Ailing JSE-listed technology business Faritec expects its financial results for the year ended 30 June to reflect a trading loss.
The company released a trading statement yesterday afternoon, which says it has not yet been able to quantify the loss and asked shareholders to trade with caution.
The company's cautionary comes as no surprise to the industry, following a disastrous few months.
Chairman Chris Jardine was hoping the worst of the company's trouble had passed; however, its coming results are expected to deliver little encouraging news to investors.
Faritec's real cost issues started to become apparent when it released a financial update in February. At this time, it explained costs and the dramatic drop in IT spend had knocked the company's revenue down by 19%, to R414 million, for the six months ended 31 December 2008. In the same period the year before, it saw its revenue at R502 million.
The global economic downturn was another blow to the company's already bleak outlook. It has been scrambling to meet costs and keep the business afloat.
Uninspired
In March, Faritec asked shareholders to help it raise R20 million-plus in short-term capital to help it sustain its business, at the cost of share dilution.
Later in April, Faritec concluded a deal with storage company Shoden Data Systems, which saw the latter take a controlling interest in Faritec in return for a loan of R29 million.
The company also retrenched staff and started a programme of cost saving, which was supposed to put it on firmer ground. Investors have not been encouraged by the deals and the possible share dilution following the capital injection scheme, and the share price has been bouncing between 4c and 6c over the last few weeks.
The fact that CFO Tshidi Nyembe and CEO Simon Tomlinson resigned a few weeks later did little to inspire the industry.
Hopeful future?
However, Jardine is confident Faritec will pull through. He says there are several signed contracts that are strong enough to see the company turn things around.
By the end of May, Jardine intended to “work hand-in-hand” with the management team to get the business back on track. He says the company will do this by “adopting a back-to-basics approach and focusing on customer service and delivery”.
The company's annual results for the past financial year should be available by August.
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