Faritec Holdings, a JSE-listed IT services and solutions company, today reported positive financial results for the six-month period ended 31 December 2005 with group revenue and operating profit increasing compared to the corresponding period last year.
Revenue increased by 29% to R263 million from R204 million. Operating profit rose to R12 million from a restated loss of R100K. Headline earnings per share improved to 6.7 cents, compared to a restated 0.1 cent per share. The restatements result from Faritec`s adoption of the International Financial Reporting Standards (IFRS) for the first time.1
The news builds on Faritec`s R54m acquisition of BEE IT specialist, Enterprise Connection, earlier this month. While the acquisition has no effect on these results, it almost doubles Faritec`s size and is expected to have a positive impact on the group`s future results.
"Our six-month performance can be summarised in terms of increased revenues across our primary business lines, greater focus and operational efficiency, and controlled costs. This time last year we believed we`d turned the corner from a strategic, operational and financial standpoint. Today`s results reflect that," said Simon Tomlinson, CEO of Faritec.
The company`s infrastructure business exceeded expectations and grew by 41% to post revenues of R159 million. The software business also performed well and grew 86% to post revenues of R38 million. Services delivered R66 million, slightly behind its revenue target.
"We are pleased with our performance overall. The hardware business will continue to grow through year-end, although not at the rate we saw during the first half. The services business is well positioned to meet its revenue targets for the full year," said Tomlinson.
The interim results also reflect progress in other areas of the business.
For example, in previous announcements, Faritec had committed to improving its focus, operational efficiency and profitability. Processes such as fixing, closing or disposing of under-performing or non-core businesses, as well as driving internal efficiency projects, are starting to deliver those results.
Faritec is also making significant progress in implementing broad-based BEE policies. It has adopted a skills development programme, and is implementing its corporate social investment initiative with the SOS Children`s Village in Ennerdale.
"It is our stated goal to become a black-owned company. The acquisition of Enterprise Connection, which we are in the process of finalising, will boost our management indicators and equity to over 40%. It also creates one of the largest black-empowered technology solutions providers on the JSE," said Tomlinson.
"As part of our strategy to diversify and evolve into new markets, we are also looking at other smaller acquisitions. The outlook for the second half of the year is positive and we anticipate showing further growth compared to the corresponding period last year. We are satisfied that the group is well positioned to achieve market-related returns and deliver shareholder value."
1 Faritec adopted the International Financial Reporting Standards (IFRS) for the first time in preparing the unaudited interim results for the six months ended December 2005. The group has restated its results for 2004 - this has had a negative impact on its previously-reported earnings and net asset values.
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