Secure Electronic Technology Plc (SET Plc) experienced a tumultuous financial year in 2024, marked by a complex interplay of rising revenues and escalating costs. Despite achieving a 24% surge in gross income, reaching N4.35 billion compared to N3.50 billion in 2023, the company declared a loss of N118 million. This stark contrast between revenue growth and overall profitability highlights the significant operational challenges SET Plc faced during the year. The company’s accumulated losses further deepened, reaching N2.56 billion, a concerning increase from N2.44 billion in the preceding year. This escalating loss underscores the urgent need for effective cost management and strategic adjustments to ensure the company’s long-term financial viability.
A closer examination of SET Plc’s financial performance reveals the key factors contributing to its losses. While net income showed a modest improvement, rising to N283.62 million from N235.88 million in 2023, the burden of operating expenses proved overwhelming. Specifically, the soaring costs associated with prizes and winnings, a core aspect of SET Plc’s business model, amounted to a substantial N2.44 billion. Ticket expenses also saw a significant increase, reaching N1.60 billion, further impacting profitability. Although administrative expenses were marginally reduced to N366.26 million from N399.27 million in 2023, this cost reduction was insufficient to offset the surge in other operational costs. The resulting operating loss of N82.65 million, though an improvement from the N163.39 million loss in 2023, underscores the persistent challenges in balancing revenue generation with operational expenditures.
The financial strain on SET Plc is further evident in its declining cash position. The company’s cash balance plummeted by 24.6%, from N69.91 million in 2023 to N52.66 million in 2024, raising serious liquidity concerns. Although cash generated from operations improved slightly to N29.06 million from N13.54 million in 2023, it proved insufficient to counter the overall cash outflow. To address its liquidity challenges and support ongoing operations, SET Plc secured a N20 million loan in 2024. This reliance on external financing underscores the need for improved cash flow management and strategic initiatives to enhance the company’s financial stability.
The impact of sustained losses is reflected in SET Plc’s equity position. By the end of 2024, the company’s equity had decreased to N2.30 billion from N2.42 billion in 2023. This decline in equity, coupled with an increase in borrowings to N330.65 million from N310.65 million the previous year, further highlights the financial pressures faced by the company. While the revaluation reserves remained stable at N2.05 billion, these reserves do not directly address the immediate need for improved profitability and cash flow management. The company’s financial health is increasingly fragile, demanding proactive measures to reverse the trend of accumulating losses and shrinking equity.
SET Plc’s first-quarter results for 2024 paint a similarly concerning picture. The company recorded a loss of N33.41 million, a substantial increase from the N6.81 million loss experienced in the same quarter of the previous year. This early indication of continued financial struggles underscores the urgency of implementing effective corrective measures. The widening loss in the first quarter suggests that the challenges faced in 2024 are not isolated incidents but rather represent a potentially persistent trend that requires immediate and decisive action.
Looking ahead, SET Plc’s primary focus must be on achieving sustainable profitability. This requires a multi-pronged approach encompassing cost reduction strategies, revenue optimization, and prudent liquidity management. Specifically, the company needs to critically evaluate its cost structure, particularly the significant expenditures related to prizes and winnings, and identify areas for potential savings. Simultaneously, exploring opportunities to enhance revenue generation and improve operational efficiency will be crucial. Strengthening cash flow management and optimizing working capital will be essential to ensuring the company’s ability to meet its short-term obligations and fund its operations. Implementing these measures will be critical to reversing the negative financial trajectory and positioning SET Plc for long-term growth and stability.
