DIVERSIFYING business interests in Adapt IT Holding has been instrumental in the growth of the company, CEO Sbu Tshabalala said on Monday.

 

His firm had "deep vertical knowledge" of various facets of the information communication technologies services where it operates. Speaking after the release of the company’s results, he said Adapt IT had grown organically and through acquisitions in the year to June as it reported profit of R58m, up from R38m the previous year.

 

"On acquisitions we look at businesses that are adding value and differentiating when they go to a client," Mr Tshabalala said.

 

There was huge growth opportunity in the information communication technologies sector. It had "grown in demand as every business is automating".

 

Adapt IT, which has a presence in education, mining and manufacturing, financial services and energy sectors, said profit from operations â€" before tax of R27m and other deductions â€" had risen 89%, from R49.7m to R93.8m, representing an improved operating profit margin of 16%.

 

Equity analyst Simba Johnson Chimanzi of JM Busha Asset Managers said Adapt IT’s results were driven by organic and acquisitive growth. Of a 42% increase in turnover, 18% came from organic growth and 24% from acquisitions. Adapt IT noted its acquisition of South African cloud-based-telecommunications software provider AspiviaUnison and the smaller acquisition of New Zealand’s Student Management Software Systems.

 

Mr Chimanzi said those two acquisitions provided strong annuity income and improved diversification through offshore exposure.

 

Through efficiencies, the two clusters in which the acquisitions operated â€" financial services and education â€" had improved operating margins to 17%, compared with 10% and 12% respectively.

 

Adapt IT’s acquisition strategy would remain central to margin improvements, he said.