Square One Solutions' profits plunged in the year to December, which the company blames on costs related to two acquisitions.
Although the group's turnover rose by 57.9% to R144.34 million, from R91.42 million the previous year, operating profit fell by 66.4% to R1.89 million (2003: R5.61 million).
CEO Trevor James says the increase in turnover is in line with the broader IT industry beginning to show signs of growth.
"In order to fulfil on our strategic intent, two key acquisitions were made during the financial year and the cost borne by the acquisitions is reflected in the lower than desired bottom line achievement for the 2004 financial year," he says.
The group's attributable profit fell by 58.6% to R0.56 million (R1.34 million), while earnings fell to 2.5c (6.1c) a share and headline earnings to 3.6c (7.8c) a share. Headline earnings of R0.79 million compare with R1.71 million previously.
"The directors view this result as a resilient performance during a year of much change for the business and its staff," James says.
Bank balances stand at R1.81 million (R0.84 million) while the current ratio (current assets to current liabilities) of 1.4 was maintained.
James adds that new business units that were in development during the year have started to show sustainable growth, and good results have also been achieved through all the existing founding business units.
"With a growing desire from customers to partner and seek value-based IT services and solutions, the opportunity for niche integrators that are nimble, flexible in structure and have the ability to adjust quickly to a very dynamic marketplace is growing in strength," he says.
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