JSE-listed Adapt IT is in negotiation with several potential partners in Africa as the Durban-based IT services company looks to expand its operations on the continent, while balancing its interests in the tough South African market.

Speaking on the back of the release of the company's interim results for the six months ended 31 December 2016, CEO Sbu Shabalala could not disclose details of the potential partners, but said they were in "various stages" of discussion as part of its overall regional diversification drive.

Adapt IT considers Africa to be a huge market with strong growth potential, and the focus is on establishing stronger regional presence, particularly within the East Africa block, to drive services and grow the current turnover level of 15% says Shabalala.

He describes Kenya as a key market because of its mature ICT sector.

"Our acquisitive growth drive has been extended to look at acquisitions in the rest of Africa... so we have a few targets that we are in discussion with that are outside of South Africa. 15% of the business that we do outside of South Africa has been through the Mauritian presence as well as direct sales from the South African environment."

The company's acquisitive growth strategy has helped it achieve 48% turnover growth, according to its interim results.

Turnover increased to R460 million, with earnings before interest, tax, depreciation and amortisation (EBITDA) up 43% to R89 million while operating profit was also up 31% to R69 million and normalised headline earnings per share (HEPS) was also up 20% to 34,56 cents.

The company's official results released state that organic growth was 4%, while acquisitive growth was the remaining 44% - following the acquisitions of CQS Group, a specialist in the development and deployment of financial software, and EasyRoster, a provider of rostering optimisation software services.

In its statement Adapt IT said it disclosed normalised HEPS for the first time as a result of the high non-cash expenses in terms of International Financial Reporting Standards (IFRS) related to its acquisition.

Non-cash amortisation costs of R13.5 million and notional interest costs of R5.3 million were expensed, according to the company, which totalled R18.8 million for the half year.

"We have been consistent in pursuing diversification through an organic and acquisitive growth strategy, which has contributed to this positive set of results for Adapt IT," says Shabalala.

This strategy, supported by R84 million of fresh equity raised by the company, will be extended to the rest of the continent. The company intends to scout for partners across Africa that meet its criteria, which includes having a stable management, a positive trading record and proven market reach.

While there are challenges in every region across Africa, Shabalala says the company is familiar with operating on the continent and is ready to meet the requirement for cloud computing with cloud-ready applications.

"Despite the challenging market conditions, our outlook remains positive as we continue to build on the strong, well-diversified foundation, to create a sizeable, leading ICT business that delivers above ICT sector average growth and returns."