| Tue 4 Mar 2003, 17:29 | | Faritec - Interim Results For The Six Months Ended |
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Faritec - Interim results for the six months ended 31 December 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)
interim results for the six months ended 31 December 2002
and renewal of cautionary announcement
ABRIDGED GROUP INCOME STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Dec 31 Dec 30 June
2002 2001 2002
R`000 R`000 R`000
Revenue 125 604 152 242 304 398
Operating expenses
before depreciation 126 562 141 515 283 230
Depreciation 895 930 1 888
(Loss)/profit from
operations (1 853) 9 797 19 280
Finance income 945 1 021 2 910
Goodwill amortised (25) (362) (50)
Income from associate - - 20
(Loss)/profit before taxation (933) 10 456 22 160
Taxation (329) (2 361) (4 858)
Net (loss)/profit for
the period (1 262) 8 095 17 302
Attributable to minorities - 153 153
Attributable earnings
for the period (1 262) 8 248 17 455
Goodwill amortised 25 362 50
Headline earnings for
the period (1 237) 8 610 17 505
Weighted average number
of ordinary shares in
issue (`000) 125 989 137 897 135 028
Number of ordinary
shares in issue (`000) 125 989 137 084 125 989
Basic earnings per
share (cents) (1,0) 6,0 12,9
Headline earnings
per share (cents) (1,0) 6,2 13,0
Fully diluted earnings
per share (cents)* (0,9) 5,6* 12,2
*Based on 142 585 000 (2002: 142 585 000) shares in issue
ABRIDGED GROUP CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Dec 31 Dec 30 June
2002 2001 2002
R`000 R`000 R`000
Cash flow from
operating activities (8 173) 5 998 22 932
Cash flow from
investing activities (2 973) (1 342) (6 922)
Cash flow from
financing activities (139) (416) (9 997)
Net movement in cash
and cash equivalents (11 285) 4 240 6 013
Cash and cash equivalents
at beginning of period 82 938 76 925 76 925
Cash and cash equivalents
at end of period 71 653 81 165 82 938
ABRIDGED GROUP BALANCE SHEET
Unaudited Unaudited Audited
31 Dec 31 Dec 30 June
2002 2001 2002
R`000 R`000 R`000
Assets
Non-current assets 20 344 14 732 18 272
Plant and equipment 3 872 4 196 4 152
Share incentive trusts 997 1 104 1 023
Development costs
capitalised 7 350 1 772 4 967
Goodwill 425 - 450
Investments 7 700 7 660 7 680
Current assets 129 244 155 708 154 677
Inventories 6 318 4 089 5 626
Trade and other receivables 51 273 70 454 66 113
Cash and cash equivalents 71 653 81 165 82 938
Total assets 149 588 170 440 172 949
Equity and liabilities
Capital reserves 85 404 87 283 86 666
Ordinary shareholders`
interest 85 404 87 283 86 666
Minority interests - 1 -
Non-current interest-bearing
borrowings 1 307 649 1 307
Current liabilities 62 877 82 507 84 976
Trade and other payables 57 825 75 314 76 342
Taxation 188 1 813 3 650
Current non-interest-bearing
borrowings 4 864 5 380 4 984
Total equity and liabilities 149 588 170 440 172 949
Total number of ordinary
shares in issue (`000) 125 989 137 084 125 989
Net asset value per
share (cents) 67,8 63,7 68,8
GROUP STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
31 Dec 31 Dec 30 June
2002 2001 2001
R`000 R`000 R`000
Share capital 133 144 133
Balance at beginning
of period 133 136 136
Issued during the period - 11 11
Shares repurchased and
to be cancelled - (3) (14)
Share premium 27 153 36 966 27 153
Balance at beginning
of period 27 153 37 381 37 381
Issued during the period - 1 088 1 161
Shares repurchased and
to be cancelled - (1 503) (11 389)
Retained income 58 118 50 173 59 380
Balance at beginning
of period 59 380 41 925 41 925
Net (loss)/income for
the period (1 262) 8 248 17 455
Total capital and
reserves 85 404 87 283 86 666
COMMENTS
INTRODUCTION
The performance of Faritec over the first six months was below expectations as
stated in our trading update of 25 November 2002. This was attributable to our
Enterprise Solutions business being well below its budget. Our tight management
of operating expenses has kept the impact of the slow down in the product
business to a minimum.
RESULTS
Revenue for the Group declined by 17% primarily as a result of a 30% decrease in
product revenues. However, our services revenues were 31% up on the same period
last year. This resulted in a loss from operations of R1,9 million. The loss in
headline earnings and headline earnings per share was R1,2 million and one cent
respectively.
Although the Faritec Group has not had a successful trading period for the first
six months of the financial year, the balance sheet remains solid. Cash on hand
excluding cash equivalents decreased to R28 million from R41 million as reported
at 30 June 2002. Of the R13 million, R9,8 million was used to fund the
operations over the last six months, R2,4 million was spent on ongoing
development costs for the ICP project, R0,7 million was used to acquire fixed
assets and the balance was used to settle amounts outstanding to vendors and to
repurchase 40 000 Faritec shares. As reported in June 2002, costs related to ICP
are being capitalised.
Debtors collections remain of utmost importance and debtors days have remained
stable at 37 days. Stock holding is kept to a minimum and the bulk of the stock
on hand was delivered in early January. Trade and other payables have reduced as
a result of the trading conditions experienced.
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 2002.
OPERATIONS
ENTERPRISE SOLUTIONS
Our product business, which has been the major contributor to our results over
the last two years, has been negatively affected by the tough trading conditions
and economic situation. This has resulted in a slow down in customer spend in
the server and storage markets. On the positive side, we have managed to
maintain our budgeted product margins and control operating expenses, which are
10% below budget. As a result of our pending empowerment transaction, our
improved pipeline and management investigating new services to add value around
the products, we are expecting an improvement in the second half of the year.
STRATEGIC IT SERVICES
Our services business delivered a strong performance over the last six months.
Revenue and earnings were both ahead of budget and operating expenses were below
budget. This was achieved by maintaining our existing contracts, adding a number
of new contracts, widening the breadth of services offered and developing a
number of new offerings. A large percentage of our revenue from this business is
recurring in nature and is derived from long-term contracts. Therefore, we are
confident that the services business will continue to perform well in the second
half of the year.
INTER COMPANY PROCESS ("ICP")
Our venture, ICP, which focuses on the service provision of inter- company
processes, is still in the development and pre-revenue phase of its business
plan. We are in the process of engaging our first few customers and expect to
begin generating revenue in the second half of the year.
PROSPECTS
We expect the tough trading conditions being experienced in the South African IT
market to continue for the remainder of the financial year. However, the Faritec
Group will continue to focus in the following areas to ensure growth in the long
term and position Faritec when market conditions improve:
- maintaining a strong balance sheet;
- tight control of operating expenses;
- focus on our core business;
- development of our largest asset, our staff;
- development of new high margin, annuity revenue offerings and businesses;
- black economic empowerment and employment equity;
- corporate governance; and
- social responsibility.
The directors believe that by focusing on the above areas, Faritec will show an
improvement in the second half of the financial year and will be well positioned
for growth in the long-term.
TRADING UPDATE
Management believes it is appropriate to provide an update on the trading
conditions currently being experienced at Faritec and the outlook for the rest
of the financial year.
Faritec expects the second half of the financial year to be an improvement over
the first half and our forecasts show that we expect to make a profit for the
year to 30 June 2003.
FURTHER CAUTIONARY ANNOUNCEMENT
Peregrine Corporate Advisory Services (Proprietary) Limited is authorised to
announce that negotiations are currently in progress with an empowerment group,
which, if successfully concluded, may have a material effect on the share price
of Faritec.
Accordingly, shareholders are advised to continue exercising caution when
dealing in their shares until a further announcement is made.
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 AR Timm
Chief executive officer Executive director
Johannesburg
4 March 2003
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*, AR Timm, PJ Winn
*Non-executive
Company secretary: DA Nieuwoudt CA(SA)
Date: 04/03/2003 05:05:00 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
