Storage and services company Maxtec is disposing of its 20% interest in UK-based Sagitta and is changing its distribution strategy in an effort to correct the R2.4 million net loss for the interim period.
Maxtec says the net loss of R2.4 million and headline loss of 2.5c per share can be attributed to poor demand and further restructuring.
Revenue also fell from R69.2 million to R47.1 million for the six months to February.
George Talbot, Maxtec executive chairman, says the company will sell its 20% holding in UK storage company, Sagitta, in an effort to eliminate its gearing and allow the company to focus on its original business of local data storage distribution.
Maxtec has also announced it will cease to sell its products directly to end-users and is entering into strategic alliances with distributor Tri-Continental to market IBM`s xSeries products.
"In building up a loyal and expanding reseller base, Maxtec has elected to divest from direct sales to the end-user. The business activities of Enterprise Storage Solutions (ESS) will be transferred to its current management, with ESS becoming an independent storage reseller. After the Sagitta disposal, Maxtec will have a solid balance sheet with little or no debt component," says Talbot.
The Sagitta sale is expected to raise around GBP 500 000 (R7.6 million) which will be used to re-capitalise the local company.
"Having cash on the balance sheet has become even more important in the current IT environment, since the demise of Siltek and the knock-on effect with regard to tightening up on credit policy and the shortening of credit terms," says Talbot.
"Without a strong balance sheet, importers of expensive equipment cannot negotiate the best price and terms, or assist their customers in funding the transaction."
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