Secure Tech narrows after-tax loss by 57% on lower costs

Secure Electronic Technology Plc narrowed its loss significantly in the first half of 2026, but the improvement masks a weaker core business rather than reflecting one.

The company’s unaudited results for the period ended 30 June 2026 show a loss after tax of N32.17 million, down 57 percent from the N74.86 million loss recorded in the same period of 2025. On paper, that looks like a strong turnaround. Underneath it, revenue and profitability from the company’s core lottery and gaming operations both weakened.

Gross income fell 3.4 percent to N1.95 billion, from N2.02 billion a year earlier. More significantly, gross profit collapsed 40 percent, to N110.8 million from N184.9 million, as prize and winnings payouts rose 10.7 percent even as revenue declined. Gross margin nearly halved, slipping from 9.1 percent to 5.7 percent, evidence that the core business became materially less profitable during the period, not more efficient.

The narrower bottom-line loss was instead driven by three factors outside the core business: a new N55.0 million “other operating income” line that did not exist in the prior-year period and is not explained anywhere in the notes; a 16.5 percent cut in administrative expenses, to N197.1 million from N236.2 million; and an 81 percent drop in finance charges as the company paid down debt. Without the N55 million income item alone, the company’s operating loss for the half would have widened rather than narrowed.

Net cash generated from operations rose 13 percent, to N52.7 million from N46.6 million a year earlier, but this too reflects the smaller accounting loss rather than a healthier revenue picture. Trade receivables grew by N12.9 million during the half, roughly double the N6.1 million increase recorded in the same period last year, indicating the company is converting less of its billed revenue into actual cash collected, not more.

The notable improvement in the results is on the balance sheet: non-current borrowings fell 44.6 percent year-on-year, to N310.7 million from N560.7 million, a genuine deleveraging that also explains the lower finance charges. Taken together, the half-year numbers show a company reducing debt and administrative costs while its underlying lottery business, still its main revenue driver, continues to lose ground.

Secure Electronic Technology’s shareholders’ funds remain effectively underwater. Total equity stood at N3.56 billion as at 30 June 2026, roughly flat compared with N3.59 billion in the corresponding period of 2025, but the entire positive balance is held up by a N3.58 billion revaluation reserve; strip that out, and the company’s core equity, share capital net of accumulated losses, would actually sit at around negative N17.7 million.

The company’s shares have moved approximately 4 percent YTD with the last trading figure at N0.84 as of July 17th, giving it a market capitalisation of roughly N4.73 billion.