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Adapt IT profit slumps, no dividend

Samuel Mungadze
By Samuel Mungadze, Africa editor
Johannesburg, 24 Feb 2020
Adapt IT CEO Sbu Shabalala.
Adapt IT CEO Sbu Shabalala.

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 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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