Square One's 2003 decision to restructure the business in order to "distinguish its service offerings" to small and medium enterprises (SMEs) is paying off.
Releasing its financial results for the year ended 31 December, Square One yesterday revealed it had grown attributable and headline earnings by 50% and 40% respectively. This is despite a 5% decline in revenue to R163.6 million.
"This change in strategy has proved successful. Our strategic intent has been to diversify the nature of the business to a higher margin, solutions-based business. The group now focuses on coupling innovation, technology and service in order to achieve value for its clients, while achieving superior returns and growth in earnings for its shareholders, as evidenced by the growth in earnings and headline earnings compared to the prior period," Square One said.
This strategy has seen the company's annuity revenue increase from 10% of turnover to 25%. This, it explained, reflected an improvement in the "qualitative nature of the business as a whole".
Company CE Craig Alexander says profitability is expected to continue to improve during 2008.
"Looking forward, the financial outlook is bullish and we believe our current growth rate is sustainable. We will continue to expand into new markets through a targeted acquisition strategy, coupled with solid organic performance."
Earnings per share (EPS) for the period rose 40%, to 15.6c. Headline EPS increased 30%, to 14.5c.
No trades were made on the company's shares yesterday.
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