little EOH,” is the way i n which one f und manager described IT s of t wa r e c ompany Adapt IT. The company recently reported interim results to end December that saw turnover rise by 39%, operating profit by 75%, and headline earnings per share by 65%. The company is still small by JSE standards – interim profit for the period was R14.9m – but results like these will soon bring the company on to the horizon of larger money managers if it continues.
In short, the company provides, maintains, and customises integrated software applications that are specialised but which can be commercially transferable. In other words, the company creates and adapts intellectual property in the form of software that helps businesses run efficiently. A sketch of each of the four operating divisions is included below. MANUFACTURING: The company’s solutions do everything from measure vehicles on weighbridges to monitoring quality control in laboratories. Manufacturing accounts for approximately 36% of revenue and 15% of operating profit, with operating profit margins averaging 10%. EDUCATION: The company is involved with 19 of 25 local universities and 20 of the country’s 50 FET (Further Educa- tion and Training) colleges. The division accounts for 32% of revenue and 35% of operating profit, with operating profit margins in the region of 13%. The beauty of this business is that clients pay annual licensing fees upfront in January and February, which makes the division extremely cash-f low positive. FINANCIAL SERVICES: Adapt IT is largely focused on providing business intelligence solutions to banks. The division contributes approximately 18% of revenue and 15% of operating profit.
What caught my attention is the company’s recent foray into energy. The company acquired the Aquilon group of companies effective from 1 October 2013. Aquilon provides consulting and systems integration services for the oil and gas sector through the design, Cents