Adapt IT, the JSE-listed software services group that is currently the subject of a takeover by Canada’s Volaris Group, said on Tuesday that it expects to report a 1% improvement in revenue for the 12 months to June 2021.
In a voluntary trading update, it said it had “successfully navigated” the past year “despite the economic and social challenges”.
“This was achieved primarily by safeguarding the wellbeing of employees, driving the company’s values-based culture, maintaining close customer interaction, restructuring divisions where the market has permanently shifted, and providing best practices and support where required,” it said.
This will be the first set of results not presented by long-serving CEO Sbu Shabalala, who resigned recently following armed assault allegations levelled against him in an acrimonious divorce case. Shabalala resigned with immediate effect on 10 August.
Adapt IT’s trading update is unlikely to move its share price as the company is currently the subject of a R7/share all-cash offer from Volaris that is keeping the share trading in a tight band.
“Similar to many other corporates, Adapt IT has been impacted by the continued Covid-19 pandemic and related regulations and lockdowns, with some divisions being more affected than others,” the company said in the trading statement.
“Project delays and the inability of Adapt IT’s personnel to be on site negatively impacted project-based revenue, with the energy division being the most impacted. As a result of projects being postponed or cancelled, this division is facing a slower recovery.”
Also, the restructuring of some divisions in the prior year, which was precipitated by permanent changes to the market, has delivered increased profitability off lower revenue bases and the divisions are now stable and poised for growth, it added.
Cash generated from operations improved significantly, helping the company further reduce its gearing. Net gearing is now 17%, compared to 45% a year ago.
Annuity revenue increased to a “healthy” 66%, up from 62% in the 2020 financial year. Earnings before interest, tax, depreciation and amortisation before corporate activity costs and bonus incentives increased by 7% to R319-million. With the bonus incentives included, Ebitda was R289-million, representing a margin of 19% (2020: 20%).
Adapt IT said it expects to publish its full-year results on 28 September. – © 2021 NewsCentral Media