JSE-listed Adapt IT Group reported a tough year as sales in its second-largest revenue contributor slowed.
The company this morning released its results for the 16 months to June. It said revenue grew 4.3%, to R180.9 million, against R173.3 million for the annual equivalent of the last financial year to June 2010. Profit from operations declined 4%, to R15 million.
“It was a tough period, especially as the sugar industry was quite depressed,” says CEO Sbu Shabalala. He adds that the situation in the cyclical sector was exacerbated by adverse weather conditions.
As a result, explains Shabalala, companies in the sugar industry started delaying expansion projects. However, the situation has improved and the company has also secured a new client in Sierra Leone.
Gaining new ground
Adapt IT comprises three subsidiaries: Adapt IT Solutions, ITS and ApplyIT. The sugar industry accounts for about 30% of Adapt IT's revenue, while education contributes 56%, with mining, manufacturing and other sectors adding the balance.
During the year, it increased its stake in education service provider ITS Holdings to 100% by acquiring a 49% non-controlling interest and fully integrated the unit. “ITS outperformed expectations, reporting a 42% increase in profit before tax of R14.7 million,” says Shabalala.
Its mining and manufacturing solutions have also gained ground in Africa and the Australasian market. Shabalala says if Adapt IT had not diversified its business two years ago, it would not be in a position to report the growth it had.
Adapt IT continues to be acquisitive, comments Shabalala. He says the company continues to look for entrepreneurial software companies that can help it rapidly ramp up capacity to meet growing demand for its offerings.
Shabalala says the company wants to buy out firms that will expand its current capabilities and aid it to enter new markets, which will diversify its client base further.
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