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Adapt IT aims to expand African footprint

8th February 2019

By: Schalk Burger

Creamer Media Senior Deputy Editor

     

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JSE-listed information technology services company Adapt IT has grown its turnover by 4% year-on-year to R667-million and its earnings before interest, taxes, depreciation and amortisation (Ebitda) by 10% year-on-year to R118-million for the six months ended December 31.

The company’s headline earnings per share increased by 1% to 29.89c, but normalised headline earnings per share grew by 5% to 40.81c. It managed to improve its Ebitda margin to 18%, compared with an Ebitda margin of 16% in 2017.

However, there was no organic growth from continuing operations, owing to the challenging economic environment persisting in the South African market, which resulted in low project turnover in the energy and hospitality sectors.

Acquisitive growth was 4%, comprising mainly the acquisition of LGR Telecommunications, which was consolidated at the beginning of June, the company says.

“Annuity turnover is a healthy 58% over the period and the five-year compound annual growth rate for turnover was 21%. “Cash generated from operations grew by 105% to R58.3-million,” Adapt IT CEO Sbu Shabalala says.

The company did not declare a dividend and maintained its policy of declaring a dividend after the financial year-end. It paid a 17.10c dividend for the full year ended June 30, 2018.

The company continues to pursue industry-focused growth. Its earnings are spread across its operational divisions, with education contributing 14%, energy 10%, financial services 22%, hospitality 23% and manufacturing 31% of its earnings, Shabalala says.

“The company’s focus is on improving the ability of the existing businesses to improve profitability and develop new capabilities in their key markets. “This approach has assisted in securing more customers, diversifying products and services, and moving up the services value chain.”

Further, Adapt IT continues to extend its geographic reach across Africa and the rest of the world. Foreign markets represent 22% of its turnover, while software and services are delivered to 24 other African countries. This expansion is a key factor in diversifying market risk and growing hard currency revenue streams.

While most of the group’s revenue is generated in South Africa, the company plans to continue diversifying the business into the rest of Africa and the global markets, says Shabalala.

Adapt IT has entered into agreements to acquire the cloud-based software-as-a-service learning relationship management platform company Wisenet Group.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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