| Thu 29 Jan 2009, 11:48 | | FRT - Faritec - Trading Statement For The Year Ended 31 December 2008 |
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FRT
FRT
FRT - Faritec - Trading Statement For The Year Ended 31 December 2008
Faritec Holdings Limited
(Registration number 1998/004872/06)
Share code: FRT
ISIN: ZAE000016838
("Faritec" or "the company")
TRADING STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2008
In terms of the Listings Requirements of the JSE Limited, companies are required
to publish a trading statement as soon as there is a reasonable degree of
certainty that the financial results for the period to be reported upon next
will differ by at least 20% from that of the previous corresponding period.
During the six months to 31 December 2008 revenue has declined by approximately
19% from R502 million to R414 million compared to the same period last year. The
contraction in revenue growth has been experienced in our Gauteng and Public
Sector regions, with the coastal and Africa regions reporting flat growth year
on year. The decline in hardware and software product revenues is as a result of
a decrease in spend from almost all of our customers in the affected regions and
we put this down to the current economic downturn.
The group`s gross profit margins have deteriorated slightly from 24% in the
previous year to 23%, mainly a result of the hardware margins that have come
under significant pressure. The revenue mix for the period has been maintained
at similar levels to the year-end, with hardware contributing R237 million, or
57%, software R40 million, or 10%, and services R137 million, or 33%. Compared
to the same period last year, services revenues have grown by 41%, hardware
revenues have declined by 26% and software revenues by 53%.
Our costs have grown by approximately R16 million or 17%, compared to the same
period last year. This is comprised of approximately R3,1 million from
inflationary increases to salaries and operating expenses and R10,9 million
arising from the new salaries and operating expenses arising from the recent
acquisitions and the new Google venture. Included in the operating costs is R2m
provision for bad debt that relates to a government tender.
As a result of the above, we have continued to experience pressure on our
working capital and this has resulted in our financing costs increasing by
approximately R8,7 million for the six months period.
All of the above have contributed to a significant decrease in our headline
earnings per share ("HEPS") and earnings per share ("EPS") for the six months to
31 December 2008. Faritec accordingly advises that it expects headline earnings
per share ("HEPS") and earnings per share ("EPS") for the six months to 31
December 2008 to reflect a loss of between -11,6 cents and -12,8 cents.
SECOND HALF FORECAST
It is the view of management that the slowdown in trade experienced during the
first half of our financial year will not improve significantly during the next
six months. With this in mind we have embarked on a major cost cutting exercise,
which we initiated in the October/November 2008 timeframe. This exercise has
resulted in a headcount and capex freeze and a significant reduction in
operating expenses and people- related costs. This has already realised R2
million worth of savings per month and once completed by the end of March, will
result in approximately R4 million of cost reductions per month. A conservative
analysis of our current pipeline for the second half of the year and the above
cost cutting exercise should see Faritec make a profit for the second half of
the year, from 1 January 2009 to 30 June 2009. As a result of the profits earned
over the last 4 years and the funding we have secured, Faritec has a stable
balance sheet and remains within all of the covenants of its funding
arrangements.
The financial results on which this trading statement has been based have not
been reviewed or reported on by the company`s auditors. The financial results of
the company will be published on or about 20 February 2009.
29 January 2009
Sponsor
Java Capital (Propriety) Limited
Date: 29/01/2009 11:48:01 Produced by the JSE SENS Department.
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