Adapt IT to continue buying back 'undervalued' shares - TechCentral

Adapt IT to continue buying back ‘undervalued’ shares

Sbu Shabalala

Adapt IT will continue aggressively to buy back its own “undervalued” shares, CEO Sbu Shabalala said in an interview with TechCentral on Thursday following the publication of the JSE-listed software group’s annual results for the year ended 30 June 2018.

During the 2018 financial year, Adapt IT bought back 9.3 million shares — 5.8% of the issued total — at an average of R7.84/share, utilising cash of R73-million to do so. About 1.1 million of the shares repurchased were issued as consideration for group’s acquisition of EasyRoster, with the remainder held as treasury shares. The treasury shares will be used to pay for future acquisitions, Shabalala said.

Adapt IT reported a 14% improvement in headline earnings per share — 11% normalised — for the full year. This was on the back of a 36% improvement in turnover to R1.35-billlion and a 39% increase in earnings before interest, tax, depreciation and amortisation to R270.1-million.

Shabalala said Adapt IT’s shares are undervalued and that this is an industry-wide phenomenon not specific to the group. “Every market is cyclical,” he said. He expects the share price to recover in time. “As management, we are holding onto our shares,” he said, adding that the group still has the authority from shareholders to buy back a significant number of shares.

Despite the difficult economic conditions, Adapt IT delivered organic growth — so, excluding acquisitions — of 13% in the year to June. “This figure will improve when the market improves.”

The group continues to eye acquisitions, Shabalala said, and is also looking to step up its activities in other African markets, including Nigeria and Kenya. It is keen to conclude acquisitions in the health-care vertical as well as in financial services. “There are specific opportunities we are looking at.”

In the rest of Africa, Adapt IT will work with partners to take its intellectual property to market and to make acquisitions where it makes sense. “Our expansion is mainly around product sales,” said chief financial officer Nombali Mbambo. This will involve upskilling partners in these markets.

Adapt IT’s share price was quoted at R7.48 at 9.44am in Johannesburg on Friday, up 4.6% on the session. The counter has fallen by 20% in the past year and by 28% over three years.  — © 2018 NewsCentral Media

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