JSE-listed software services firm Adapt IT has failed to declare a dividend on the back of decreased profit for the six months to December 2019, which saw headline earnings per share slump by 35%.
The company says the board decided not to declare a dividend and a review of Adapt IT’s capital structure is under way.
The Johannesburg-headquartered group provides specialised software and digitally-led business solutions to the education, manufacturing, financial services, energy, communications and hospitality sectors, and has presence in Mauritius, Botswana, Ireland, Kenya, Australia and New Zealand.
The group derives almost three-quarters of its revenue from SA.
Adapt IT’s profit for the year declined to R76.3 million from R122.1 million in the 2018 financial year.
The group’s revenue increased 10% to R721 million during the period and earnings per share decreased by 34% to 16.18c, compared to 24.48c in the previous year.
The company says cash generated from operations in the six-month period was R51 million (2018: R54 million). Additionally, Adapt IT’s net gearing is at 66%, being net interest-bearing borrowings of R464 million (2018: R309 million), resulting in an increase of R10.4 million in interest paid to lenders.
“Whilst this is higher than the preferred target gearing of 50%, owing to a planned capital raise that did not proceed due to the decline in the share price, the debt remains serviceable by the business,” reads a statement from the company.
Adapt IT CEO Sbu Shabalala says: “Weaker trading conditions in South Africa persisted, affecting some of the operating segments, most notably the hospitality segment, which saw revenue dropping 6% and EBITDA reducing by R13 million. Annuity revenue improved to a healthy 60% (2018: 58%), aiding the business in defending the underlying revenue to remain static at -1% (2018: 0%) organic growth.”
According to Shabalala, SA’s weak economy prospects will continue for some time.
“The South African market remains challenging; however, Adapt IT continues to focus on leveraging its underlying diversification to offer more value to the current client base more effectively, focusing on sales in a cohesive manner, driving efficiencies and carefully expanding on the Pan-Africa and Asia Pacific diversification strategy.”
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