Adapt IT reports increase in turnover of 38%
Adapt IT Holdings Limited released its preliminary consolidated results for the year ended 30 June 2016, final dividend declaration and notice of AGM.
- Turnover up 38%
- Operating Profit up 58%
- HEPS up 36%
Turnover for the year ended 30 June 2016 increased 38% to R796,2 million (2015: R575,3 million), organic growth was 9% and acquisitive growth was 29%. Profit from operations increased 58% to R136,4 million (2015: R86,5 million), representing an improved operating profit margin of 17% (2015: 15%). All segments of the business grew turnover and operating profit.
Adapt IT acquired CQS effective 31 December 2015, in line with the acquisitive growth strategy. CQS is a value added distributor of a combination of its own and third party (being CaseWare, ACL and Confirmations. com) Intellectual Property software solutions. On 1 January 2016, the group acquired Multimatics, a company specialising in business intelligence solutions relating to telecommunications. A smaller offshore company, Meta Office, in New Zealand was acquired on 1 January 2016.
Earnings per share (EPS) improved by 36% to 57,61 cents per share (cps) from 42,34 cps and headline EPS (HEPS) improved by 36% to 57,54 cps from 42,31 cps.
The Board declared its 14th ordinary dividend of 13,40 cents per share, payable in September 2016, which represents a four times dividend cover ratio and a 23% increase on the prior year's dividend. The company has a policy of declaring a dividend at the end of the financial year and not at the interim reporting date.
Business Combinations Acquisition of Subsidiary: CQS:
On 31 December 2015, the group acquired the entire issued share capital of CQS Investment Holdings Proprietary Limited and its subsidiaries (CQS). CQS is South African registered.
With over 20 years in business and approximately 4 000 clients, CQS is a value added distributor of a combination of its own and third party (being CaseWare, ACL and Confirmations.com) Intellectual Property software solutions for audit, data analytics, controls monitoring, risk management and financial reporting to financial professionals, corporates and the public sector. CQS, which has the reputation of being a leader in this niche market, also services clients in Nigeria, Kenya, Zambia, Tanzania, Botswana and Zimbabwe through a direct and a distributor network.
The total purchase consideration of R216 815 000 consists of R159 879 215 in cash, funded from borrowings, paid on 14 December 2015 and R56 935 785 in shares issued on 18 December 2015.
The fair value of the net liabilities acquired amounted to R18 390 749 and non controlling interest in equity amounted to R7 557 668, resulting in goodwill of R195 989 913 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.
The acquisition, which is in line with Adapt IT's strategy of targeted acquisitive growth, will augment the group's Financial Services segment and public sector markets' representation by providing diversification into the auditing and accounting professions and will enhance its technology diversification.
Dividends: Ordinary Dividend Number 14:
The Board has set a policy of considering a dividend once annually, after the year-end. The Board has declared a dividend on a dividend cover ratio of four times as the group wishes to retain a significant proportion of profits for future growth activities.
The group will have sufficient working capital to meet its requirements after the dividend payment. Notice is hereby given that a gross cash dividend of 13,40 cents per share (the dividend) has been declared for the year ended 30 June 2016, payable to shareholders recorded in the books of the company at close of business on 16 September 2016.
Shareholders are advised that the last day to trade cum-dividend will be Tuesday, 13 September 2016. Shares will trade ex-dividend as from Wednesday, 14 September 2016, and the record date will be Friday, 16 September 2016. Payment will be made on Monday, 19 September 2016. Share certificates may not be dematerialised or rematerialised during the period Wednesday, 14 September 2016 to Friday, 16 September 2016, both days inclusive. This dividend, having been declared after 30 June 2016, has not been provided for in the financial statements for the year ended 30 June 2016.
Notice of Annual General Meeting:
Notice is hereby given that the 17th annual general meeting of shareholders of Adapt IT will be held on Friday, 25 November 2016 at 09:00 at the company's offices at 5 Rydall Vale Office Park, Rydall Vale Crescent, La Lucia Ridge, KwaZulu-Natal.
The integrated annual report will be mailed to shareholders on 1 September 2016 and is available on the group's website: www.adaptit.co.za, on 18 August 2016.