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Adapt IT buys business intelligence firm

Nicola Mawson
By Nicola Mawson, Contributor.
Johannesburg, 04 Jan 2012

JSE-listed Adapt IT has bought a business intelligence company, BI Planning Services, for R17.25 million, as part of its plan to grow organically and through acquisitions.

The company, which expects earnings and headline earnings per share to be at least 66% higher in the first six months to December, says the deal will bolster future basic and headline earnings per share by about 9%.

CEO Sbu Shabalala says Adapt IT bought BI Planning Services (BIPS) as the company has a strong presence in the financial services sector and strengthens Adapt IT's service offering. He notes that the sector spends substantially on IT, and the deal is one step towards entering the industry.

Adapt IT, which has three subsidiaries, supplies enterprise resource planning software to the sugar, manufacturing and education sectors. Shabalala adds Adapt IT will also be able to cross-sell the business intelligence offerings to its current client base.

Shabalala says Adapt IT aims to grow organically and through acquisitions, and will continue to seek profitable companies that add value. “While we will continue to grow organically, acquisitions form an important part of our overall growth strategy.”

BIPS is certified in IBM and Microsoft technologies, and is accredited by the Information Systems, Electronic and Telecommunications Technologies Sector Education Training Authority.

The company was established in 2001 and specialises in business intelligence services in the financial services, healthcare, telecommunications and other sectors. Its offerings include data warehousing and performance management services, as well as end-user support. It has 50 staff members and is based in Midrand.

Adapt IT will pay the R17.25 million in cash and shares, and the purchase price is warranted by pre-tax profit of R8.7 million for the 18 months to June 2013, and pre-tax profit of R6.4 million for the year to June 2014.

If the profit warranties are not met, the purchase price could be reduced by up to half. However, if the company beats its targets, Adapt IT could pay more, says Shabalala. “We are hoping management over-performs the profit warranties, in which case we will happily pay more.”

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