Morvest grows revenue 8.4%, expects tough conditions

Morvest Business Group (MOR), a provider of professional services, ICT and outsourcing solutions, on Monday announced an 8.4% rise in revenue to R445.8 million for the six months ended November 2011, from R411.1 million before.

The group said that 93% of its revenue was generated from South African operations and the remainder from the rest of Africa.

Morvest reported diluted headline earnings per share of 3.87 cents, from 4.31 cents, and diluted earnings per share declined to 3.87 cents, from 4.25 cents in 2010.

It reported EBITDA of R73.4 million, from R60 million in 2010, while net profit margins improved from 7.3% to 8.2% as a result of cost reductions in the period.

Financing costs reduced to R6.7 million from R9.1 million largely due to a decrease in the prime lending rate during the period, Morvest said.

Morvest has an international footprint spanning South Africa, Africa (Nigeria, Mozambique), India and the USA and a staff complement of over 2,000.

“The South African economic conditions remain challenging with continued price pressure being exerted by clients. Morvest focused on a cost management strategy reducing costs for the period which is evident in the improved gross profit and EBITDA margins. The group’s international focus remains on Africa, Asia and the USA,” it said in a statement.

It said that cash on hand of R100 million is reflective of effective working capital management despite a substantial increase in inventory to R38.2 million from new orders.

Looking ahead, Morvest said that its board anticipates that the tough market conditions coupled with pricing pressure from clients will continue. “Morvest therefore remains focused on maintaining its cost management strategy and identifying innovative means of cost cutting by at least a further 10%. Nonetheless the group remains optimistic of sustainable growth by targeting government and parastatals, the power and energy sector and the broader mobile consumer markets.”

At the same time the group said it will continue to strengthen its existing businesses through building management capacity, investing in strong leadership, improving productivity and entrenching a culture of excellence.

“The group will continue with its diversification strategy, which includes exploring new markets and territories as well as expanding into the retail and services industries. Morvest has plans to launch a new online portal with walk-in stores in all major centers as part of its strategy to diversify into retail in partnership and co investment with MS Varachia in terms of the company policy.

“The group expects the trend from prior years to continue with the first six months of the year exceeding the second half,” it concluded.

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Morvest grows revenue 8.4%, expects tough conditions