Tough times for manufacturing but end in sight

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As a result of the global recession, South Africa's manufacturing sector has experienced a 13.7% contraction year on year. In spite of this drop in production, the industry could see an optimistic turnaround in the fourth quarter, bringing with it new opportunities and renewed growth for South Africa's economy.

The decline in the manufacturing sector has not hindered Adapt IT Holdings from achieving healthy interim results. The KwaZulu-Natal based ICT player has already begun to see the results of its business diversification strategy, with interim results reflecting a strong portfolio that has vast potential for future growth.

"Our results indicate that our diversification strategy, which sets out to explore a multitude of key markets and which we started a few years ago, has ensured that Adapt IT remains resilient. Exposure to one market is limiting and this strategy has enabled us to continue growing during this highly pressurised period," explains Sbu Shabalala, Group CEO of Adapt IT Holdings.

The company's slightly lower growth in revenue, at R60, 6 million compared to the same period last year is attributable to the acquisition of ITS Holdings, a provider of educational administrative software.

However, the cost of acquisition was expensed within 6 months allowing for good returns next year.

With the private sector hardest hit by the economic downturn, Adapt IT's move to investments in the public sector through this acquisition has offered a positive addition to the company's portfolio, expanding it to a national level.

"Our strategy has been to make investments and see growth over time. Already, we have seen profit in ITS Holdings over the two months that it has been consolidated and we are confident that profit will follow in the second half of our financial year," says Shabalala. ITS Holdings contributed a profit before tax of R 0.7 million.

Net profit attributable to ordinary shareholders was at R4.5 million compared to R4.2 million in the previous period, while ordinary dividends 7 of 1.86 cents per share were paid to shareholders on the 3rd of July 2009.

Interim earnings per share increased in line with profit 4.73 cents from 4.36 cents on the comparative period, representing an 8% increase.

Through its strong establishment as a premium provider of ICT solutions, Adapt IT has laid a foundation that has withstood the economic turbulence of the past year.

Shabalala explains: "Though we have experienced some reduction in operating profit from those segments operating in the manufacturing and mining sectors, we are confident that the economic recession will lift and the company's prospects going into the second half of the financial year are positive."

The company has also been rated by Empowerdex as a Level 3 contributor to broad-based BEE, differentiating Adapt IT as a company committed to positive transformation in South Africa.

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