JSE-listed specialised software group Adapt IT aims to gain a foothold in all African markets as part of its strategy to become a R3-billion-a-year-turnover business by 2020, CEO Sbu Shabalala said on Monday.
The group grew its turnover by 25% year-on-year to R994-million for the financial year ended June 30, and foreign markets now contribute 24% of its turnover.
The group provides information technology services and solutions for the manufacturing, energy, financial services, agroprocessing, hospitality and communications industries. Adapt IT identifies these as growth sectors in Africa and its presence in Botswana, Mauritius and Kenya are examples of its "strategic intent to cover all of Africa", explained Shabalala.
Adapt IT achieved 6% organic growth and 19% acquisitive growth over the past year. Earnings before interest, taxes, depreciation and amortisation increased by 18% to R194.3-million. Annuity revenue comprised 66% of its total revenue.
The group grew normalised headline earnings by 22% to R118.5-million and normalised headline earnings a share by 10.2%. It also grew the proportion of revenue derived from its African operations to 14% of group revenue, up from 13% in 2016.
Further, the group aimed to strengthen its presence in the Nigerian market. Shabalala highlighted that it had access to the market through direct sales and merger and acquisition activities, but would aim to establish a strong presence in the country within the medium term.
He added that the shortage of foreign currency in the Nigerian market made it more difficult for the group to sell its foreign currency-denominated software. Its aim was to use local operations to facilitate payment in the Nigerian currency, the naira.
"The Nigerian market will recover and we must be a strong player – and ready to compete – when it does recover."
Meanwhile, the group reported robust demand for its education software and services in Africa and in the Australasia region.
"The Australasian market, in particular, has been lucrative for our education solutions. We will focus on further growing our education businesses in Australasia and strengthening our presence in the region, as well as meeting demand for education solutions in Africa."
There was significant demand and good prospects for further growth in demand for its education solutions in Africa.
Adapt IT reported good prospects in the African education sector and noted that continuing investment in the education sector in Africa will continue to drive uptake of its services and systems.
SECTOR GROWTH
Adapt IT derived 30% of its revenue from the manufacturing industry, 17% from the education industry, 34% from the financial services industry and 19% from the energy industry.
"We will focus on growing each of our target segments independently. We are excited that we have entered the hospitality market through our acquisition of hospitality IT services company Micros, which was concluded after the financial year-end. Growth in the hospitality industry is more than 6% a year."
Adapt IT would continue with its strategy to acquire mature and profitable businesses "that can gain value from being part of the Adapt IT group" in the territories it operates in, to expand its presence and bolster its growth.