Adapt IT holds on to dividend as Covid-19 pummels economy
Group expects a bump from education and telecoms sectors as pandemic boosts demand for online learning and services related to working from home
Technology group Adapt IT, which provides software to many different industries, has opted to hold on to its final dividend as Covid-19 batters the SA economy, particularly manufacturing and tourism.
The group expects a bump from the education and telecoms sectors as the pandemic boosts demand for online learning and services related to working from home, but says it also wants to be conservative with its cash.
The Johannesburg-based company, which provides software solutions to the education, manufacturing, energy, financial services, communications and hospitality sectors, said on Monday that the pandemic had a mixed effect on demand during its year to end-June.
Revenue increased 3% to R1.48bn to end-June, before accounting changes that brought leases on to the balance sheet, while earnings before interest, taxation, depreciation and amortisation (ebitda) — a measure of operating profit — grew 9% to R250m. This was also before accounting changes.
Four of the group’s six operating divisions grew ebitda, with the hospitality and manufacturing divisions hit by poor trading conditions in the wake of the Covid-19 pandemic.
Adapt IT’s education division, which contributes about 16% in group revenue, posted an 8% rise in revenue. Earnings in its communications business, which contributed 21% of group revenue, jump by a third.
Manufacturing, contributing 17% in group revenue, posted an 18% decline in revenue, amid project delays and a decline in demand.
After accounting changes, group profit fell 5.6% to R70.9m, while net debt fell 24% to R337m.
The group opted to suspend dividend payments in favour of holding on to cash. It had deferred its final dividend payment for its 2019 year, ultimately opting not to pay this amid a review of its was finances.
In morning trade on Monday, Adapt IT’s share was up 6.55% to R2.93, having fallen 20.71% so far in 2020.
Correction: October 26 2020
An earlier version of this article mistakenly said Adapt IT's revenue had decreased 3% in its year to end-June, when it should have said it had increased.
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