Software services group Adapt IT on Monday published full-year financial results to 30 June 2020 that showed remarkable resilience in the face of the Covid-19 pandemic and lockdown.

Normalised headline earnings per share rose by 7% to 83c (before accounting adjustments for leases), while cash generated from operations rose by 27% to R227-million (also before “IFRS16” lease adjustments).

Net gearing – a key focus of management following years of acquisitive growth – improved to 43% from 66% a year ago.

Adapt IT CEO Sbu Shabalala said the group has proved to be “highly resilient” despite the impact of the lockdown on the economy. This is due to its “sound underlying business model of providing mission-critical software to its clients on a long-term basis”, he said.

“The tough trading conditions in South Africa were a catalyst for Adapt IT to drive operational improvements through significant cost reduction and containment measures in segments most impacted by Covid-19. Most operational efficiency projects have been completed, which will result in cost savings in future financial periods,” Shabalala added.

Mixed picture

Revenue for the full-year was 3% higher at R1.48-billion. Organic growth was -2%, while growth from acquisitions was 5%.

Shabalala said that sector and geographic diversification had served the company well as some divisions had outperformed while others had been hard hit by the environment.

Geographic diversification of revenue improved from a strengthened pan-African footprint, with a heightened presence in Kenya. This resulted in the region contributing 16% (2019: 15%) to revenue from 32 other African countries.

Asia-Pacific, Europe and the Americas contributed 11% (2019: 9%) to revenue, resulting in an overall improvement in international revenue contribution to 27% (2019: 24%). Annuity revenue rose to 62%, from 61% previously.

Areas of weakness were in the hospitality and manufacturing segments, where trading conditions were impacted by Covid-19, while positive contributions were made by the remaining four divisions in the group.