Faritec Holdings has incurred an operating loss of R13.04 million as a result of an increased cost base related to its new managed services strategy.
Faritec has in the past had a hardware focus, but has expanded its offerings into the managed services arena.
Although revenue for the year to June rose by 16.8% from R282.48 million to R329.98 million, CEO Simon Tomlinson says expenses were up because of a 30% increase in staff numbers, with about 90% of new staff being placed in sales, marketing and managed services.
"The expected revenues from that have taken a bit longer than we expected to come through," he says. He adds that operating margins were also affected by adverse trading conditions.
The group reported a pre-tax loss of R20.06 million, compared with a profit of R0.74 million the previous year, while an attributable loss of R11.56 million was incurred, against prior-year earnings of R0.51 million.
A headline loss of 8.6c a share compares with previous headline earnings of 5c a share.
Tomlinson says a net overdraft position of R3.5 million is not cause for concern. It is a temporary situation, with business picking up and plans to dispose of non-core businesses, which will lead to substantial cash.
The group invested R16.6 million in the business, including R6.4 million in the construction of its new security operations centre; R2.2 million to acquire fixed assets for ongoing operations; R4 million in development costs for its Inter Company Processes division; and R4 million to acquire the African licence fees for a mobile application and content offering.
This resulted in cash on hand decreasing by R21.9 million to the net overdraft position.
"Although the group did not meet its financial objectives, significant progress has been made in the roll-out of our new strategy to focus on the marketing and delivery of managed services," he says.
"As communicated earlier in the year, we have entered the consolidation phase of our strategy and the operations are now well positioned to execute on our new business model."
Tomlinson says trading conditions are improving and the group is entering the new year with improved confidence and expectations of returning to profitability.
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