Covid-19 has accelerated Adapt IT’s debt reduction pan and digital transformation

CFO Nombali Mbambo says that, in time, this acceleration will save the company overhead costs.

Despite the impact of Covid-19, Adapt IT has reported a 27 percent improvement in cash generated from operations to R227 million for the year ended 30 June 2020.

Because of the impact of Covid-19, Adapt IT has had to right-size in two divisions that were adversely affected by reducing six percent of the group’s headcount. But, falling right into the most essential service category during the lockdown, other divisions of Adapt IT had slightly increased demand, such as its telecommunications and education divisions. Its education division especially saw increased demand for e-learning solutions on its Moodle platform.

According to Adapt IT CFO Nombali Mbambo, Covid-19 also brought other benefits to the fore, including accelerating the company’s digital transformation. “We already had an advanced cloud strategy, but were forced to solve for the ‘last mile’ of that in every area. We are building a policy and enablement of a hybrid model of remote and office-based work.”

She explains that, in time, this will save the company overhead costs and allow its employees more flexibility. “Our people gave a tremendous response to the challenge and worked highly effectively throughout. They have shown they can certainly be trusted with this level of empowerment.”

Covid-19 has also accelerated Adapt IT’s debt reduction plan, and saw the company significantly reducing its debt through “stringent working capital management” which, according to Nombali, will continue.

“Our debt levels had risen as we had utilised all cash and had no shares to undertake our latest acquisitions. This created a level of discomfort with shareholders and is a priority,” she says.

“We are most proud of the fact that we were able to serve all our customers continuously and deliver robust results through our inherently sustainable, diversified and high annuity (62 percent) revenue nature,” Nombali says. “Working capital management was excellent.”

However, she says that organic growth is now the biggest challenge and the company has placed extreme focus and effort on this. “Sustainability and profitable organic growth are at the core of our success and are a priority for the group.”

Nombali also explains that as industry models are changing, including Adapt IT’s, the company will also be prioritising the development of strategic consulting capabilities. "Strategy and consulting companies are undertaking technology related services and it is therefore critical that technology companies like ours become more strategic and value adding to our clients. Additionally, the market is moving away from products or services to solutions. This requires deeper service capabilities from us.”