Data storage group Maxtec has disposed of its interest in its non-core local authority business to the division`s founders for R1.35 million.
The group says the decision, which takes effect on 1 May, will allow management to concentrate on the data storage business.
The subsidiaries involved in the sale are Maxtec Global Support Services (formerly Unitech Computer Services), Nyl-Data Computer Services and African Financial Solutions.
The main activities of the local authority division, which is housed within Maxtec Global Support Services (MGSS), entail the sale and support of the Finstel financial software system and the provision of hardware and network infrastructure to local authorities and municipalities.
"Although the companies met their initial profit warranties and fared well for at least a year after the merger, they were subject to an ever-diminishing market with the demarcation of local authorities and resultant consolidation in that market," says Maxtec executive chairman George Talbot.
"The customer base shrank from 80 to around 30 customers. With a contracting revenue base, the division was unsuccessful in introducing new solutions to this market due to deferred decision-making, as well as smaller budget appropriations for IT requirements."
He adds that Maxtec has cut the division back to a profitable level and with the market showing some signs of revival, it was able to sell it.
The Consulting, Cad Cam and Data Storage Support activities, currently housed in MGSS, will be transferred to another wholly owned subsidiary, Maxtec Peripherals.
"By restructuring these non-local authority assets into Maxtec Peripherals, the company structure will be simplified, not only from a financial point of view, but will also give customers one interface to deal with in the company," Talbot says.
"We are confident that the restructuring will have a positive effect on the group into the future."
Share
