The technology group advised shareholders to wait for guidance on a takeover bid as it unveiled improved earnings.
Adapt IT has again urged shareholders to hold off on accepting an unsolicited offer for their shares from Huge Group until independent experts hired to evaluate the bid have published their opinion. Releasing interim results yesterday, the company said shareholders were not obliged to respond to Huge's offer - and would automatically retain their shares if they sat tight.
In January, Huge offered 0.9 of its shares for each share in Adapt IT. At the time, it valued the bid at R5.52 per share, a 33% premium to the 30-day weighted average price of Adapt IT's shares ahead of the announcement. Huge's shareholders have already given their approval. Last month, Adapt IT appointed Nodus Capital to give an independent opinion on the R800 million takeover bid.
Meanwhile, Adapt IT has continued to show a recovery, getting its debt under control and reporting improved earnings despite the lingering impact of Covid-19.
Revenue declined by 2% to R707 million for the six months to end-December due to ongoing challenging and weaker trading conditions, particularly in SA, its main market. However, it said annuity revenue remained healthy, contributing almost two-thirds of total revenue, up from 60% a year earlier. Earnings before interest, tax, depreciation, and amortisation (EBITDA) were steady at R128 million, held back by reduced project volumes. Its interest bill shrank by 30% to R18 million after it reduced interest bearing borrowings by 30% to R324 million. Earnings per share (EPS) rose 37% to 2006c and headline EPS jumped 44% to 20.69c. On a normalised basis, headline EPS came in 16% higher at 32c. Cash generated from operations increased to R124 million from R74 million.
"It is pleasing that Adapt IT maintained revenues comparable to those of the previous period, against notably weaker trading conditions caused by the global pandemic," CEO Sbu Shabalala said. "Adapt IT continues to focus on leveraging its underlying diversification to Offer enhanced 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."
The company's shares closed 3.1% down at R4.75 yesterday.