JSE-listed Adapt IT has announced results for the financial year ended 30 June 2019.

“While the results for the year under review showed moderate top-line growth, I am pleased to say that in a year of global macro-economic challenges, Adapt IT made great strides in positioning itself for the next growth phase, with a strategic focus on geographic positioning, strengthening sales capabilities and ensuring that all the divisions are streamlined,” says Adapt IT CEO Sbu Shabalala.

He comments that, given the difficult economic climate locally and abroad, the year was used as a period of consolidation, bedding down the operations at the new Johannesburg campus, fortifying the leadership team, and focusing on governance.

“This has realigned the teams, enhanced group culture, will facilitate better cross-selling and standardise processes that are critical for sustainability. Adapt IT has been consolidated in the Johannesburg campus for 16 months and is already experiencing an immensely positive employee engagement across the organisation.”

Revenue from continuing operations increased by 14% to R1,438-billion (2018: R1,264-billion [restated]). Revenue growth comprised an improved 5% organic growth from continuing operations and 9% from acquisitions.

In spite of the ongoing poor trading conditions, the majority of segments delivered double-digit organic growth. Annuity revenue remains healthy and an improvement on the previous reporting period to 61% (2018: 58%).

Segment contributions to revenue were as follows:

* The Education division delivered an increase in revenue of 24%, contributing 15% to total revenue;

* The Manufacturing division achieved excellent revenue growth of 26% year-on-year, contributing 21% to total revenue;

* Financial Services grew 11% from continuing operations, post the disposal of CQS GRC, contributing 19% to total revenue;

* The Energy division experienced a 30% decrease in revenue from a decrease in project revenue after several years of strong project revenue, contributing 9% to total revenue;

* The Communications division grew 69% inclusive of the two acquisitions, contributing 16% to total revenue; and

* The Hospitality division remained flat in line with expectations and contributed 20% of total revenue.

Shabalala adds that strategic acquisitions made during the financial year, geographic diversification and attractive technologies assisted the group in achieving the 9% acquisitive growth.

The acquisitions included are the results of the LGR Telecommunication group for 11 months; Strive Software for 10 months; Conor Solutions for six months and Wisenet group for four months.

Adapt IT strengthened its pan-African footprint, resulting in this region contributing 15% to revenue with a heightened presence in Kenya. Growth in Asia Pacific also more than doubled with the successful acquisition of the Australian-based Wisenet group and its integrated applications for training and education institutions. As a result of this diversification strategy, international revenue for the 2019 financial year amounted to 24% (2018: 19%).

Earnings before interest, tax, depreciation and amortisation (EBITDA) from continuing operations improved by 3% to R229-million (2018: R223-million). The underperformance in the Energy segment had a significant impact on the results with its EBITDA reducing by R20-million.

Once-off impacts on earnings in the current year included an impairment of R8-million on a fixed property held for sale and a negative foreign exchange movement year on year of R11-million. A net increase in loss allowances (provision for doubtful debts) of R4-million pursuant to the adoption of IFRS 9 also impacted earnings.  As a result, EPS and HEPS from continuing operations decreased by 15% and 6% to 51,32 cents and 57,27 cents, respectively. Normalised HEPS from continuing operations decreased by 6% to 76,20 cents.

Cash generated from operations was R179-million representing a cash conversion ratio of 1,08 times.