Adapt IT said that it decided not to reward its shareholders in order to reduce debts it incurred on several once-off costs during the period. Ian Landsberg/African News Agency (ANA)

DURBAN – Adapt IT withheld dividend payments for the year to end June as payments of several costs during the period weighed in on its earnings.

The information technology group said that it decided not to reward its shareholders in order to reduce debts it incurred on several once-off costs during the period. 

It said the costs included an impairment of R8 million on a fixed property held for sale, a negative foreign exchange movement year-on-year of R11m, a net increase in loss allowances and provision for doubtful debts of R4m following the adoption of IFRS 9.

The group said the payments resulted in a 15 percent decline in earnings per share from continuing operations to 51.32 cents and a 6 percent decline in headline earnings per share (Heps) from continuing operations to 57.27c. It said normalised Heps from continuing operations also fell 6 percent to 76.20c. 

However, revenue from continuing operations increased by 14 percent to R1.44 billion, revenue contribution consisting of 5 percent organic growth from continuing operations and 8 percent from acquisitions.  

Earnings before interest, tax, depreciation and amortisation (Ebitda) from continuing operations improved by 3 percent to R229m, with an Ebitda margin of 16 percent. 

Chief executive Sbu Shabalala said the board took a decision to withhold paying a dividend until the company had reduced its debt levels.

“Having given consideration to the level of net gearing, which is unusually high at 65 percent and will be reduced in the forthcoming year to be closer to the preferred net gearing ratio of 50 percent, the board took a decision that it is prudent to defer a dividend decision until after the interim period when cash flows of the group are generally stronger,” Shabalala said.

Last year Adapt IT declared a dividend of 17.10c a share. 

Shabalala said given the difficult economic climate locally and abroad, the year was used as a period of consolidation, bedding down the operations at the new Johannesburg campus, fortifying the leadership team and focusing on governance. 

“While the results showed moderate top-line growth, Adapt IT made great strides in positioning itself for the next growth phase, with a strategic focus on geographic positioning, strengthening sales capabilities and ensuring that all the divisions are streamlined,” Shabalala said. 

Adapt IT shares declined 2.73 percent on the JSE on Monday to close at R4.28.

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