Queensland-based software developer Mincom has posted an $8.6 million annual profit for the year to June 30, 2002, an $11.4 million improvement on its $2.8 million loss in the 2000/2001 financial year.
Revenues from ordinary activities rose 9 per cent to $207.8 million, but the turnaround owed as much to cost-cutting and rationalisation than signing up a host of new customers.
CEO and managing director Alan McElrea said there was no "silver bullet" for achieving the result, but that the underlying principle was to take the business back to basics.
The ASX-listed company's cost structure was analysed to ensure that it was only spending money in areas that generated revenue, McElrea said. "We were investing in a lot of areas that were based on valid ideas, but had long pay-back periods," he said. "Those projects were put on ice and we diverted individuals into revenue-earning operations."
McElrea said that Mincom's business very rarely strays beyond four core verticals. Customers in mining make up 37 per cent of Mincom's revenues, with 24 per cent derived from utilities (electricity, water and gas companies), a further 24 per cent from defence and government, and around 9 per cent from large transport customers. But even within these verticals, the company is avoiding spending up to attract deals that vary from its core competency. "We are only chasing business that is our business to win," McElrea explained.
While several large US and Canadian defence contracts were realised during the reported year, McElrea said there are generally no spectacular surges that boost the software provider's profits when a new contract is signed up. He said the company has some major contracts in the pipeline, but lead times for such deals are very long.
Mincom plans to continue with its review and restructuring, under the assumption that the next 12 to 24 months are going to be tough for both the IT industry and business in general, McElrea said.