Diversification benefits Adapt IT
Durban-based software and computer services group Adapt IT continues to achieve double-digit growth in a tough and highly competitive environment, which has hurt rivals like Gijima.
Adapt IT, which reported a 35% ri s e in head l i ne ea r ni ngs per s ha r e t o 46.57c in the year to end June, has seen its share price rise 58.1% over the past year.
The company’s organic growth was 18% while acquisitive growth added 24% to turnover, bringing total turnover to R575m, up 42%. It hiked its dividend by 32% to 10.9c.
Despite a challenging economic climate, which has seen bigger rival Gijima struggle and delist from the JSE in May 2014, Adapt IT remains keen on buying more f irms to ensure t hat it s prof it able diversif icat ion creates more value.
CEO of Adapt I T, Si busi s o Shabalala, told Finweek t hat t he company would continue with its strategy to focus “on markets where we are differentiated and a l so to continue to seek earnings-enhancing a c qu is i t i ons t hat we ca n buy ”. Shabalala also believes the tech f irm will continue to deliver good growth organically, even though markets are not as buoyant as they used to be. The company recent l y bought St u d e n t Ma na g e me n t Soft ware Solutions
(SMSS), a New Zealand-based software firm, to bulkup its prof itable education software portfolio.
Adapt IT believes SMSS would bring a host of new business opportunities. “They have an interesting piece of software that manages campuses that are below university sizes,” explains Shabalala.
The acquisition gives them access to software that looks at the next tier of education, he says. “What we are going to do is localise the software to the regions in which we operate.”
Adapt IT’s organic growth was boosted by strong demand in the higher education sector, a space i n which the IT f irm has provided specialised software services for 29 years.
Its education unit offers a turnkey enterprise resource planning product, ITS integrator, and ser vices to the higher education sector globally. In the year to end June 2015, Adapt IT’s education unit saw operating profit rise to R27m from R15m in the previous year.
Adapt IT is likely to benefit from providing SMSS education software in SA and the rest of the continent.
“SMSS is already suitable for the Australasian market and we wil l adapt it … excuse the pun … to the South African and African markets to go to next tier of education below universities,” said Shabalala.
While the company strategy is to focus on organic growth, Shabalala is keen to make more acquisitions – through the issue of new shares – when