OPERATING margins are rising at Faritec after it put recruitment plans on hold, instead encouraging existing employees to become more productive. <\/p>\n
The hardware and software supplier had produced far healthier results than a year ago after improving internal systems and tightening its focus, CEO Simon Tomlinson said. <\/p>\n
Part of that was driven by external consultants who helped it get more from existing resources instead of hiring about 40 extra people as planned. “The head count remained static except through acquisitions,” Tomlinson said. <\/p>\n
“We focused on sales and management control and found we could pretty much do the growth we have done with the existing head count.”<\/p>\n
Its revenue for the year to June 30 broke through the R1bn barrier, up 21% from R858m a year ago. After-tax profit grew 75% from R16,5m to R28,9m and headline earnings per share rose 27% from 8,9c to 11,3c.<\/p>\n
Its cash reserves of R18,7m could be used to fund further acquisitions to strengthen its existing offerings. “The type of acquisition we’d be looking to do would be to increase our capabilities in some areas rather than large, across-the-board acquisitions,” Tomlinson said.<\/p>\n
The “pleasing” results confirmed the wisdom of its strategy to bulk up its software and services offerings rather than focus on hardware sales, which carry lower margins. <\/p>\n
Software and services now account for 46% of revenue, from 41% last year. The operating margin rose from 22,5% to almost 25% as a result of that more profitable revenue mix. <\/p>\n
Last year Tomlinson reported a dip in its performance as bedding down the R54m acquisition of Enterprise Connexion and its R16m takeover of Lechabile Storage Systems had made Faritec too internally focused. “Our operations are now fully functional and focused on what they need to focus on,” he said.<\/p>\n
Faritec ’s more recent R12,5m buy-out of Software Futures has paid off more handsomely than expected. It brought in about 80 technicians along with their existing contracts, and Faritec had already followed up with some new contract wins.<\/p>\n
Altogether, its acquisitions had significantly improved Faritec’s risk profile through diversifying its activities, and its efforts to raise its profile and market its offerings to the public sector were showing good results, Tomlinson said. <\/p>\n
Although the macroeconomic environment was beyond its control, Faritec was now in good shape to handle any challenges that were thrown at it, he said.<\/p>\n
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