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INTERIM RESULTS

INTERIM RESULTS. 30 Nov 2011. Investor Presentation 20 February 2012. MORVEST AT A GLANCE. 2011 Highlights. Maiden DIVIDEND DECLARATION of 1 cps Move to JSE Main Board – June 2011 Concluded Management BEE transaction – Level 2 Continued D iversification S trategy

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INTERIM RESULTS

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  1. INTERIM RESULTS 30 Nov 2011 Investor Presentation 20 February 2012

  2. MORVEST AT A GLANCE

  3. 2011 Highlights Maiden DIVIDEND DECLARATION of 1 cps Move to JSE Main Board – June 2011 Concluded Management BEE transaction – Level 2 Continued Diversification Strategy Change of name to “MORVEST” – March 2011 Nigeria Launch – Lagos: June 2011 & Abuja: Sept 2011 Renewedkey customer contracts ie. Vodacom, MTN, Eskom

  4. 2011 Highlights continued • Strengthened the board • Investment in subsidiary leadership and development • Managed cost strategy • New Midrand Campus: • Land acquired for R17.1m • Estimated building cost R50m – financed over 5-10 years • Target move in 2013 • Direct saving in 2014 in excess of R3m • Centralisedcampus resulting in additional indirect savings

  5. New Midrand Campus

  6. SalientFeatures (Interim) R446m Up 8% Revenue R73,4m Up 22% EBITDA R25m Up 11% Headline earnings 4.87 cents per share Up 13% HEPS R100m Cash 37.15 cents NAV per share

  7. CompanySnapshot Listed on JSE since 2004 Diversified Group with annuity revenue of 50% Approximately 2,000 staff International footprint Provider of Business Support Services (including Professional Services and Outsourcing) and ICT Solutions Blue chip customer base Level 2 B-BBEE (but still a challenge for Group in terms of Equity and Level 1 Status)

  8. GeographicalFootprint South Africa Global: Nigeria (Political Risk), Mozambique; India& USA

  9. OurPositioning Largest DOE outsourcing contract for adult literacy Microsoft Mobility Solutions Partner: 2010 winner Top 3 Oracle Partner throughout EMEA Primary supplier to leading Telco’s for SIM packaging and fulfilment and scratch cards IntergraphPPM and SGI Africa Partner

  10. Offerings

  11. ProfessionalServices • ADVISORY • Due Diligence Services • Business Continuity Planning • Business Performance Improvement • Organisational Restructuring • CONSULTING • Business Process Outsourcing • Project & Programme Management Services • Financial Management Services & Standards • Supply Chain Management Services • Asset Management Services • RETAIL • Online Retail • Retail Stores • FINANCIAL SERVICES • Banking • Insurance; and • Financial Services • GOVERNANCE • Internal Audit Services • IT Audit Services • Forensic Audit Services • Risk Management Services • Governance & Adherence Services • Audit Committee Forums • Performance Audit Services • Governance Frameworks • HUMAN CAPITAL MANAGEMENT • Outsourced Professionals, • (permanent and temporary) • Organisation Design & Development • Human Capital Optimisation • Skills Development • TRAINING ACADEMY • General Training • Management Training • General Management in SAP • ORACLE • Microsoft • PRINCE2; COBIT; ITIL

  12. Outsourcing • SIM packaging and fulfilment • Secure print solutions/ scratch cards and vouchers

  13. ICTSolutions • INFORMATION INTELLIGENCE/ • BUSINESS INTELLIGENCE • Business Intelligence • Data Mining • Data Warehousing • Dashboards & Balance Scorecards • INFRASTRUCTURE SERVICES • Managed Services • BUSINESS APPLICATION SOLUTIONS • Financial Management • Human Capital Management • Enterprise Information Management • Software Orientated Architecture • Engineering and Smart Plant Solutions • GIS Solutions • Global partners and products: • CONSUMER AND MOBILE SOLUTIONS • Data Support • Content and Information • Management • Mobility Applications (.Net) • Microsoft CRM • Microsoft Share Point • Storage

  14. Operational REVIEW

  15. South Africa • Economic conditions remain challenging and tough organic growth • Continued price pressure • Focused cost management strategy (saved 10%) • New contract wins • Improved Level 2 B-BBEE status (but still a challenge due to change in • shareholding): • Current ownership at 27% - need to increase to compete going forward to get to Level 1 • Has helped to win new contracts • Key management interest aligned for 5 to 7 years

  16. Rest of Africa & Abroad • Nigeria: • Political risk • Tough market conditions and pricing pressure • Sim fulfillment volume record in November • INGR Technologies (Intergraph) in its first year • Establishment of Morvest Nigeria Limited • Taking the Group’s current offerings into Nigeria • India • Prepaid scratch card JV established to combat pricing pressure and • create additional capacity for Africa

  17. Agenda • 1. Welcome • 2. The Group at a glance & Highlights for the year • - Mohammed Varachia: CEO Morvest Business Group • 3. Financial Review • - Suren Singh: CFO Morvest Business Group • 4. Outlook for the next year • - Mohammed Varachia: CEO Morvest Business Group • Questions & Answers • 6. Refreshments

  18. FINANCIAL REVIEW

  19. Revenue • Revenue up 8.4% • Organic revenue – 93% (R415 569) • Geographical contribution: 93% SA, 7% Abroad • Segmental 62% contributed from BSS & balance from Technology sector • Continued pricing pressure

  20. Gross Profit • Gross profit % increase by 6,5% • Revenue mix - BSS 62% & Technology 38% • Production in India assisted the increased margin

  21. OPEX and EBITDA • EBITDA margin increased to 16,5%: • Careful cost management • Benefits of Group restructuring • Opex cost to revenue – 33,9% (FY11 – 34,9%) • Drive to reduce costs by 10% throughout the Group • Net margin of 8.2% (PY 2011 6%) after effective tax rate of 35.5%

  22. HEPS • HEPS growth of 13% • Diluted HEPS stable – impacted by additional shares weighted BEE • transaction (in for 8 months), total shares of 135,0 million

  23. Net Debt • Paying down debt as per schedule – R42.2m • Additional vendor debt for the acquisition of R and S (mobile data support • company) • Healthy cash position • Investec debt restructured (at JIBAR + 4.5%), Nedbank debt settled • Additional R50,0 million debt for the building

  24. Working Capital • Careful working capital management. • Increased inventory (to R38.2m) from new mobile operator orders (stock for the • festive period). Inventory days increased from 23 to 30 days • Trade receivable days increased from 50 to 55 days • Trade payable days increased from 55 to 60 days • Net working capital days of 25 days compared to 18 days at FY11

  25. Cashflow Highlights • Careful working capital management • Lower finance costs from lower debt and interest rates • Cashflow from investing activities (R20 191) PPE = R21,5 million • Cashflow from financing activities (R9 152). Vendor payment of R2,0 million • + dividend of R5,3 million • > 100% of EBITDA converted into cash

  26. OUTLOOK

  27. Outlook • Challenging market conditions and pricing pressure • from clients to continue; • Ongoing focus on cost management strategy of at least a further • 10% saving; • Ongoing strengthening of existing businesses: • Building management capacity; • Investment in strong leadership; • Improved productivity; • Culture of excellence; • Improved collaboration between business units with opportunities to deliver revenue growth.

  28. Outlook continued • Continued diversification strategy exploring new • markets and territories (Retail and Service Industries); • Due to potential risk of dilution we will actively maintain and enhance B-BBEE • (currently Level 2 – striving to be Level 1 and improving BEE shareholding); • Further expansion into Africa and international emerging markets focusing • on Outsourcing, Resourcing, Training, Education and niche ICT; • New Midrand Campus – construction commenced in 1st quarter of 2012; • Continue building the new Morvest brand and positioning.

  29. ClientBase

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