DURBAN - ADAPT IT, which is at the centre of a takeover bid by Huge Group, yesterday reported a double-digit growth in half-year earnings despite a knock from Covid-19.
Its headline earnings per share (Heps) surged by 44 percent to 20.69 cents a share and earnings per share increased by 37 percent to 20.06c while normalised Heps was up by 16 percent to 32c.
The group, which provides specialised software and digitally-led business solutions to the education, manufacturing, financial services, energy, communications and hospitality sectors, however, saw its revenue declining by 2 percent to R707 million. The decline in revenue was due to ongoing challenging and weaker trading conditions particularly in South Africa, which remains its primary market. The South African market constitutes 73 percent of total revenue.
“The Covid-19 global pandemic caused repeated shutdowns or slowdowns in certain of our client segments resulting in project volume decline and delays, with project-based revenue suffering longer lead times. The prior comparative period was not affected by Covid-19,” Adapt IT said. Its earnings before interest, tax, depreciation and amortisation (Ebitda) declined by 1 percent to R128m, with Ebitda margin maintained at 18 percent as cost containment remained a focus through operational efficiency projects, particularly in divisions most impacted by Covid-19.
Chief executive Sbu Shabalala said it was pleasing that Adapt IT maintained revenues comparable to last year against notably weaker trading conditions caused by the global pandemic.
“We recognise that our people and customers have worked together through this challenging period to ensure delivery and performance of mission-critical systems. This demonstrates our aspiration to achieve more for our customers and proves our sustainability and commitment to them through all business cycles,” Shabalala said.
Its cash generated from operations improved by 67 percent to R124m and the group reduced its net debt by R140m to R324m. Adapt IT shares rose more than 12 percent in one day towards the end of January when Huge Group made an unsolicited general offer to acquire all of the issued share capital of Adapt IT for 552c a share.
Adapt IT chairperson Craig Chambers said Adapt IT had cautioned its shareholders to not make any decisions, take any actions or provide any undertakings in relation to the Huge Group Offer until they had the benefit of the opinions of the independent expert and the independent board. “Adapt IT has already begun drafting the Adapt IT Response Circular, in order to issue this as soon as practicably possible after the publication of the Huge Group offer circular,” Chambers said.
Looking ahead, Shabalala said the group continued to focus on leveraging its underlying diversification to offer enhanced value to the current client base more effectively.
Adapt IT’s share price closed 3.06 percent lower at R4.75 on the JSE yesterday.
BUSINESS REPORT