AltX-listed IQuad Group said yesterday that an 11% decline in headline earnings for the six months to August should not worry investors as the firm was making steady progress to strengthen its business to achieve a better performance.

Business Day
21 October 2011
Sure Kamhunga

"Whilst these results were below expectation, significant progress has been made in cementing our business strategy over the last six months and the group is well-positioned to focus on growth in the core revenue- producing areas of the business," IQuad said.

The specialist financial and business services firm — now controlled by Sasfin Group — said earnings fell to R3,49m from R3,93m in the comparative period last year.

It generated R5,53m cash from operating activities , including a R302000 increase in working capital, but had decided against an interim dividend.

The group said it was focusing on five strategic themes to revitalise its businesses.

These included ensuring it had the right team to achieve the growth plan, simplifying its management team and strengthening its presence in Gauteng through strategic alliances.

Another strategic objective was to "fix or exit" underperforming businesses, which had resulted in a decision to disinvest from noncore areas to focus on growing the traditionally strong units.

Probably the most important corporate activity in the period under review was the acquisition of a majority stake in the firm by Sasfin, which bought a 42,9% stake from private equity group Paladin Capital.

"Sasfin is focused on providing banking and related services to (small and medium enterprises) and there is a strong synergistic fit between the services offered by IQuad and Sasfin," IQuad said.

"This will enable both parties to offer a broader range of services to our respective clients and in so doing enhance value to clients and grow revenues," it said.

Discussing other developments, IQuad said Kagiso Treasury Solutions, which was bought last year, had been integrated into the IQuad treasury operation.

"We anticipate that other players in the treasury outsourcing sphere of business are likely to go through a consolidation phase in the short to medium term, and we will be actively pursuing opportunities in this market to acquire competitors," it said.

The main objective for the year ahead was to grow the client base within the existing infrastructure to maximise returns.

"We will also be focusing on increasing and improving our conversion rate in respect of our marketing efforts while being mindful that our existing clients continue to receive excellent service," it said.