| Fri 18 Sep 2009, 17:03 | | FRT - Faritec Holdings Limited - Trading Statement and Withdrawal of Cautionary |
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FRT
FRT
FRT - Faritec Holdings Limited - Trading Statement and Withdrawal of Cautionary
Faritec Holdings Limited
(Registration number 1998/004872/06)
Share code: FRT
ISIN: ZAE000016838
("Faritec")
TRADING STATEMENT AND WITHDRAWAL OF CAUTIONARY
Shareholders are referred to the Faritec cautionary announcements of the 2nd of
July and the 17th of August relating to the company`s expected losses for the 12
months ended 30 June 2009.
Shareholders are advised that the company expects to post an EPS loss of between
47,5c and 48,7c and HEPS loss of between 35,0c and 36,2c for the year ended 30
June 2009. The rights offer and the Shoden Data Systems (Pty) Ltd ("Shoden")
transaction were concluded after the year-end on 13 July and 21 July 2009
respectively. In terms of these transactions, there are now 1 891 544 767 shares
in issue. Had these transactions had been concluded at the commencement of the
financial year, it would have resulted in an EPS loss of between 6,5c and 6,7c
and HEPS loss of between 4,8c and 5,0c.
Faritec has experienced a difficult and disappointing chapter in its history,
posting a loss reflective of the many hardships endured throughout the year.
Notwithstanding the current domestic and global economic situation, the Board is
immensely disappointed with the results for the year ended 30 June 2009.
The biggest factors contributing to the losses were the rapid decline in sales
as the economy and the Faritec market contracted, together with the high cost
structures of the business which needed to be trimmed as the market shrunk.
Revenues declined at a faster rate than that by which the cost structures could
be reduced. This gave rise to severe working capital pressures and ultimately to
the losses experienced.
Revenue has declined as compared to last year, with full-year revenues of
approximately R736m being down about 30%. This is largely due to the trading
difficulties, which were exacerbated as the company undertook its turn-around
programme and customers cut back on capital expenditure.
There are several non-recurring costs which contributed to the loss, including:
- once-off downsizing costs of approximately R10m
- write-off of bad debts of approximately R8m and provisions of R18m for
doubtful accounts receivable, both relating to debtors raised in the prior
financial year and arising as a consequence of the ongoing economic climate
- additional interest charges of R11m more than budgeted for and which were
incurred during the difficult trading conditions
- an impairment charge of R31m on goodwill
Going forward, Faritec`s operating costs have been reduced by approximately R7m
per month on a year-on-year comparative basis. In addition, there has been a
significant improvement in the working capital management.
During the period, working capital pressures led to a rights offer to raise
additional capital as well as the introduction of a new equity partner in
Shoden, through an issue of shares for cash. This injection of capital,
together with the release of certain guarantees, has resulted in an inflow of
approximately R60m into the business.
Faritec is now in a much improved position as compared to the period just prior
to the corporate transactions. There is a new management team in place, the
cost structure has been significantly reduced, the company has narrowed its
focus to its core enterprise offerings and the high-end corporate customer base
remains promising. Faritec is now well poised to build on its stabilisation and
realise its full potential over the course of the coming year.
The full results will be published on SENS on Wednesday, 23rd September.
Shareholders are no longer required to exercise caution in dealing with their
Faritec shares.
18 September 2009
Sponsor
Java Capital (Proprietary) Limited
Date: 18/09/2009 17:03:01 Produced by the JSE SENS Department.
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