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ITWeb Africa

Thursday, Feb 21st

Adapt IT's diversification strategy pays off

Adapt IT's diversification strategy pays off

Sbu Shabalala, COE of JSE-listed enterprise software provider Adapt IT, confirmed that the Micros South Africa hospitality group acquisition, consolidated with effect from 1 July 2017, helped secure a 36% increase in turnover.

In statement issued to the media, the software firm said "the hospitality division supports business-critical processes by providing best-of-breed solutions to 4,200 hotel, retail and food and beverage outlets in 18 countries."

Adapt IT initiated a share buyback programme to take advantage of the ADI share recently having been undervalued. Since 1 July 2017, the company repurchased 9,3 million shares or 5.8% of the issued shares, at a weighted average price of 784 cents per share, utilising cash of R73 million.

According to Adapt IT's financial results for the year ended 30 June 2018, the company also recorded a 39% increase in earnings before interest, tax, depreciation and amortisation (EBITDA) and 13 % organic growth from continuing operations.

HEPS was up 14% to 66,7 cents, and normalised HEPS up 11%.

The results show that the company's diversified growth strategy is working, said Shabalala, adding that this is because all three main elements (software-focused, growth sector-specific and geographic in intent) are well-aligned.

"What you would have seen in the results is a culmination of Adapt IT having diversified the business successfully, across Africa and internationally," said Shabalala.

Shabalala said South Africa remains its biggest market and contributes 81% to overall revenue, with 19% generated from global (of which 13% is attributable to Africa).

This is likely to increase going forward, particularly because the company's operations are spread across key markets including SADC (Botswana and South Africa), East Africa (presence in Kenya) and West Africa (busy establishing an office in Nigeria).

"We are a new entrant into the rest of the Africa market, based on the opportunities that we see, we believe that it can only go up. We are taking the same approach (as SA) in Africa, so we're looking at education, manufacturing, financial services, energy and telecommunications sectors, all of which are growth sectors for us," said Shabalala.

The CEO said to date the company has not yet been impacted by current market challenges in Africa, including currency fluctuation and limited access to forex, and remains focused on growth sectors – and leveraging the lessons it has learnt in South Africa.

While Shabalala cannot divulge details in terms of M&A activity in Africa, specifically the pursuit of acquisitions through partners, he did confirm that acquisitions are on the cards going forward on the continent.

"In the next financial year, we look forward to the South African market really starting to improve... if it starts to grow, we believe we are poised to leverage that growth," he said.

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