Faritec Holdings says its recovery from the slump of 18 months ago is largely thanks to a renewed focus on what originally made the company successful.
This week the company reported a 130% increase in profit from operations to R9.8 million for the six months to end-December. Headline earnings per share almost doubled to 6.2c.
CEO Simon Tomlinson says that 18 months ago, after the company reported the worst results in its history, the board "took a hard look at the business".
At the time the focus had been on growing the business internationally, but the company walked away from acquiring overseas company TBC as it was considered too large. It also walked away from a merger with Paracon.
"We looked at why we were successful originally and asked: 'Can we do that again?`," says Tomlinson.
"So we focused on what made us successful - IBM servers. We also cut costs significantly and we cut back totally on advertising and marketing. We figured the only way to get back on the radar screen was to produce good results."
Tomlinson says the product component has served the company well. It continues to derive about 60% of its revenue from products, particularly the IBM P Series (formerly RS/6000). The balance is derived from services operations, including various degrees of outsourcing.
However, while there is still some longevity in the product market, Faritec realises that its future is not in selling IBM servers.
"It`s not a market in which we see upwards of 30% growth in the future. But we have dominated that market and it is generating cash, so why get out of it?"
He says the company is now entrenched as an outsourcing player in SA and is moving up in the ranks.
"With those two building blocks in place - products and outsourcing - we looked at new revenue streams."
The company formed Faritec ICP (InterCompany Process) in July last year to handle a new e-business service, initially dealing with electronic invoicing and payment, and Tomlinson says new benefits have arisen from that development.
Among the opportunities the company is examining is the chance to offer a systems integration service.
"So we are continuing the product revenue that mad us successful, and we are also growing the service business and growing into other service provision markets," Tomlinson says.
Share
