Faritec's new CEO has set himself the challenge of turning the loss-making company around by June next year.
CEO Fanie van Rensburg says the company should report a profit - however small - in the year to June 2010. He also expects the company to break even by the time it reports its half-year results to December. “I'm bullish, but I can see what is happening in the organisation.”
Van Rensburg concedes that he has set himself a difficult target. In its most recent results to June 2009, the company reported a slide in revenue from R1 billion, to R727 million, and operational losses led to a loss per share of 48.1c, compared with a gain of 11.3c in 2008.
The company said - at the time - that the disappointing results were due to a “rapid decline in sales” and its high cost structure. However, Van Rensburg says the company has restructured, and refocused. “If I can't get it to be profitable by the end of the year, I've missed something.”
In the next three to five years, Van Rensburg also expects the company to pay out a dividend - something it has not done since listing on the JSE in November 1998.
After a slew of resignations that left the company without a CEO and CFO, it has now also accomplished putting a management team in place. From 1 August, Arvind Gupta was appointed financial director and Van Rensburg was appointed to the helm of the company.
“It's been quite hectic,” says Van Rensburg. “Ten weeks sounds like a long time, but it has gone by like the last hour has.”
New focus
Shoden injected R20 million into Faritec earlier this year, for which it bought a 51% stake. Another R29 million was invested by shareholders after a rights offer. Together, these amounts gave the company the cash it needed to continue operating.
Since then, Faritec has shifted focus and is now concentrating on servicing the data centre market. Van Rensburg says it has also gotten out of low-margin businesses that were putting a strain on cash flow.
Faritec has also ditched its managed print service offering, he says. “We're no good at it. Why go into that and lose money?”
Van Rensburg explains that the company is now focusing on adding value to its clients. This has meant moving away from a silo structure, where each unit was focused on only selling its products. “The silo mentality inhibited our ability to listen to our customers.”
Instead, Faritec now aims to analyse a company's needs, and fill those requirements. This means staff will be trained in all aspects of its offerings, and Van Rensburg is also keen to look for skills in the market base.
While this shift in company structure will result in longer lead times before sales are completed, it should result in higher margins - and ongoing relationships that will keep revenue coming in, explains Van Rensburg. “I've got patience, because what we are doing is building for the future of Faritec.”
Its core offerings will remain Microsoft, IBM, Symantec and its internal security offerings, which Van Rensburg says are sophisticated and yet, under-utilised. Faritec will also make more use of its in-house software development capability to add to its offerings.
In the next five years, Van Rensburg expects Faritec to be a strong, profitable company.
Share
