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    Home»Sections»IT services»Adapt IT revenue up 10%, but earnings take a big knock

    Adapt IT revenue up 10%, but earnings take a big knock

    IT services By Duncan McLeod24 February 2020
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    Sbu Shabalala

    JSE-listed software services group Adapt IT has reported a 35% decline in headline earnings per share despite a 10% increase in revenue for the six months to 31 December 2019.

    The Heps number was knocked lower by a combination of factors, including the tough economic environment and the adoption of a new accounting methodology. The board elected not to pay an interim dividend.

    Revenue was R721-million, from R657-million (restated) a year ago. Organic revenue fell by 1%, with growth from acquisitions contributing 11% to the top line. Annuity revenue was 60%, from 58% previously, while cash generated from operations came to R74-million (2018: R54-million).

    Weaker trading conditions in South Africa persisted, affecting some of the operating segments, most notably the Hospitality segment

    Normalised Heps, before the impact of IFRS 16 accounting rules, fell by 10%.

    Adapt IT strengthened its pan-African footprint, resulting in this region contributing 16% (2018: 14%) to revenue with a heightened presence in East Africa. Asia-Pacific contributed 8% (2018: 6%), strengthened by the acquisition of the Australian-based Wisenet group. International revenue for the six months improved to 27% from 22% previously.

    “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,” said Adapt IT CEO Sbu Shabalala in a statement.

    Ebitda flat

    Ebitda, or earnings before interest, tax, depreciation and amortisation, was flat at R106-million, impacted by the underperformance of the Hospitality segment.

    Net gearing was at 66%, higher than the group’s preferred target gearing of 50%, owing to a planned capital raising that did not proceed due to the decline in the share price. “The debt remains serviceable by the business,” it said.

    “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. While a review of the company’s capital structure is under way, the board took a decision not to declare a dividend,” said Shabalala.  — © 2020 NewsCentral Media

    Adapt IT Sbu Shabalala top
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