Faritec not shy of growth

Johannesburg, 13 Sept 2006

IT services and solutions company Faritec is bedding down its recent acquisitions and is open to other opportunities that come its way.

The company reported cash-on-hand of R39.3 million in its year-end results to end-June. CEO Simon Tomlinson says this is not only because the company is continuing to be open to acquisitions, but also because it has just completed two acquisitions and its first priority is to repay the cash portion of those deals. Faritec has borrowings of R34.5 million, mostly due to its acquisition activity.

While the company`s growth over the last year has been "phenomenal", Tomlinson says this was off a low base. He says the company will show significant growth over the next year. Faritec aims to hit R1 billion in turnover in its next financial year.

It reported revenue of R530 million in this financial year, up from R428 million the previous year. Its two recent acquisitions, Enterprise Connection and Lechabile Storage Systems, were excluded from this year`s results as the closing date fell outside year-end. However, had the two companies been accounted for, Faritec`s revenue would have exceeded R870 million.

Organic growth

Its acquisition of Enterprise Connection closed at the end of June, while Lechabile closed a few weeks ago. Tomlinson says both companies will be included in next year`s results. Enterprise Connection will provide a full year of earnings, while Lechabile will contribute about 10 months, Tomlinson says.

With these two companies contributing to earnings, its forecast of R1.1 billion in turnover is in sight. Tomlinson says this means an effective 15% or 17% organic growth for the company over the year, a figure with which he is comfortable. It aims to triple its bottom line three to five years from now.

At the moment, he says, the company is bedding down its acquisitions and aims to get the best out of its acquisitions. While not actively shopping for more opportunities, Tomlinson is keeping his eyes open for attractive opportunities.

Tomlinson adds that the company`s policy is not to pay dividends. This, he says, will change as soon as its debt conditions have normalised. The company`s board has this topic on its agenda at every meeting.

Empowerment

On the black economic empowerment (BEE) front, he says within the next three years, the company should be 51% BEE, assuming the right partners are found.

The company, which says it is one of the largest black-empowered IT companies listed on the JSE, is 42% BEE-owned.

"Faritec also continued to improve on all other elements of the broad-based BEE scorecard during the year," says Tomlinson.

"Diversity in our boardroom, management teams and staff is representative, with 58% of our board and 44% of our staff from previously disadvantaged backgrounds."