| Tue 30 Mar 2004, 8:26 | | Audited Results for the year ended 31 |
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Square One Solutions Group Limited - Audited Results for the year ended 31
December 2003
Square One Solutions Group Limited
(Registration number 1999/026822/06 )
Share code: SQE
ISIN: ZAE000023768
Audited Results for the year ended 31 December 2003
BALANCE SHEETS
31 December 31 December
2003 2002
R"000 Audited Audited
ASSETS
Non-current assets 13 892 3 740
Fixed assets 1 327 1 905
Intangible assets 8 922 13
Investment 16 16
Loans receivable - 1 049
Deferred tax 3 627 757
Current assets 44 734 51 280
Inventories 15 245 19 099
Accounts receivable 28 620 30 957
Taxation 30 31
Bank balances 839 1 193
Total assets 58 626 55 020
EQUITY AND LIABILITIES
Issued capital 9 020 9 020
Accumulated losses (3 559) (4 901)
Ordinary shareholders" funds 5 461 4 119
Outside shareholders" interest 503 361
Outside shareholders" loans 365 365
Long-term liabilities 20 859 2 354
Current liabilities 31 438 47 821
Accounts payable 22 716 25 368
Current portion of long-term liabilities 7 287 199
Provisions 1 297 261
Bank overdraft 138 21 993
Total equity and liabilities 58 626 55 020
EARNINGS PER SHARE
2003 2002
Earnings per share (cents) 6,1 0,5
Headline earnings per share (cents) 7,8 37,8
Earnings per share is calculated by using
the relevant attributable profits and
issued shares.
Reconciliation of earnings per share
Attributable profit 1 342 104
Goodwill amortised 369 4 352
Loss on disposal of foreign subsidiary - 3 868
Headline earnings 1 711 8 324
Number of issued shares 22 000 22 000
note:
The statements have been prepared in accordance with South African
Statements of Generally Accepted Accounting Practice and the accounting
policies used in the preparation of these results are consistent with
those applied in the previous reporting period.
INCOME STATEMENTS
2003 2002
R"000 Audited Audited
Turnover 91 422 174 196
Operating profit 5 612 13 327
Net finance costs (3 335) (3 345)
Profit after finance costs and before
exceptional items 2 277 9 982
Exceptional items - (8 221)
Net profit before tax 2 277 1 761
Taxation (793) (1 296)
Net profit after tax 1 484 465
(Profit)/loss attributable to outside
shareholders (142) (361)
Net profit attributable to
ordinary shareholders 1 342 104
ABRIDGED CASH FLOW STATEMENTS
2003 2002
R"000 Audited Audited
Net flow from operating activities 4 732 12 342
Net flow from investing activities (9 873) (12 071)
Net flow from financing activities 26 642 (359)
21 501 (89)
Cash at beginning of period (20 800) (20 711)
Cash at end of period 701 (20 800)
STATEMENT OF CHANGES IN EQUITY
Distribu- Capital
Share Share table and
R"000 capital premium reserves reserves
Balance at 31 December 2002 220 8 800 (4 901) 4 119
Surplus for year - - 1 342 1 342
Balance at 31 December 2003 220 8 800 (3 559) 5 461
COMMENTARY
NATURE OF BUSINESS
Square One is an information technology company listed under the
"Information Technology (IT) - Software and Computer Services" Sector of the JSE
Securities Exchange South Africa ("JSE"). Square One"s primary service focuses
on providing niche, early adoption business enabling solution offerings which
create value for our clients through the application of business knowledge and
best practices, technological skills and capability.
The Group"s primary focus is the provision of value-based offerings centred
around biometric authentication, power solutions, product coding and marking
solutions, application and systems integration services, wireless and
infrastructure, storage, back-up recovery and telecommunications and service
provider solutions to its key target market of Enterprise, SME, Corporate and
Government clients. Channel Services continues to play an important role in the
Group and has a well established and mature reseller channel.
BUSINESS REVIEW
Our overall position in the "Information Communication and Technology
("ICT")" Sector remains strong, with clients showing their approval of our
solution offerings and services by entrusting us with more business in the
niche, early adoption, business enabling solution offerings.
Good results were achieved in a number of our business units whilst others
experienced a tough year.
Square One has managed to expand its business while substantially reducing its
overheads, thereby increasing margins and tightening its controls.
This ongoing process has been positively embraced by staff and management and a
number of our strategic goals have been met.
The Group recorded a net profit before tax of R2,277 million, an increase of
29%. (2002: R1,761 million). The Directors view this result as a resilient
performance during a challenging year of business. The strengthening of the Rand
adversely affected selling prices, particularly in the channels business. The
Group also benefited from a large once-off
Biometric Authentication transaction in 2002, which was not repeated this year,
further contributing to the decline in revenue over the previous year. Revenue
declined by 48% to R91,422 million (2002: R174,196 million).
The above results are in line with our strategic intent which retains a strong
emphasis on the power, coding and marking and channels businesses, as well as a
growing contribution from the business solutions arm of the business.
BLACK PARTNERSHIP AGREEMENT
In terms of its Black Economic Empowerment ("BEE") initiatives, the Group has
concluded a black partnership agreement, effective 1 January 2004, that gives
Utho Technologies (Pty) Ltd an effective 56,4% controlling interest. This
transaction provides additional skills to the Group and will contribute towards
securing a sustainable, long-term future for the business. This agreement has
resulted in the Group"s ability to meet the majority of the requirements of the
balanced scorecard approach that is expected to flow out of the recently
announced ICT Charter and associated
BEE targets. The acquisition remains subject to approval by the Securities
Regulation Panel, the JSE, the Competition Commission and Square One
shareholders.
OUTLOOK
Surviving companies from the IT Sector"s stock market collapse a few years ago,
have proved that they have the strength, flexibility and skill to ride out the
storm, and 2004 should see them reap the rewards of their persistence in
overcoming the adverse trading conditions.
Square One boasts 18 years of experienced business and is one of those
nationally represented businesses which has a solid platform from which to enter
and succeed in 2004.
While IT budgets will remain extremely tight our business solutions business
remains confident that the group is well positioned to assist our clients in
optimising their previous investments in IT and in better leveraging any
investments they may make. Based on prospects, our channels, coding and marking
and power business provides a long established and mature channel to provide
consistent and controlled growth in the period ahead.
The management of Square One will continue to restructure the back- and front-
office operations in order to support our push into new markets. We will
continue to reshape the organisation and will aggressively rejuvenate our
products and services in order to diversify our sources of revenue and attract
new customers. In line with our strategy we will continue to evaluate and seek
new opportunities to enhance our skills base and related business offerings
through organic means as well as other initiatives.
AUDITORS REPORT
The statements have been audited by the group"s auditors, Russell Bedford
Southern Africa (Jhb), Inc. The audit report is available for inspection at the
registered office of Square One.
DECLARATION OF DIVIDEND
The board has prudently decided not to declare a dividend.
On behalf of the board.
G A Coetser
Chairman
R T Muzariri
Vice-Chairman
W T James
Chief Executive Officer
Sandton
29 March 2004
Directors: G A Coetser* (Chairman), C L Alexander, B A Croza,
W T James (Chief Executive Officer), R R Masebelanga* (Deputy Chairman),
A Meyer, R T Muzariri (Vice Chairman), B Thokoane* (Non-executive)
Registered address Transfer secretaries
Eastgate Park, 8 Commerce Crescent West Ultra Registrars (Pty) Ltd
Eastgate Extension 13, Sandton PO Box 4844, Johannesburg 2000
(PO Box 1163, Gallo Manor 2146) SPONSOR
Telephone: (011) 321-5900 Bridge Capital Service (Pty) Ltd
Telefax: (011) 444-2462 PO Box 651010, Benmore, 2010
www.sq1.co.za
Date: 30/03/2004 07:01:11 AM Produced by the JSE SENS Department
