AdaptIT considers further acquisitions
SPECIALISED software solutions and services provider AdaptIT has said that it was eyeing more acquisitions outside South Africa to boost its bottom line.
The group said it wanted to lift its organic growth beyond the 6 percent it achieved during the current financial year in the future. In 2016, AdaptIT achieved 9 percent organic growth.
Chief executive Sbu Shabalala said that the company had been consistent in pursuing diversification through an organic and acquisitive growth strategy, which contributed to its positive year results to end June.
AdaptIT derives 14 percent of its revenues from other African countries and 10 percent from the Americas, Australasia and Europe with the rest in South Africa.
“We will continue with our diversification to international markets to counter the effects of concentration in the local market,” Shabalala said.
AdaptIT services the education, manufacturing, energy and financial services sectors in 40 countries around the world. Last year the company bought EasyRoster and said the acquisition was in line with its acquisitive growth strategy for R87 million.
The purchase was funded through a combination of one million AdaptIT shares with the balance payable in cash in a period of four years.
EasyRoster is a leading information technology company with more than 20 years experience in the development of software tools for operational management.
At the beginning of July the Competition Commission approved the acquisition of Micros South Africa, which provides software, hardware, enterprise systems integration, consulting and support to the hospitality industry. The group expects the acquisition to contribute to earnings in the next financial year.
AdaptIT reported a 25 percent increase in turnover to R993.7m during the period, up from R796.2m recorded during the comparative period last year while earnings before interest, tax, depreciation and amortisation increased 18 percent to R194.3m from R165.1m. Headline earnings per share (Heps) increased 2 percent to 58.76 cents a share, while normalised Heps increased 10 percent to 78.96c. Normalised headline earnings increased 22 percent to R118.5m against last year’s R97.5m.
Shabalala said while the current market conditions are challenging, “the group’s outlook remains positive as we continue to pursue a diversified growth strategy aimed at creating a global specialised software business that has annualised turnover of R3 billion by 2020 through a combination of organic revenue growth and strategic acquisitions.”
The board has declared an ordinary dividend of 13.70c a share, payable in September, which represents a four times dividend cover ratio. The company’s policy is to declare a dividend at the end of the financial year.
AdaptIT shares dropped 0.56 percent on the JSE yesterday to close at R8.90.