Faritec inches ahead

Johannesburg, 13 Feb 2008

JSE-listed IT services and solutions player Faritec says it has overcome the integration difficulties that plagued its last two sets of financial results.

This week, the company released its financial results for the first half the year, delivering a 6% increase in revenue, to R502 million.

The second half of the year is expected to be even stronger, according to company CEO Simon Tomlinson.

"We have a very strong pipeline and we will also have the benefit of accounting for a full six months of Software Future's performance. Hitting the R1 billion revenue mark is most definitely the plan for this year," he says.

Faritec had initially hoped to reach the R1 billion revenue mark in its 2006 financial year. However, the difficulties of integrating large acquisitions Enterprise Connection and Lechabile Storage Solutions ultimately resulted in the company missing that goal. Instead, the company posted revenue of R858 million.

Turning around

Tomlinson maintains he is satisfied that these woes are over and is now looking at making further acquisitions in key areas to bolster the company's offering.

"Since November 2006, we've only made one acquisition - Software Futures. Besides, the buys we are targeting now are smaller than the deal we had with Enterprise Connexion. That acquisition saw two companies of similar sizes trying to integrate, which is obviously more difficult and compounded the difficulties of integration. Now it will be relatively smaller companies, which will make it easier to integrate," he says.

In the past six months, the usually quiet company has announced the conclusion of some high-profile deals with companies like Lotto provider Gidani; Indian IT giant Satyam; cellular operator Vodacom; and the Gauteng Provincial Legislator.

Additionally, Tomlinson says the company has a "very nice sales pipeline", which needs to be converted.

"All things being equal, we should see our full-year results showing an equivalent or slightly stronger second half of the year. I'm confident that we are on track, but I caution that there are external environmental pressures which we have no control over," he explains.

The external pressure that Tomlinson points to includes SA's power crisis and instability in international markets.

Its interim financial results warn shareholders that Faritec is "not immune to the energy crisis".

"But, we have alternative sources in place to ensure continued trading and productivity, albeit at a cost. The impact of the energy crisis on some of our customers may be a little more severe and we may experience some slowing down of spend due to this. The economic outlook, currency and interest rates may also make trading conditions a little more difficult, but we are not significantly exposed to either the weakening of the currency or the increase in interest rates," it said.