JSE-listed support service group Morvest Business Group is seeking new business contracts outside the country in a bid to reduce its reliance on local businesses.
The company reported a 7.6% increase in revenue for the year to May to R868.6m, of which the lion’s share, 95%, was generated in SA. It has operations in Nigeria, India, Mozambique and the US, which contributed the remaining 5%.
"We are concerned about the over-reliance on SA, hence we are looking for alternative business, primarily in business support service and the newly launched retail and consumer services," CEO Mohammed Varachia said.
The company will also invest in its existing international business to enhance its operations.
"Morvest also continues to monitor Africa and further afield for higher-margin projects in sectors where the group has existing capabilities," said Mr Varachia.
He is confident that opportunities in emerging economies can offer the group a way to offset the difficult local conditions which he expects to prevail over the next 18 months.
The company provides products and services such as SIM and scratch cards to cellphone operators, and consulting, training and software.
Headline earnings for the year to May rose 10% to R36m, translating into earnings per share of 2.33c and headline earnings per share of 6.81c, both higher than the previous year.
Mr Varachia said the group expected a "tough year" but showed reasonable growth, helped by cost-reduction programmes that were implemented during the year.
"To face down market challenges, including ongoing pricing pressure, and to maintain margins, we continued controlling costs and optimising systems, productivity, skills and capacity utilisation."
In addition, the new centralised group campus in Midrand, due to be completed by February next year, was expected to reduce "rental and administrative costs and introduce economies of scale", he said.
Morvest added new businesses which included consumer financial services and travel management, cleaning and waste management, and solutions for e-commerce.
"Morvest has traditionally operated in the business-to-business market, which is heavily saturated at present. Looking to long-term sustainability, the business-to-consumer market, including retail, offers the group new opportunity for revenue generation," he said
During the year the company repurchased 12-million shares valued at R2.2m on the open market in terms of the share repurchase programme. It intends to continue repurchasing shares next year.
Mr Varachia expects a sluggish domestic economy and trading challenges, including continuing pricing pressure, in the next 12-18 months.
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