Johannesburg, 01 Feb 2010
Shareholders are advised that the group's annual report, incorporating the audited financial statements for the year ended 30 June 2009, was dispatched today and is available on the company's Web site (www.faritec.com).
The financial statements have been audited by Charles Orbach and Company, which, while not qualifying its audit opinion, has included an emphasis of matter modification on Faritec's going concern status.
This emphasis of matter arises out of the opinion of the directors that, given the operating performance of the business subsequent to year-end, the company requires funding of at least R60 million in order to execute its business plan.
The company has previously indicated that it is engaged in discussions to raise this funding. This emphasis of matter has resulted in the reversal of a deferred tax asset previously recognised (as more fully set out below). However, once the funding requirements have been met, this deferred tax asset will be recognised.
The annual financial statements contain the following changes to the reviewed results, which were announced on SENS on 23 September 2009:
The group in its provisional results announcement raised a deferred tax asset of R37 million at year-end, arising from the tax loss for the year, which was available for set off against future taxable profits. This asset
was expected to be recovered based on future profit expectations for the group, and at the time of the publication of the provisional results, met the recognition requirements of IAS 12, Income taxes. The group has, however, in its trading update and cautionary announcement released on 28 December 2009, advised shareholders that it expects to post a loss for the six-month period ended 31 December 2009, and furthermore, of its funding requirements to implement its turnaround strategy and plans to meet these funding requirements. In light of these conditions, the deferred tax asset no longer meets the accounting standard recognition requirements and has been reversed. Revenue and cost of sales were amended for a classification change on the application of IAS 18, Revenue.
A revised abridged report, taking into account the effect of the above changes, is being released simultaneously over SENS.
The annual report contains a notice of Annual General Meeting for Faritec, which will be held on Tuesday, 23 February 2010 at Faritec House, 150 Kelvin Drive, Woodmead, Sandton at 3pm.
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