Square One Solutions Group has been hard hit by the economic downturn, but believes it is well positioned for growth going forward.
The group has announced turnover for the year ended 31 december 2009 down by 63% over the prior period largely as a result of cutbacks in technology spend budgets by clients across the board in response to the economic downturn, especially from late 2008 to end 2009.
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 in new orders in 2009, the company says in a statement. As the business had been geared to service this important new segment of our business the lack of orders had a massive negative impact on its overall business.
Gross profit has, however, only decreased by 45% due to higher margins achieved, the company says.
"In line with prior year initiatives, the group has continued with its focus on reducing turnover from low margin business and oving more towards service and contract type business which typically ttracts a higher gross margin for the group," the statement reads. "Consequently, gross margins in the operating units have held up very well and in some cases increased, quite a feat, particularly in light of the economic decline that has severely impacted us as a result of the financial markets driven turmoil."
Results for the financial year ended 31 December 2009 reflect a decline in earnings and an increase in headline earnings attributable to ordinary shareholders.
The group has taken action to curtail further losses. It has sold a loss-making subsidiary and cut operating expenses by about 26,6% as well as cut employee headcount by about 41% – including the loss of the former CEO and COO who left to pursue other business interests.
"Whilst this process was painful we are now reaping the benefits of longer term sustainability as a more than 23 year-old business in this tough trading environment. We continue to manage costs and will act aggressively where necessary to make timely adjustments to ensure the longevity of our business for shareholders, employees and all other interested stakeholders."