Refocus dents Square One's turnover

Square One Solutions has reported a 59% plunge in interim turnover as a result of exiting the high-volume, low-margin distribution business to focus on value-add high-margin business.

Turnover fell to R36.65 million in the six months to 30 June, compared with R88.74 million in the same period last year, although operating profit fell just 17%, from R4.93 million to R4.09 million.

Square One's main focus is the provision of IT-based business-enabling solutions, with its energies channelled into providing niche solution offerings.

"There has been a reduction in the investment of inventory coupled to the reduction in high-volume low-margin related business," CEO William James says. "The overall improvement in working capital has had a marginally positive effect on the net cash flow position. The group's dependency on short-term bank funding still impacts on its overall profitability due to the high cost of this funding."

Square One formally launched its enterprise solutions business early this year. The group has negotiated national partner agreements with integrators, which James says has secured associations that will provide full turnkey solutions offerings to its customers.

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"The group's national service and support arm is expected to address customer requirements across the full gambit of Square One's offerings. The period under review saw the launch of a number of new service initiatives and offerings."

He says the group has a pipeline of excellent business prospects and for the year ahead the group expects to see headline earnings growth in line with sales objectives.

Square One has reminded its shareholders that it is trading under a cautionary notice related to talks with Labat Africa.