Adapt IT Holdings is seeking to grow aggressively after positing a 169% increase in revenue for the 2010 financial year and issuing a cautionary announcement shortly after publishing its results.
The company released its annual results late yesterday evening and said revenue grew R208.5 million for the 16 months to June 2010, against R77.5 million for the year to February 2009.
Adapt IT attributed 59% of the rise in turnover to organic growth, while its June 2009 acquisition of 51% of ITS Holdings added R85 million. However, the figures are not directly comparable, because the group moved its financial year-end from February to June after buying the stake in ITS.
The company, which has integrated ITS, now wants to find further acquisition opportunities to continue growing. Early this morning, it issued a cautionary announcement indicating that it was in talks, which could affect its share price.
Niche products
CEO Sbu Shabalala says the company aims to grow organically and through acquisitions. Adapt IT is seeking firms that provide software solutions in niche areas, he explains. ITS, for example, provides specialised software to the education sector.
“We are quite serious” about acquisitions, Shabalala says, and growing the company by expanding into more niche areas. He says Adapt IT released results and then went straight into new discussions.
bank balance of R39 million.
Shabalala says a new acquisition could be funded either through shares, cash, or debt. He explains that the company only has R4 million in debt, which has been paid down from the R16 million it owed after buying ITS.
As a result, he explains, Adapt IT has the scope to gear its balance sheet at the moment, and debt is becoming more easily available.
However, while the company wants acquisitive growth, it is seeking sustainable growth that adds to its annuity revenue base. Currently, 45% of revenue is annuity-based, says Shabalala.
The group has 260 staff throughout SA, and conducts business through three subsidiaries: Adapt IT Solutions, Apply IT and ITS Holdings. Adapt IT has customers across SA, East Africa, Australasia and Europe.
Its subsidiary companies provide a range of specialised IT solutions and services to customers in sectors, including manufacturing, mining, education, financial services and the public sector.
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