Faritec Holdings, a JSE-listed company, today reported net profit of R0.5 million for the year ending 30 June 2003, an improvement on the loss of R1.2 million posted for the first half of the year. Turnover increased by 25% over the first six months trading, although revenue declined year on year by 7%, primarily as a result of a downturn in product revenues.
Faritec`s services based revenue grew by 45% and product-based revenue declined by 27%, resulting in an overall profit from operations of R4.6 million for the trading year. This was an improvement on the loss of R1.9 million posted for the first six months trading. The group`s balance sheet remains strong, with net asset value per share having increased to 69.2c from 68.8c for the previous year.
Operating margins improved to 4.1% for the second half of the year, although they declined to 1.6% compared to 6.3% for the previous year due to the difficult trading conditions. Operating expenses were tightly managed and were reduced by 3% on the previous year.
The past financial year has been a challenging one for the IT industry in SA and Faritec has felt the effects of these tough trading conditions. Yet Faritec CEO Simon Tomlinson says the company will continue to invest and grow its business, and that Faritec has achieved more in the last year than any other year since its inception.
"We concluded a significant BEE transaction, developed a number of new businesses and solutions, kept costs under control, and made a profit. This all took place under harsh economic and trading conditions," Tomlinson said.
Faritec`s empowerment transaction, announced in April this year, saw a consortium led by the J and J Group (J&J) acquire 30% equity in Faritec. The deal also saw Hasmukh Gajjar appointed as an executive director, Chris Jardine as non-executive chairman and Jayendra Naidoo as non-executive director, to the Faritec board.
"Our empowerment transaction with the J&J consortium is having a positive effect on Faritec, by unlocking new business opportunities, providing us with additional management expertise as well as important assistance in the process of transforming the company," said Tomlinson.
Faritec`s services division`s strong performance is set to continue with its strategy of widening the breadth of services offered. It launched several new offerings throughout the year, including Managed Security and Business Intelligence services and FariMed, an application service provider (ASP) for the medical scheme administration sector.
Although Faritec`s server and storage division saw a decline in its revenue, the division improved considerably on its first six months` performance by maintaining margins and controlling operating costs, and is implementing a new strategy to add components to its existing offerings.
Faritec`s third division, Inter Company Processes, has made significant progress in the development of its service and is receiving a substantial amount of interest from the market. The division is in the process of forming a number of partnerships and alliances and expects its first customers by the end of the calendar year.
"The prospects for the future of Faritec are upbeat, with the real positive financial benefits from our new strategy, empowerment transaction, and significant investment in new offerings only beginning to be realised over the next three years," concluded Tomlinson.
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