Turnaround for Faritec

By Iain Scott, ITWeb group consulting editor

Johannesburg, 13 Sept 2005

JSE-listed Faritec, which this morning reported figures for the year to June, has sustained the turnaround achieved at the interim stage, with the group reporting earnings of 2.6c a share, compared with a prior-year loss of 8.6c a share.

Basic earnings per share of 4.5c compare with a previous loss of 8.9c.

"Although the group`s returns are still not at the levels that we are aiming for, significant progress in revenue and margins has been made," says CEO Simon Tomlinson. "We are satisfied that Faritec is on course to meet the market`s expectations."

Revenue for the period rose 31.6% from 329.98 million to R434.21 million, while an operating profit of R4.39 million compares with an operating loss of R13.04 million previously.

The group says the turnaround is the result of growth in its services, software and hardware revenue. Software and services now account for 40% of revenue, up from 36% previously.

CEO Simon Tomlinson says Farimed, Gizmoz and e-bis performed below expectations, but steps are being taken to ensure they do not burden Faritec in the current financial year.

Also having a negative effect on earnings per share was the adoption of new accounting practices AC140 and AC129, due to amortisation and impairment charges of R9 million.

The group had cash of R18.84 million on the balance sheet at the end of the period. A net asset value of 63c a share compares with 58.6c previously, while the group`s tangible net asset value rose to 22.8c a share from 15.1c.

Current assets of R133.75 million (2004: R58.36 million) compare with current liabilities of R118.20 million (R55.15 million).

Tomlinson says the group is considering acquisitions and new business opportunities which could affect interim results. However, he expects full-year results to show more growth.

The Faritec share was trading at 65c early this morning, unchanged from yesterday`s close. The share gained 5c yesterday.

The group is presenting its results and outlining its strategic direction at a presentation to analysts and the media this afternoon.