After amalgamating its business units, Adapt IT is ready for a merger with a company that is like-minded and about the same size as it.
Adapt IT's growth strategy has always included mergers and acquisitions, but it has historically focused on adding smaller units to the company to grow its offerings. Now, says CEO Sbu Shabalala, it is time to become quite deliberate and the company is seeking an opportunity that would allow it to double up.
The group yesterday released its results for the year to June and said revenue gained 36%, to R306 million, while earnings per share grew 27%, to 22.25c. Headline earnings per share, which strips out unusual items and is seen as a key indicator, gained 28%, to 22.27c. Its shares closed flat at 311c.
After the end of the period, BI Planning Services, ITS Abacus, ITS Africa Technologies, ITS Holdings, ITS Tertiary Software and Synet were amalgamated into the top-level structure. This was in a bid to rationalise its structure and reduce the number of entities.
Shabalala says, at any given time, the company is talking with more than one potential partner and will do a deal "when it makes sense". He says, now that it is one organisation, it is ready to extract efficiencies.
Growth plans
Shabalala says the company is pleased with the results as the sector has been through a tough period and it has been difficult to do business. He adds its strategy has been "robust". Revenue grew 51% in the first half.
In the year ahead, its key areas are to consolidate the sector focus in education, manufacturing and financial services. During 2013, 44% of Adapt IT's revenue came from the manufacturing sector, 40% from education and 16% from financial services.
The group also wants to improve its regional presence in SA and grow in the local market. Most of the company's revenue (77%) was generated in SA. Adapt IT also aims to extend its presence in the rest of the African markets. African countries generated 19% of the group's revenue in 2013.
Africa, which is driven from SA, is a drive area and boosted its revenue, Shabalala says. "Business in developing markets is improving for all sectors and the expectation is that more companies will reinvest in information technology. This improvement will definitely filter through in the next year to the African markets within which we operate," says Shabalala.
In Australia, it is gaining traction in the mining segment off the back of its automation offerings, says Shabalala.
Adapt IT provides solutions to companies and entities in the education, manufacturing and financial services in 20 countries worldwide.
Its SAP cloud offering, an area it moved into after buying Swicon360 in the first half, added 11% of its top line growth of 36%, notes Shabalala. He says the unit added R4 million to net profit this year, which in total came in at R24 million.
As the trend towards cloud grows, with companies wanting to cut back hardware spend, and not deal with software issues, this will be a future growth area for the listed company, says Shabalala.
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