| Tue 3 Sep 2002, 0:00 | | Faritec Holdings Limited - Audited Results For The |
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FARITEC HOLDINGS LIMITED - AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2002
FARITEC HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/004872/06)
("Faritec" or "the Group")
(Share code: FRT)
(ISIN number: ZAE000016838)
AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2002
FARITEC HIGHLIGHTS
Revenue up 11%
Profit from operations up 51%
Operating margin up 39%
Attributable earnings up 38%
Headline earnings per share up 44%
GROUP INCOME STATEMENT
Audited Audited
year ended year ended
30 June 30 June Per-
2002 2001 centage
R`000 R`000 change
Revenue 304 398 273 722 11
Operating expenses
before depreciation 283 280 259 396
Depreciation 1 888 1 599
Profit from operations 19 230 12 727 51
Income from associate 20 -
Finance income 2 910 2 690
Profit before taxation 22 160 15 417 44
Taxation (4 858) (2 915)
Net profit for the year 17 302 12 502 38
Attributable to minorities 153 184
Attributable earnings
for the year 17 455 12 686 38
Goodwill amortised 50 98
Headline earnings for the year 17 505 12 784 37
Weighted average number
of ordinary shares in
issue (`000) 135 028 141 758
Number of ordinary shares
in issue (`000) 125 989 136 543
Basic earnings per
share (cents) 12,9 8,9 44
Headline earnings per
share (cents) 13,0 9,0 44
Fully diluted earnings
per share (cents)* 12,2 8,4 46
*Based on 142 585 000 (2001: 151 636 000) shares in issue
GROUP BALANCE SHEET
Audited Audited
30 June 30 June
2002 2001
R`000 R`000
ASSETS
Non-current assets 18 272 13 112
Property and equipment 4 152 5 447
Share incentive trusts 1 023 5
Development costs capitalised 4 967 -
Goodwill 450 -
Investments 7 680 7 660
Current assets 154 677 151 728
Inventories 5 626 3 944
Trade and other receivables 66 113 70 859
Cash and cash equivalents 82 938 76 925
Total assets 172 949 164 840
EQUITY AND LIABILITIES
Capital and reserves 86 666 79 442
Ordinary shareholders` interest 86 666 79 442
Minority interests - 153
Non-current interest-bearing
borrowings 1 307 649
Current liabilities 84 976 84 596
Trade and other payables 76 342 77 709
Taxation 3 650 1 499
Current non-interest-bearing
borrowings 4 984 5 388
Total equity and liabilities 172 949 164 840
Total number of ordinary shares
in issue (`000) 125 989 136 543
Net asset value per share
(cents) 68,8 58,2
GROUP STATEMENT OF CHANGES IN EQUITY
Audited Audited
year ended year ended
30 June 30 June
2002 2001
R`000 R`000
Share capital 133 136
Balance at beginning of year 136 142
Issued during the year 11 1
Shares repurchased and to be
cancelled (14) (7)
Share premium 27 153 37 381
Balance at beginning of year 37 381 39 594
Issued during the year 1 161 361
Shares repurchased and to be
cancelled (11 389) (2 574)
Accumulated profits 59 380 41 925
Balance at beginning of year 41 925 29 239
Net income for the year 17 455 12 686
Total capital and reserves 86 666 79 442
ABRIDGED GROUP CASH FLOW STATEMENT
Audited Audited
year ended year ended
30 June 30 June
2002 2001
R`000 R`000
Cash flow from operating
activities 22 932 16 805
Cash flow from investing
activities (6 922) (1 745)
Cash flow from financing
activities (9 997) (2 382)
Net movement in cash and cash
equivalents 6 013 12 678
Cash and cash equivalents at
beginning of year 76 925 64 247
Cash and cash equivalents at
end of year 82 938 76 925
COMMENTS
INTRODUCTION
The board is pleased to announce its results for the year ended 30 June 2002.
Our continued focus on our core business and tight management of operating
expenses has resulted in improved operating margins. Strong growth in earnings
and a solid balance sheet are the results of a successful year for the Group.
RESULTS
Group turnover increased by 11%, with the highlight being the 51% turnover
growth reported by our joint venture company e-bis, (previously named MDS). The
wholly owned Faritec subsidiaries grew turnover by 5%.
Despite the modest growth in turnover, management`s focus on improving margins
has led to a 51% increase in operating profit. Operating margins for the full
year have increased to 6,3% compared to 4,6% for the previous year. The first
six months of the year yielded operating margins of 6,4% while the second six
months declined marginally to 6,2%. The reasons for this are as follows:
- A decline in gross profit margins in the contracting division. This has
subsequently been rectified and margins have been restored to previous levels.
- Incentives were paid to certain staff in the second half for exceeding
budgets.
As reported in December 2001, costs related to our e-commerce initiative are
being capitalised. To date R5 million has been capitalised. Work to date has
included the completion of a comprehensive functional and technical
specification as well as the development of insight and relationships with pilot
and target market participants. Substantial progress has been in the
establishment with a large South African banking institution to jointly
commercialise the planned business service. The finalisation of this joint
venture reduces "go-to-market" and financial risk to the Group and commences the
go-to-market strategy in earnest.
Free cash on hand has remained stable at R41 million, having increased by R4
million from the previous financial year. Of the cash generated by operations,
R5 million was invested in ICP, R2 million was used to purchase fixed assets and
R11 million was used to repurchase 14 million of the company`s own shares. These
shares are reflected as a reduction of share capital and will be ultimately
cancelled.
ACCOUNTING POLICIES
The financial statements have been prepared in accordance with South African
Statements of Generally Accepted Accounting Practice and the accounting policies
used are consistent with those used in the preparation of the audited financial
statements for the year ended 30 June 2001.
AUDIT OPTION
The financial statements have been audited by Charles Orbach & Co, Chartered
Accountants (SA), and their unqualified report is available for inspection at
the company`s registered address.
OPERATIONS
INFRASTRUCTURE
Our infrastructure business exceeded expectations for the second year running
and is the largest contributor to the Group`s results. We are the dominant
suppliers of IBM server and storage technology in the South African market. Our
focus on large, high value add, complex solutions and the ongoing delivery of
implementation, integration and support services has resulted in us retaining
our existing customers and winning a number of new competitive accounts.
OUTSOURCING
The year under review was a difficult one for our outsourcing business. The
South African infrastructure outsourcing market is becoming over traded and the
ability to differentiate is an imperative. Over the year we have managed to
retain our existing contracts as well as add a number of new contracts. The
development of new outsourcing services to help differentiate our offering is
important and is one of the main areas of focus for the outsourcing business.
CONTRACTING
Changes in the Tax and Labour Law regulations resulted in a reduction in our
number of contractors but a concerted effort from the management team and a
small acquisition has the contracting business back on plan.
FARITEC ICP
Our new venture, ICP, which focuses on the service provision of intercompany
processes is still in the development and pre-revenue phase of its business
plan. The development of an electronic invoice process and payment service has
attracted a lot of interest from a number of prospective clients, a major bank
and an international IT company. ICP purchased a 40% share in Commerce Chain
Technologies, a Microsoft software and development partner.
E-BIS
Faritec`s value added distribution joint venture, e-bis, performed above
expectations and continues to grow its market in Africa.
PROSPECTS
Whilst the last year has been a successful one for the Faritec Group, we expect
the tough trading conditions being experienced in the South African IT market to
continue in the coming year. With this in mind a decision has been taken to
decentralise the Group into three autonomous businesses, namely Faritec
Enterprise Solution, Faritec Strategic IT Services and Faritec ICP. This has
been done to facilitate growth in the long-term and position Faritec when market
conditions improve.
The focus of the Faritec Group in the year ahead will be on growing the existing
operations and investigating new innovative opportunities. Corporate Governance
and Black Economic Empowerment also remain important priorities.
Faritec expects to show growth in earnings and operating margins over the 2002
year, however, the level of growth will be dependent on local market conditions.
DIRECTORATE
Mr Donald Masson was appointed to the board on Monday, 26 August 2002 as a non-
executive director
DIVIDEND
No dividends have been declared with funds generated being retained to assist
with the Group`s anticipated growth.
For and on behalf of the board
SM Tomlinson J Long
Chief executive officer Financial director
Johannesburg
5 September 2002
REGISTERED ADDRESS: Faritec House, 150 Kelvin Drive, Woodmead
(PO Box 76784, Wendywood 2144)
TRANSFER SECRETARIES: Computershare Investor Services Limited, 70 Marshall
Street Marshalltown 2001 (PO Box 61051, Marshalltown 2107)
Directors: SM Tomlinson (Chief executive officer), Dr DF da Silva*, BM Khoza*D
Masson*, J Long, AR Timm, PJ Winn
*Non-executive
COMPANY SECRETARY: DA Nieuwoudt CA(SA)
www.faritec.com
Date: 03/09/2002 05:50:00 PM Produced by the JSE SENS Department
