Asha Speckman
MVELASERVE is selling two subsidiaries, Stamford Sales and Khuseti Holdings, the franchisor of King Pie.
“They don’t quite fit in our profile,” Jorge Ferreira, the chief executive, said yesterday.
The sale price for each business would be determined by advisers next week.
Ferreira said the group, which provides outsourced business support services, would sell Khuseti and Stamford Sales during the first half of the 2013 financial year.
For the year to June, Khuseti was hit hard by depressed consumer spending, which intensified pricing pressure and competition. Its operating profit plunged from R24 million to R18m and margins shrank due to rising input costs.
Overall pie sales grew only 2 percent to 31 million pies sold in the 12 months, but there was strong growth in the export, retail and wholesale markets compared with poor sales in local franchises.
The outlook for this business was subdued, the group said.
Stamford Sales, which specialises in ingredients, hygiene and packaging for the food preparation sector, increased revenue by 21 percent to R407m during the year.
However, it posted an operating loss of R20m. The company rolled out a new fleet of delivery vehicles to increase efficiencies.
Mvelaserve’s shares lost 0.84 percent to close at R8.28 yesterday. The group did not declare a dividend for the year.
An analyst, who spoke on condition of anonymity, said that by mid-afternoon yesterday, less than R16 000 worth of trade of the stock had taken place, which showed the low liquidity of the stock.
“It is difficult to say whether the market is to take the news in its stride,” the analyst said.
Mvelaserve has been listed on the JSE for two years after unbundling from Mvelaphanda Holdings in November 2010.
Ferreira said the focus in the new fiscal year would be on “growing existing companies and improving margins”.
The group employs 32 000 people. It operates locally, in Ghana, Nigeria and the United Arab Emirates. It provides services that include facilities management, Protea Coin security, catering firms and cleaning groups RoyalMnandi and Royalserve to banks, mines, retailers, parastatals and local governments.
During the second half of the year under review operating results at Mvelaserve strengthened despite tough economic conditions in the decelerating domestic economy.
Revenue for the year grew 12 percent to R5.1 billion, driven by higher revenue at its Protea Coin security and Total Facilities Management Company (TFMC) cleaning subsidiaries, including contribution from Stamford Sales for the full year under review.
Group operating profit plummeted 41 percent to R200m compared with R340m for the previous year.
Mvelaserve attributed the decrease to an anticipated contraction in TFMC’s profit margin during the year and net once-off income of R87m that was included in operating profit for the previous year.
Attributable earnings a share decreased to 49.7c compared with 87.8c for the same period last year.
Headline earnings a share declined to 66.8c compared with R1.60 for last year.