JSE-listed software services company Adapt IT saw a massive jump in its share price on Wednesday after it issued a surprisingly upbeat trading statement.
Headline earnings per share for the year ended 30 June 2020 are expected to rise by as much as 19.3%, the company said, sending its shares rocketing 60%. Normalised Heps are likely to change by between -1.4% and 3.6% — a commendable performance given the hard lockdown during the second half of the financial year.
Excluding the effects of implementing the IFRS 16 accounting standard, Heps would have jumped by as much as 29.2% (11.1% normalised), it said.
“The financial results have been impacted by a combination of factors, including the difficult trading environment, especially for certain segments of the business; Covid-19; the application of a new accounting standard; and areas of significant judgment and estimation, including impairments to certain intangible assets (which are excluded from the calculation of Heps) and fair-value adjustments to financial liabilities,” Adapt IT said in the trading statement.
“Notwithstanding these factors, the business remains highly resilient and cash generation has been strong. The net interest-bearing debt-to-equity ratio at 30 June 2020 was below target level and significantly lower than the prior comparable period. All debt has been serviced in the ordinary course of business and all debt covenants met at 30 June 2020,” it added.
Expanded
While some divisions performed at reduced capacity as a result of the lockdown, mainly the the hospitality sector, other divisions found opportunity and expanded, the company said.
“The business was proactively virtualised before lockdown regulations were implemented, thereby accelerating digitisation. This was met by an exceptional response from our people, with increased commitment and productivity being evident throughout the remote working experience. The advanced state of our migration to cloud platforms was a significant enabler of this success.”
The company cut about 10% of its staff as a result of Covid-19, with divisions where difficult trading conditions were expected feeling the brunt of retrenchments. These cuts will aid the improvement of trading margins, Adapt IT said.
“The business is stable and intently focused on trading through the future uncertainty as the effects of the pandemic continue to unfold,” it said.
Adapt IT is expected to publish its full-year results by no later than 26 October. – © 2020 NewsCentral Media
