Adapt IT hikes dividend on strong earnings

Adapt IT, a technology services group, has recently announced impressive financial results, with a 10% increase in normalised headline earnings per share. The group also raised its dividend per share by 23% to 13 cents, reflecting a substantial growth in earnings. Joining CNBC Africa for an exclusive interview, Adapt IT CEO, Sbu Shabalala, shed light on the company's performance and future outlook. Behind these strong numbers lies a remarkable 25% increase in turnover, indicating significant progress for the company. Shabalala affirmed that this growth is real and not a one-time occurrence, attributing it to a challenging market environment. He highlighted a notable recovery in the second half of the year, with organic growth accounting for 6% of the overall increase. While the market has expressed concerns about Adapt IT's organic growth, Shabalala reassured stakeholders that the company is on par with industry standards, aiming for low double-digit growth in the coming years. Despite economic headwinds, Adapt IT remains optimistic about its growth prospects. The company weathered the tough times by making strategic acquisitions to bolster its market position. Shabalala confirmed that Adapt IT acquired micros for 120 million and hinted at potential future acquisitions that align with the company's growth strategy. In light of the current economic landscape, Shabalala emphasized the importance of deploying capital to fuel growth, expressing confidence in the market's potential for mergers and acquisitions. The company's dividend policy, underpinned by strong cash generation, assures shareholders of sustainable returns and robust financial health. Adapt IT's commitment to maintaining a four-times dividend cover underscores its dedication to shareholder value. Reflecting on broader economic indicators, Shabalala acknowledged positive signs of a turnaround in certain sectors, such as manufacturing. With a hopeful outlook fueled by low inflation rates and possible interest rate cuts, Adapt IT anticipates brighter times ahead. Despite policy uncertainties in various industries, Adapt IT remains resilient in navigating regulatory changes. By achieving a level three B-BBEE rating and investing in enterprise development, the company demonstrates its commitment to diversity and competitiveness. As Adapt IT continues to chart a path of growth and resilience, stakeholders can look forward to sustained value creation and market leadership.