAWtrust), which became effective on 1 June 2018.
LAWtrust is an information technology developer and provider of cyber and information security solutions, which include authentication products and services as well as biometric solutions for identity management. The company will become part of the group’s new horizontal structure and will provide the security component of its value offering.
As digital technology irrevocably alters the entire business landscape, the need for trusted digital security solutions is developing exponentially. The acquisition of LAWtrust gives Etion the capability to meet the most stringent digital security requirements, especially in the critical and rapidly developing area of the Internet of Things (IoT).
Within this context, Daka says that the group’s outlook for the 2019 financial year is positive, although it anticipates a slower recovery of the South African economy.
“Our new positioning and unified, integrated brand will drive performance as the growing penetration of digital technologies is inevitable,” says Daka. “From this platform, we will be focussing on leveraging our integrated capability to better provide solutions to existing markets, as well as on exploring opportunities in new segments and sectors. We will also be progressing opportunities in the SADC region and the rest of Africa, where the digital revolution is set to take hold and where we have the opportunity to secure a ‘first to market’ position.
“At an operational level, we will continue to optimise margins, manage expenditure, control cash flow and improve reserves. Continued investment in plant, equipment and human capital will also remain important focus areas.
“While we anticipate that economic conditions will not improve markedly during the current period, we foresee increased demand in all four of our solutions-focused business units: Original Design and Manufacturing, Safety and Productivity Solutions, Digital Network Solutions and Cyber Security Solutions.”