Square One Solutions Group saw a decline in earnigns for the financial year ended 31 December 2009, along with a decrease in turnover as a result of customers cutting back in the economic downturn.
The groupd reports that turnover decreased by 63% over the prior period largely as a result of cutbacks in technology spend budgets by clients across the board. In addition a major contract with a dominant fixed line operator, which was expected to yield in excess of R100-million in turnover based on projects that had previously been planned, only yielded approximately R850 000.00 in new orders in 2009.
"As the business had been geared to service this important segment of our business the of orders had a significant and negative impact on our business overall," the group explains in a statement.
"Gross profit has decreased by 45%," it adds. "However, the group achieved higher margins which was pleasing."
In line with prior year initiatives, the group has continued with its focus on reducing turnover from low margin distribution type business to service and contract type business which typically attracts a higher gross margin.
"As a result, gross margins in the operating units held up very well and in some cases increased, particularly in light of the economic decline that has severely impacted the group as a result of the worldwide turmoil in the financial markets."
Contracts being signed with customers vary from one- to five-year service and/or rental contracts. In addition, the group in the past year, focused on diversifying the customer base and strategically positioning the company into new and parallel markets, primarily the government and parastatal markets.
Operating expenses decreased approximately 26,6% in the current period compared to the prior period, largely due to staff cutbacks and attendant costs reductions as part of the repositioning.