Johannesburg Stock Exchange (JSE) listed company Adapt IT, a software provider for the global Education, Manufacturing, Energy, Financial Services, Communications and Hospitality sectors, today, 16 August 2018, announced its financial results for the year ended 30 June 2018.
Turnover increased 36% to ZAR1.35 billion for the year, organic growth from continuing operations being 13% and acquisitive growth contributing 30%.
“Adapt IT’s diversified growth strategy has contributed positively to above-industry turnover growth during the reporting period,” says Sbu Shabalala, Adapt IT Chief Executive Officer.
“Our Pan-African market focus on software sales also assisted with the improvement in organic growth, while the company’s strategic entry into the Hospitality sector, through acquisition, was additive.”
Earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 39% to ZAR270 million, while profit before interest and tax (PBIT) grew 45% to ZAR218 million.
Profit attributable to equity shareholders grew 38%, while the weighted average number of shares in issue grew 5% over the prior period.
Adapt IT initiated a share buyback programme to take advantage of the ADI share recently having been undervalued.
Since 1 July 2017, Adapt IT 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 ZAR73 million.
“Adapt IT is a well-diversified software business providing solutions that enable customers to achieve more. We aim to continue delivering growth and returns, which are above the sector average, in line with our 2020 annualised revenue target of ZAR3 billion and beyond,” concludes Shabalala.
Micros South Africa
The acquisitive growth contribution of 30% comprised mainly of the Micros South Africa hospitality group acquisition, which was consolidated with effect from 1 July 2017.
Micros has a talented team of over 300 employees providing world-class solutions for the hospitality industry.
The Hospitality division supports business critical processes through providing best-of-breed software solutions to 4 200 hotel, retail and food and beverage outlets in 18 countries.
Adapt IT also acquired the LGR group with effect from 1 June 2018. LGR is a specialist solutions provider with an exclusive focus on the global Telecommunications industry providing and managing end-to-end data warehouse and business intelligence systems at leading international operators, bolstering the Communications product offering.
Adapt IT received and accepted an offer to purchase its shares in CQS GRC Solutions (Pty) Ltd (CQS GRC).
The transaction was concluded through a sale of certain CQS GRC assets and liabilities, for a consideration of ZAR20.5 million on 31 May 2018 and Adapt IT disposing of its share in CQS GRC on 1 June 2018, for a consideration of ZAR22.8 million. The CQS GRC disposals resulted in the group recognising a profit on disposal net of tax amounting to ZAR17.6 million.
Adapt IT initiated a share buyback programme to take advantage of the Adapt IT Holdings Limited (ADI) share recently having been undervalued.
Since 1 July 2017, Adapt IT 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 ZAR73 million. 1,1 million of the shares repurchased were issued as consideration for the EasyRoster acquisition, with the remainder
of the shares held as treasury shares.
On 1 July 2017, the group acquired the entire issued share capital of Micros South Africa (Pty) Ltd (Micros), a South African registered company.
Micros conducts business in the Information Technology sector, inter alia, providing software, hardware, enterprise systems integration, consulting, support and solutions to its clients, primarily in the Hospitality industry.
The acquisition of Micros, which is a leader in its vertical market, created an entry into the Hospitality industry, a new vertical for the group, further diversifying the group.
The purchase consideration of ZAR134 950 940 consists of ZAR88 889 787 in cash, paid on 19 July 2017, ZAR33 651 703 in shares issued on 31 July 2017 and ZAR12 409 450 fair value of cash top-up payment.
Adapt IT agreed to provide the Micros sellers, where shares have been issued, with a one-year protection on any decrease in the value of the shares in Adapt IT Holdings Limited on the basis that Adapt IT will become obliged to make a cash top-up payment to the applicable sellers to place them in a similar position had they in fact been cash-settled at July 2017 in respect of their entire proceeds.
In July 2017, the fair value of the share value underpin was calculated at ZAR12 409 450.
The fair value of the net assets acquired amounted to ZAR56 903 617, resulting in goodwill of ZAR78 047 323 at acquisition.
The purchase consideration paid for the combination effectively included amounts in relation to the benefit of the expected synergies, revenue growth, new market penetration and future market development.