| Wed 14 Feb 2001, 0:00 | | Faritec - Interim Results |
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FARITEC HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/004872/06)
("Faritec" or "the Group")
Interim results for the six months ended 31 December 2000
GROUP INCOME STATEMENTS
Six months Six months Audited year
ended ended ended
31 December 31 December 30 June
2000 1999 2000
(unaudited) (unaudited) (audited)
R'000 R'000 R'000
Revenue 118,084 116,590 203,273
Operating profit 4,257 13,148 13,160
Abnormal items - - (4,435)
Operating profit
after abnormal items 4,257 13,148 8,725
Finance income 883 954 1,830
Profit before taxation 5,140 14,102 10,555
Taxation (605) (2,651) (1,598)
Net income after taxation 4,535 11,451 8,957
Attributable to outside
shareholders 11 - 134
Attributable earnings 4,524 11,451 8,823
Abnormal item net of tax saving - - 3,333
Headline earnings 4,524 11,451 12,156
Weighted average number of
ordinary shares in issue ("000) 143,183 138,005 142,000
Total number of ordinary
shares in issue ("000) 143,183 138,005 142,000
Earnings per share (cents) 3,2 8,3 6,2
Headline earnings per share (cents) 3,2 8,3 8,6
GROUP BALANCE SHEETS
Assets
Non-current assets 12,848 13,859 12,966
Property and equipment 5,183 6,194 5,301
Share incentive trust 5 5 5
Investments 7,660 7,660 7,660
Current assets 108,922 103,679 96,617
Inventories 2,304 3,945 2,257
Trade and other receivables 37,434 34,044 30,113
Cash and cash equivalents 69,065 65,690 64,247
Taxation 119 - -
Total assets 121,770 117,538 109,583
Equity and liabilities
Capital and reserves 73,500 39,976 68,975
Ordinary shareholders' interest 73,500 39,976 68,975
Minority interests 349 - 338
Non-current borrowings 649 36,200 -
Current liabilities 47,272 41,362 40,270
Trade and other payables 41,913 32,733 33,834
Taxation - 2,129 236
Current borrowings 5,359 6,500 6,200
Total equity and liabilities 121,770 117,538 109,583
Total number of ordinary
shares in issue ("000) 143,183 138,005 142,000
Net asset value per share (cents) 51,1 29,0 48,6
STATEMENTS OF CHANGES IN EQUITY
Share capital 143 138 142
Balance at beginning of period 142 138 138
Issued during period 1 - 4
Share premium 39,594 7,971 39,594
Balance at beginning of period 39,594 8,118 8,118
Movement during period - (147) 31,476
Accumulated profit 33,763 31,867 29,239
Balance at beginning of period 29,239 20,416 20,416
Net income for period 4,524 11,451 8,823
Total capital and reserves 73,500 39,976 68,975
GROUP CASH FLOW STATEMENTS
Cash flow from operating activities 4,654 9,115 24,255
Cash flow from investing activities (485) (10,277) (2,788)
Cash flow from financing activities 649 52,777 (6,047)
Net increase in cash and
cash equivalents 4,818 51,615 15,420
Cash and cash equivalents
at beginning of period 64,247 14,075 48,827
Cash and cash equivalents
at end of period 69,065 65,690 64,247
COMMENTS
INTRODUCTION
The board is pleased to announce its Interim results for the period ended 31
December 2000. As previously stated, the focus during the period under review
was on rebuilding and restructuring Faritec. This process is nearing completion
and is already producing successful results.
RESULTS
Revenue for the period under review shows a marginal increase from the six
months ended 31 December 1999 and an increase of 22% over the six months ended
30 June 2000. Compared to the six months ended 30 June 2000 headline earnings
have grown from R705 000 to R4,5 million, but are lower than the R11,451
million of 31 December 1999, reflecting the difficult trading conditions of the
first three months of the new financial year. The results include those of MDS
(Pty) Limited which were not included for the period ended 31 December 1999.
The joint venture with TCM has exceeded expectations, showing profitability a
year ahead of forecasts. MDS margins are lower than those achieved by the South
Africa operations, which has led to a decrease in overall group operating
margins.
Cash on hand remains healthy, having increased to R32 million from R27 million.
Due to the difficulties in raising capital in the current uncertain markets,
the directors believe that it is prudent to maintain a strong cash balance to
facilitate its future expansion. The inclusion of MDS has resulted in a R11
million increase in trade debtors which is offset by a similar increase of R11
million in trade creditors.
During the last six months the Group has issued a further 1 million shares to
vendors of businesses acquired in previous financial years.
OPERATIONS
During the six months to 31 December 2000 management implemented a cost
reduction programme and focused on the operations of the Group. Faritec's
product division has benefited from the restructuring process and management
changes and is ahead of its forecast for the period. The services division,
which now includes contracting, continues to show steady growth. Faritec's
e-commerce initiative, which focuses on service provision and leverages the
Group's skills and infrastructure, is gaining momentum and nearing completion
of its pilot phase. Faritec's joint venture, MDS, the value-added distributor
in Africa, is performing above expectations. The cost of restructuring, MDS's
lower margins and the operational expenditure on the e-commerce initiative
contributed to a decline in the operating margins for the period.
PROSPECTS
The outlook for the second half of the year is positive. The Group's divisions
are all well-positioned to achieve their budgets and will benefit thereafter
from the current restructuring process. The restructuring process, cost
reduction programme and e-commerce initiative will continue through to the end
of the financial year and therefore operating margins are expected to remain at
their current levels. The directors are still expecting growth over the 2000
earnings and Faritec will be well-positioned to show steady growth thereafter.
DIVIDENDS
No dividends have been declared and, as stated, funds generated will be
retained in the business to assist with the Group's anticipated growth.
ACCOUNTING POLICIES
The same accounting policies and methods of computation have been used in the
preparation of these interim financial statements that were used in the annual
financial statements to 30 June 2000.
STRATE
Faritec has been selected by the JSE Securities Exchange South Africa ("JSE")
to transfer its share capital to the electronic STRATE environment as of 9
April 2001. In terms of the JSE's revised listings requirements, the move to
STRATE is obligatory and it will ensure Faritec participates in a sophisticated
settlement process which is on a par with international best practice.
STRATE is an electronic settlement and custody system which has been designed
to achieve the contractual, rolling and irrevocable settlement of share
transactions by electronic book entries.
The move to the STRATE system will involve many fundamental changes from the
current paper-based settlement system. One of the primary responsibilities for
investors, as part of the preparation for the STRATE environment, will be the
submission of share certificates to a qualifying stockbroker or Central
Securities Depository Participant (CSDP). CSDP is the name given to a custodian
bank in the STRATE environment. The CSDP, or stockbroker, will open a share
account for investors and will ensure that share certificates are converted
into an electronic record - a process known as dematerialisation.
There are three significant dates which form part of the move to STRATE and
which should be understood by all shareholders:
Dematerialisation
As mentioned above, the dematerialisation date for the share certificates in
circulation representing the share capital of Faritec is 9 April 2001.
This indicates the date from which investors' shares can be converted into an
electronic record in order to become eligible to settle in the STRATE
environment. If shares are not already in safe custody with a CSDP or
qualifying stockbroker, they should be deposited with either a CSDP or
qualifying stockbroker on or soon after this date. The selected agent will then
ensure that shares are converted into an electronic record and rendered
eligible for settlement under STRATE.
Trading for electronic settlement
Trading for electronic settlement begins 30 April 2001. As of this date, there
is a legal requirement for Faritec shareholders to deposit their shares with a
CSDP or qualifying stockbroker prior to selling them in order for the trade to
settle in STRATE. This means that as of 30 April 2001, Faritec shares cannot be
sold unless they exist in electronic form in the STRATE environment.
Electronic settlement
Five business days after the above date, i.e. on 8 May 2001, electronic
settlement of Faritec trades will take place for the first time. Any trades
that take place on or after 30 April 2001 will undergo simultaneous, final,
irrevocable settlement in an electronic environment. In other words, the
electronic share accounts of the buyer and seller will be simultaneously
updated exactly five business days after the transaction. For the first time,
settlement will be contractual and guaranteed.
Paper share certificates will not lose their value once Faritec moves to the
STRATE system, but they are no longer acceptable for the purposes of
settlement. Faritec encourages all shareholders to submit their shares promptly
for conversion into electronic form in the interests of efficiency and
security. However, investors are within their rights to retain these shares in
paper form until they wish to sell them.
For and on behalf of the board
S M Tomlinson J Long
(Chief Executive Officer) (Financial Director)
Sandton 14 February 2001
Registered address: Faritec House, 150 Kelvin Drive, Woodmead (PO Box 76784,
Wendywood, 2144)
Transfer Secretaries: Mercantile Registrars Limited, 11th Floor, 11 Diagonal
Street, Johannesburg, 2001 (PO Box 1053, Johannesburg, 2000)
Directors: S M Tomlinson (CEO), Dr D F da Silva*, B M Khoza*, J Long CA(SA), A
R Timm, P I Winn. *Non-executive
Website: www.faritec.co.za
