Square One's 2002 year-end shows profits, positive revenues

The JSE-listed Square One Solutions Group has announced an increase in operating profit of 176% and revenue improvement of 10% for the 2002 year.

During the period under review, Square One increased turnover to R174 million and operating profit to R13.327 million, despite the drop in IT and corporate spending on the traditional goods and services Square One supplies. Due to the partial recovery of the rand, the company was also able to contain pricing increases and improve productivity and the competitiveness of its offering to market.

Headline earnings improved to a profit of R8.324 million in 2002 from a profit of R1.975 million in 2001. Headline earnings per share of 37.8c was achieved compared to 8.9c last year.

According to group chairman, Garth Coetser, the increase in revenue and profitability was primarily due to Square One's authentication and security team realising the first of the group's identity verification biometric solutions.

"Our Special Authentication Projects division took a key role in the consortium-driven implementation of a voter registration system in an African country holding its first truly democratic election," says Coetser. "The Authentication division has also been working for some time with key local partners on several highly strategic projects that should realise excellent revenues and profits in 2003 and beyond.

"The traditional distribution side of the business now represents far less of the group's revenues and contribution - in line with our vision to become a solutions-based operation. This side of the business made a considerable effort in 2002 to manage its relationship with the channel, striving towards better business processes, from sales through to debt management.

"While Square One remains a key provider of the Xerox product range of colour printers into the South African market, it also successfully secured the distribution for complementary products from Epson. This has enabled the group to take to market a broader line-up of best-of-breed colour input and output devices.

"Square One's Power Solutions subsidiary (formerly UPScom), showed consistent growth throughout 2002. Square One Power Solutions contributed positively to the results of the group and secured several additional blue chip accounts in the year under review."

Coetser says that since the launch of the group's Integrated Retail Solutions (IRS) division in May 2002 the division has shown steady growth through the number of projects relating to the provision of in-store ticketing and signage solutions. Key alliances with Episys, NordicID and Extech, strategically position the division to offer the South African retail market the finest back-office and point-of-sale retail solutions. IRS is anticipated to make a significant contribution to 2003 revenues.

"We are starting to realise the growth curve in our Coding and Marking division as product marking legislation looms ever nearer and business begins to adopt the benefits of date coding in terms of effective product manufacturing, management and marketing," Coetser adds. "However, we have not yet realised the investment and full potential in mid-range storage demands. However, we see good growth prospects for 2003. The company is now well positioned to address the massive potential we see in biometric-based authentication and other security solutions. These will be our key focus areas in 2003".

Non-executive directors Roland Wilk and Deon Bothma resigned from the board during 2002 to pursue their own business interests offshore. Reginald Muzariri was appointed to the board during the period under review. New appointments in executive positions in 2003 are expected.