Listed Square One Solutions Group is embroiled in yet another legal battle, this time with a UK-based printing company.
Square One this morning issued a correction to its annual results announcement, alerting shareholders to the fact that it is involved in litigation. It had previously stated there was “no material litigation pending against the company”.
The announcement comes a day after the JSE warned shareholders that the company's results for the year to December contained an “emphasis of matter” audit opinion. Square One reported a R19 million net loss for the year to December and cash-on-hand of R832 000.
The company is being sued by UK-based Domino Printing for £285 683 - or R3.3 million - in outstanding invoices and, in turn, it is suing Domino for R9 million for loss of income, explains the South African company's lawyer.
The locally-listed organisation has a market capitalisation of R4.4 million, making both claims material as they are above 5% of the value of the firm's shares in issue.
Lost business
Kobus Swart, of Schwarz-North Inc Attorneys, explains that the lawsuits hinge on an agreement Square One had with Domino to distribute its printers in SA. However, last year the rug was pulled, and the distribution given to another local company, which he did not name.
Swart says this would be fine if Domino had followed normal business procedure and cancelled the contract, giving the company notice.
However, he alleges Domino not only suddenly yanked the 20-year arrangement, but passed all of Square One's client information along to the new distributor. “The new supplier was basically handed a whole client list.”
Swart says Square One did not pay the invoices for which Domino is claiming, because it is now stuck with products that it is no longer allowed to sell, and would be too expensive to ship back.
Domino FD Andrew Herbert did not respond to an e-mailed request for comment this morning.
One of many
This is not the only legal squabble Square One has been involved in recently. Last month, ITWeb revealed that one of its former subsidiaries had been liquidated, because it did not pay suppliers.
At the end of March, Square One Pty was liquidated in the Johannesburg High Court, after an application by Bloemfontein-based closed corporation JE Homecare and Civils. JE Homecare was owed about R400 000 for a cabling contract it had undertaken for Square One, on behalf of Telkom.
Square One owed at least 10 creditors a total of almost R9 million, money Swart alleged is owed because Telkom did not pay the company, as agreed. Telkom, however, denied owing money to the firm, which was spun out of the listed Square One in the middle of last year.
Last year, the company was sued by Agang Cables for R1 million, after CEO Deon du Plessis claimed the listed group owed him close on R1 million for work he had done for it.
In addition, before the money was paid, Square One had offered to purchase Agang through a subsidiary. However, the offer did not materialise, according to Du Plessis. The entire matter was dropped by Agang, last October, but reasons for withdrawing the court case were never disclosed.
Square One denied it owed the company money, saying the deal was between Structured Networks and Agang.
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