MB Technologies has shown positive movement for the year, appearing to have succeeded where many local IT companies have failed in the heavily slumped market.
The international IT company reports turnover up 31% to R1.99 billion for the year to August, while operating profit grew 62% to R108.4 million. Headline earnings per share finished at 16.3c, up 39%.
The group attributes the growth to a new business mix showing more solutions and service offerings in an effort to increase margins. The increase for the year under review shows margins up to 5.5%.
However, cash and cash equivalents dived from R32 million to end R42 million in the red. Similarly the group`s bank overdraft skyrocketed to R62 million from R4.5 million in the comparable period.
CEO Leo Baxter is unfazed, saying the group decided to use this time to grow the business, investing R146 million in the year under review. He adds that the bank overdraft fluctuates during the month and he is happy for it to be at the current levels considering the company`s size.
Baxter says he sees the current climate as the perfect time to invest and grow, and later when the dust settles, investors can expect to find MB Technologies in a stronger position.
According to Baxter, the group will focus on its retail solutions and storage businesses as this is where he believes growth into the following year lies.
Speaking about the value-add distribution business, Baxter says Tarsus is performing exceptionally well. He attributes this to strong management and tight financial control.
Tarsus has lowered its debtor days to 37 and stock holding days to 15. Baxter believes this performance is in sharp contrast to other distributors in the local market that are currently facing serious financial battles. He believes there is still a place for distribution in the marketplace if properly managed.
MB Technologies has acquired majority shareholdings in its e-business venture MB Worksoft and as a result, goodwill of R113 million has arisen.
Baxter says MB Worksoft`s consolidation process has been a painful one but he believes a firm hand must be taken with any part of the business that has suffered mixed performances. He remains confident of the streamlined entity going forward successfully.
MB Technologies is now on the right side of JSE free float regulations, despite only 20 million shares been taken up by the market on its last offering, but Baxter says an announcement regarding the balance of the original 40 to 50 million shares aimed at the open market can be expected shortly.
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