| Tue 13 Sep 2005, 9:11 | | Faritec - Audited results for the year ended 30 Ju |
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Faritec - Audited results for the year ended 30 June 2005
Faritec Holdings Limited
(Registration number 1998/004872/06)
Share code: FRT
ISIN: ZAE000016838
(`Faritec` or `the company`)
AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2005
2005 % growth 2004
Revenue R434 million 32 R330 million
EBITDA % 3,4 206 (3,2)
EBIT% 1,6 132 (5,0)
Net profit R5,8 million 150 (R11,6 million)
NP% 1,3 138 (3,5)
ROA 4,8 159 (13,2)
ROE 7,4 152 (14,2)
Cash generated R22,1 million 201 (R21,9 million)
TNAV (cents) 22,8 51 15,1
EPS (cents) 4,5 150 (8,9)
HEPS (cents) 2,6 130 (8,6)
ABRIDGED GROUP INCOME STATEMENT
Year ended Year ended
30 June 2005 30 June 2004 %
R`000 R`000 change
Revenue 434 207 329 980 31,6
Operating expenses (422 005) (340 104) 24,1
Operating profit/(loss)
before depreciation
and amortisation 12 202 (10 124) 220,5
Depreciation and amortisation (7 808) (6 305) 23,8
Profit/(loss) from operations 4 394 (16 429) 126,7
Finance costs (380) (656) 42,0
Investment income 768 804 (4,5)
Exceptional items 2 428 (314) 873,2
Fair value adjustment of
investment 1 743 (3 467) 150,3
Profit/(loss) before taxation 8 953 (20 062) 144,6
Taxation (3 484) 3 565 (197,7)
Net profit/(loss) for
the period 5 469 (16 497) 133,1
Attributable (to)/from
minorities - total 341 4 941 (93,1)
Attributable earnings/(loss)
for the period 5 810 (11 556) 150,3
Headline earnings reconciliation:
Attributable earnings/(loss)
for the period 5 810 (11 556)
Goodwill amortised 0 69
Write-off of liability (2 689) 0
Impairment of assets 5 303 314
Profit on sale of business (5 042) 0
Headline earnings for the
period 3 382 (11 173) 130,3
Weighted average number of
ordinary shares
in issue (`000) 129 629 129 629
Number of ordinary shares
in issue (`000) 129 629 129 629
Fully diluted shares in
issue (`000) 151 010 149 888
Basic earnings per
share (cents) 4,5 (8,9)
Headline earnings per share
(cents) 2,6 (8,6)
Fully diluted earnings per
share (cents) 3,8 (7,7)
ABRIDGED GROUP CASH FLOW STATEMENT
Year ended Year ended
30 June 2005 30 June 2004
R`000 R`000
Cash flow from operating
Activities 22 809 (7 334)
Cash flow from investing
Activities (879) (16 646)
Cash flow from financing
Activities 214 2 128
Net movement in cash
and cash equivalents 22 144 (21 852)
Cash and cash equivalents at
beginning of year (3 482) 18 370
Cash and cash equivalents at
end of year 18 662 (3 482)
ABRIDGED GROUP STATEMENT OF CHANGES IN EQUITY
Year ended Year ended
30 June 2005 30 June 2004
R`000 R`000
Share capital 133 133
Balance at beginning of year 133 133
Share premium 27 323 27 483
Balance at beginning of year 27 483 27 153
Write-off of share issue costs (160) (758)
Issued during the year 0 1 088
Accumulated profits 54 148 48 338
Balance at beginning of year 48 338 59 894
Net income/(loss) for the year 5 810 (11 556)
Total capital and reserves 81 604 75 954
ABRIDGED GROUP BALANCE SHEET
As at As at
30 June 2005 30 June 2004
R`000 R`000
ASSETS
Non-current assets 79 987 84 398
Equipment 9 198 9 973
Development costs capitalized 13 688 15 109
Goodwill 127 484
Trademarks 38 204 38 204
Licence fees 0 2 617
Investments 11 505 9 901
Loans receivable 4 216 3 581
Deferred taxation 3 049 4 529
Current assets 133 748 58 356
Inventories 3 055 2 528
Trade receivables 106 707 48 130
Other receivables 5 145 2 968
Taxation 0 145
Cash and cash equivalents 18 841 4 585
Total assets 213 735 142 754
EQUITY AND LIABILITIES
Capital and reserves 81 604 75 954
Minority interests 10 088 7 970
Non-current interest-bearing
Borrowings 1 174 1 562
Non-current non-interest-
bearing borrowings 2 665 2 121
Current liabilities 118 204 55 147
Trade payables 100 018 36 125
Other payables 15 812 9 978
Taxation 1 197 198
Bank overdrafts 179 8 067
Current interest-bearing
borrowings 998 779
Total equity and liabilities 213 735 142 754
Total number of ordinary shares
in issue (`000) 129 629 129 629
Net asset value per share
(cents) 63,0 58,6
Tangible net asset value per
share (cents) 22,8 15,1
COMMENTS
Introduction
The directors of Faritec are pleased to announce the results for the year ended
30 June 2005. Whilst we believe that the group has yet to realise its full
potential, significant progress has been made and we are satisfied that the
group is on course to meet the market`s expectations.
Results
Revenue grew by 31,6% to R434,2 million (2004: R330 million).
Operating profit for the group increased by 127% to R4,4 million on the back of
strong revenue growth and good cost control.
Net profit reached R5,5 million (2004: Loss of R16,5 million), without the
benefits of the sale of the Contracting business, the Group`s net profit would
have increased by 103%. The Group achieved headline earnings per share growth of
130% to 2,6 cents (2004: Loss of 8,6 cents).
The amortisation and impairment charges amounting to R9,0 million have had a
significant impact on the basic earnings per share, with the first-time
amortisation of ICP software development costs of R2,9 million and full
impairment of the Gizmoz licence fees of R2,6 million. The group adopted revised
AC 129 - Intangible assets. Trademarks are no longer amortised, and are now
reviewed annually and impaired where appropriate. The group accounted for an
impairment of R2,3 million relating to acquired goodwill.
The tax charge on the income statement has increased mainly as a result of the
reversal of a portion of the deferred tax asset of R1,5 million, created in a
subsidiary company in previous years, and an underprovision of taxes in certain
subsidiaries in previous years.
Income attributable to shareholders increased by 150% to R5,8 million (2004:
Loss of R11,6 million), benefiting from the improved operating performance as
well as the disposal of the Contracting business from 1 October 2004. The
revenue from the Contracting business included in this year`s results was R14,4
million, while the contribution to profits was R500 400.
The balance sheet continues to strengthen with a 51% increase in tangible net
asset value per share to 22,8 cents (2004: 15,1 cents). Cash generation has been
significant, ending the financial year with a net surplus of R18,7 million.
Working capital generated of R8 million boosting cash, a vast improvement from
the previous year`s position of R1 million and a cash flow contribution from
operating activities of R22,8 million.
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 2004, except for:
* The adoption of AC 140 - Business Combinations and the revised statements of
AC 128 - Impairment of Assets and AC 129 - Intangible Assets. These statements
have been applied from 1 July 2004 in terms of their respective transitional
provisions. In terms of these standards, trademarks and goodwill are no longer
amortised and are instead subject to an annual impairment test. The useful lives
of intangible assets has also been re-assessed and impairments raised where
necessary.
* The adoption of the new interpretation of AC 105 - Operating leases, which
include fixed rental increases. The effect of the new interpretation of
operating leases was found to be immaterial.
The provisional report has been prepared in accordance with AC127, interim
financial reporting.
With efffect from 1 July 2005 the group will adopt international financial
reporting standards, the effective transition date being 1 July 2005. The effect
of this change will be disclosed in the interim results for the six months ended
31 December 2005.
Audit
The financial statements have been audited by Charles Orbach and Company and
their unqualified audit report is available for inspection at the company`s
registered address.
Operations
The group`s operations turned around a loss of R16,4 million to show a profit
from operations this year of R4,4 million. This can once again be attributed to
the efforts of the management and staff at Faritec and the support of our
customers and partners.
Revenue has continued to grow in all areas, namely hardware, software and
services. Our focus on three core industries, namely Financial, Government and
Telecommunications has seen our revenue grow in all of these markets.
The go-to-market model is creating more customer focus and demonstrating our
value-add to existing and new customers. This has resulted in an increase in
spend in existing accounts and success in new accounts. We are also being
considered for larger more strategic solutions as a result of our new offerings.
Our relationship with TATA has gained solid momentum and this partnership gives
Faritec a whole new value proposition.
Some of the group`s businesses performed below expectations, namely Farimed,
Gizmoz and e-bis. These businesses are all receiving a high level of focus and
swift action is being taken to ensure they are not a burden to the operations in
the new year. We have initiated a number of projects to improve systems,
processes, policies, communication, staff morale and market awareness. These
will all require an investment in both time and capital, but the expected
returns will improve the operational efficiency in the future.
Transformation and BEE
We are pleased that our transformation initiatives are beginning to achieve
significant progress on all the BEE benchmarks. It is our stated goal to become
a black-owned company; currently in terms of management and control we have
already overachieved on stakeholder expectations. Policies, processes and
systems have ensured that we also achieve success in employment equity and
skills development. All our BEE metrics are progressively being
institutionalised and are becoming an integral part of the fabric of Faritec. We
are confident that Faritec is very rapidly becoming a truly representative South
African company.
Prospects
The outlook for the new year is positive and we are comfortable that Faritec is
well positioned to show further growth. As stated above, we have started a
number of projects in the group, and we are also looking at strategic
acquisitions and new business opportunities in order to continue delivering
value to our shareholders. This will ensure on-going operational efficiency,
enhance our current offerings and widen our customer value proposition. The
first six months of the past year to June 2005 included a significant profit
from the sale of our Contracting business (R5,042 million). We are not expecting
any significant profit from similar activities in the first six months of the
new financial year and this coupled with the intended investment may impact on
our results at the half year. We are however, expecting the full year to show
further improvement and growth.
Directorate
Ms Tshidi Nyembe was appointed to the Board as Group Financial Director on 01
April 2005.
Dividend
No dividends have been declared with funds generated being retained to assist
with the Group`s future growth.
By order of the Board
Chris Jardine Simon Tomlinson
Chairman CEO
Johannesburg
13 September 2005
Graphs: Segmental analysis of revenue
Revenue for the year ended 30 June
2005 Revenue by sector
2004 Revenue by sector
Transfer secretaries: Computershare Investor Services 2004 (Pty) Ltd
70 Marshall Street Johannesburg 2001
PO Box 61051
Marshalltown
2107
Registered address:
Faritec House 150 Kelvin Drive Woodmead Sandton 2148
PO Box 76784
Wendywood 2144
Date: 13/09/2005 09:00:15 AM
Produced by the JSE SENS Department
