Organic growth coupled with the group's maturing business model resulted in JSE-listed Faritec Holdings reporting a sterling set of results for the year ended 30 June 2006, with revenue increasing by 23,7% from R428-million to R530-million and headline earnings per share (HEPS) dramatically up from the previous year's 1 cent to 10,4 cents.
Faritec CEO Simon Tomlinson says that although the positive financial impact of the group's two acquisitions - Enterprise Connection and Lechabile Storage Systems - were excluded from this year's results, Faritec continues to show growth from its traditional hardware business as well as its newer businesses, namely security, integration services and service delivery. Faritec's revenue would have exceeded R870-million, had the revenue from acquisitions been included in this set of results.
Faritec CEO Simon Tomlinson
Hardware revenues grew by 18%, as a result of strong growth in storage and server product revenues, while software revenues increased by an impressive 103% from R37-million to R75-million - mainly on the back of security middleware and integration software sales. The annuity revenue base from services continues to grow and provides the platform for growth in the 2007 financial year.
"Our decision to diversify the company's offering from hardware and product supply to cater for managed services environments meant a considerable investment in people and technology, and this is now generating a significant return," he says. "Three years of investment in this strategy is paying dividends for Faritec."
The group's net profit margins ramped up sharply to 3,4% (2005: 0,6%) largely as a result of the change in revenue mix, with the services and software revenue contribution increasing from 40% to 43%.
As one of the largest black-empowered IT companies listed on the JSE, Faritec's broad-based empowerment credentials were given a significant boost with the acquisition of the Enterprise Connection business during the financial year, improving its BEE ownership from 31% to 42%.
"Faritec also continued to improve on all other elements of the broad-based BEE scorecard during the year," says Tomlinson. "Diversity in our boardroom, management teams and staff is representative, with 58% of our board and 44% of our staff from previously disadvantaged backgrounds."
Looking ahead, Tomlinson says Faritec is well positioned to show further growth, supported by the integration of the two recent acquisitions. It is well positioned to improve its position in the market and to provide the group's customers with technology solutions that add value to their businesses.
"As can be seen from our results, our aim to provide the most customer centric technology solutions is starting to deliver market related returns," he concludes.