| Tue 16 Sep 2003, 16:16 | | Audited results for the year ended 30 June 2003 |
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Faritec - Audited results for the year ended 30 June 2003
Faritec Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/004872/06)
("Faritec" or "the Group")
(Share code: FRT)
(ISIN: ZAE000016838)
Audited results for the year ended 30 June 2003
Abridged group income statement
for the year ended 30 June 2003
Audited Audited
2003 2002
R"000 R"000
Revenue 282 478 304 398
Operating expenses before depreciation 275 962 283 280
Depreciation 1 906 1 888
Profit from operations 4 610 19 230
Investment income 2 129 3 121
Income from associate 54 20
Finance costs (75) (211)
Revaluation of capital liability 6 312 -
Revaluation of trademarks (12 286) -
Profit before taxation 744 22 160
Taxation (223) (4 858)
Net profit for the year 521 17 302
Attributable (to)/from minorities (7) 153
Attributable earnings for the year 514 17 455
Headline earnings:
Attributable earnings for the year 514 17 455
Goodwill amortised 88 50
Revaluation of capital liability (6 312) -
Revaluation of trademarks 12 286 -
Profit on redemption of asset (266) -
Headline earnings for the year 6 310 17 505
Weighted average number of
ordinary shares in issue ("000) 125 938 135 028
Number of ordinary shares in
issue ("000) 125 989 125 989
Basic earnings per share (cents) 0,4 12,9
Headline earnings per share (cents) 5,0 13,0
Fully diluted earnings per share (cents)* 0,4 12,2
*Based on 140 667 000 (2002: 142 585 000)
shares in issue.
Abridged group balance sheet
as at 30 June 2003
Audited Audited
2003 2002
R"000 R"000
Assets
Non-current assets 58 045 18 272
Equipment 4 088 4 152
Development costs capitalised 11 324 4 967
Goodwill 553 450
Trademarks 40 215 -
Investments 119 7 680
Share incentive trust 1 023 1 023
Deferred taxation 723 -
Current assets 105 703 154 677
Inventories 5 313 5 626
Trade and other receivables 81 564 66 113
Cash and cash equivalents 18 826 82 938
Total assets 163 748 172 949
Equity and liabilities
Capital and reserves 87 187 86 666
Ordinary shareholders" interest 87 180 86 666
Minority interests 7 -
Non-current non-interest-bearing
borrowings 1 307 1 307
Current liabilities 75 254 84 976
Trade and other payables 74 668 76 342
Taxation 130 3 650
Bank overdraft 456 -
Non-interest-bearing borrowings - 4 984
Total equity and liabilities 163 748 172 949
Total number of ordinary shares in
issue ("000) 125 989 125 989
Net asset value per share (cents) 69,2 68,8
Group statement of changes in equity
for the year ended 30 June 2003
Audited Audited
2003 2002
R"000 R"000
Share capital 133 133
Balance at beginning of year 133 136
Issued during the year - 11
Shares repurchased and to be cancelled - (14)
Share premium 27 153 27 153
Balance at beginning of year 27 153 37 381
Issued during the year - 1 161
Shares repurchased and to be cancelled - (11 389)
Accumulated profits 59 894 59 380
Balance at beginning of year 59 380 41 925
Net income for the year 514 17 455
Total capital and reserves 87 180 86 666
Abridged group cash flow statement
for the year ended 30 June 2003
Audited Audited
2003 2002
R"000 R"000
Cash flow from operating activities (11 209) 22 932
Cash flow from investing activities (53 359) (6 922)
Cash flow from financing activities - (9 997)
Net movement in cash and cash equivalents (64 568) 6 013
Cash and cash equivalents at beginning
of year 82 938 76 925
Cash and cash equivalents at end
of year 18 370 82 938
Bank balances 18 370 40 740
Cash equivalents - 42 198
Comments
Introduction
The directors of Faritec are pleased to announce that the second half of the
year was an improvement over the first half, and as stated in our trading update
of 4 March 2003, Faritec has made a profit for the year to 30 June 2003. The
past financial year has been a difficult one for the IT industry and Faritec has
felt the effects of the tough trading conditions.
Results
The Group earned a net profit of R0,5 million for the year, which was an
improvement on the loss of R1,2 million reported for the first half of the year.
Group turnover for the second half of the year increased by 25% over the first
half, although Group turnover declined by 7% year on year. Services based
revenue grew by 45%, but product based revenue declined by 27%, on the previous
year. Our joint venture company ebis increased turnover by 1% year on year,
despite significant foreign currency revaluation charges in its dollar based
business.
The Group earned a profit from operations of R4,6 million for the year, which
was an improvement on the loss of R1,9 million posted for the first half.
Operating margins were under pressure due to the difficult trading conditions.
While operating margins declined to 1,6% compared to 6,3% for the previous year,
margins improved to 4,1% for the second half of the year. Operating expenses
were tightly managed in the face of difficult trading conditions, and were
reduced by 3% on the previous year.
Headline earnings were R6,3 million for the year. Headline earnings adjustments
include a R6,3 million gain on the revaluation of a capital liability, which is
no longer due and the Group provided for R12,3 million on revaluation of
trademarks.
The Group"s balance sheet remains strong, with net asset value per share having
increased to 69,2 cents from 68,8 cents for the previous year. Cash on hand
excluding cash equivalents decreased to R18,4 million from R40,7 million at the
end of the previous year. Of the R64,6 million decrease in cash and cash
equivalents, R15,5 million was as a result of an investment in working capital,
R1,9 million was used to acquire fixed assets, R6,4 million was used to fund
capitalised development costs for new business opportunities, and R46,2 million
was used to acquire trademarks.
Accounting policies
The financial statements have been prepared in accordance with South African
Statements of Generally Accepted Accounting Practice and the policies are
consistent with those used in the preparation of the audited financial
statements for the year ended 30 June 2002.
Audit opinion
The financial statements have been audited by Charles Orbach & Company,
Chartered Accountants (SA), and their unqualified audit report is available for
inspection at the company"s registered address.
Operations
Enterprise Solutions
The tough trading conditions that led to reduced customer spend in the server
and storage market continued into the second half of the year. However, the
management team improved the performance of the business through customer focus,
maintaining margins and controlling operating costs. The team is implementing a
new strategy that adds a number of new components to our existing offerings and
will create solutions that offer more business value to our customers.
ebis
Our value added distribution business turned in a solid performance in the tough
trading conditions and managed to show growth over last year. ebis has taken on
the distribution of some new brands and this is expected to help grow the
business in the new year.
Strategic IT Services
The Strategic IT Services business continued its strong performance of the first
six months and showed good growth in the second half of the year. The management
team has made significant progress with the strategy of widening the breadth of
services offered and the development of new offerings. This has resulted in the
following new businesses:
- Managed Security Services - This service includes the consulting,
implementation, support and management of our clients" IT security environments,
on a vendor agnostic basis. Faritec is currently Symantec"s only Managed
Security Services Partner providing managed security services within Middle East
and Africa.
- Security Product Sales - Faritec has been appointed a Symantec Enterprise
Security Partner to provide Symantec Security Products to the South African
corporate market.
- Managed Business Intelligence - This solution provides our customers a risk
free business intelligence service from a central base using secure internet
access. We enable our clients to drill down through their information to provide
them with responsive and easy to use analysis and accurate reporting
capabilities.
- FariMed - This solution consists of a medical aid administration system that
is operated on an ASP basis with fully integrated real-time processing and
includes seamless integration for financial management.
All the above businesses are already operational and generating revenue.
Contracting
The Faritec Contracting business also grew during the year, both financially and
in terms of the number of contractors. We have introduced a new structure in
this business that has reduced our fixed costs and will help our profitability
as the business grows.
ICP (Inter-Company Processes)
We have made significant progress in the development of the underlying
technology engine that drives the service we provide. This is receiving a
substantial amount of interest from the market and we expect to sign up our
first customers by the end of the calendar year. The sales pipeline and outlook
for the year is positive and we are making progress with a number of
partnerships and alliances in accordance with our go to market plan.
Prospects
Faritec is in the process of transforming. This process is well advanced and
whilst the financial effects of this transformation are not yet visible we have
achieved a lot. Our focus over the next year will be in the following areas:
- growth and development of new businesses and solutions,
- focus on our core business,
- cost management and control,
- growth in operating margins,
- black economic empowerment and employment equity,
- corporate governance, and
- social responsibility.
The empowerment transaction with the J&J consortium has had a positive effect on
Faritec and has helped in the transformation process. The new partnership has
not only unlocked numerous business opportunities, but has also provided us with
additional management expertise and assisted us to fast-track Faritec into a
better corporate citizen of South Africa.
Our new strategy is on track and the prospects for the year are positive.
Management expects to show growth over the next year, but the real effects of
the strategy, transformation process, empowerment transaction and significant
investment will be felt positively over the next three years.
Directorate
Mr Jonathan Long resigned as an executive director on 1 November 2002. On 17
July 2003 Dr Duarte da Silva and Mr Butana Khoza resigned as non-executive
directors, Dr Chris Jardine was appointed chairman to the board and non-
executive director, Mr Jayendra Naidoo was appointed to the board as non-
executive director and Dr Hasmukh Gajjar was appointed as an 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
C Jardine SM Tomlinson Johannesburg
Chairman Chief executive officer 16 September 2003
Registered address
Faritec House, 150 Kelvin Drive, Woodmead (PO Box 76784, Wendywood 2144)
Transfer secretaries
Computershare Limited, Investor Services Division, 70 Marshall Street
Marshalltown 2001 (PO Box 61051, Marshalltown 2107)
Directors
Dr C Jardine* (Chairman), SM Tomlinson (Chief executive officer) Dr H Gajjar, D
Masson*, J Naidoo*, AR Timm, PJ Winn
*Non-executive
Company secretary
DA Nieuwoudt CA(SA)
www.faritec.com
Date: 16/09/2003 04:00:11 PM Produced by the JSE SENS Department
