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Square One re-aligns for long-term growth

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Square One has reported that its revenues for the six months ended 30 June 2008 are up but that headline earnings are substantially lower.

A statement released on Friday says this is in line with the company's decsion to focus on diversifying the customer base and strategically positioning the company into new and parallel markets comprising government and parastatal markets, through strategic alliances and initiatives.
It adds that significant parastatal business was secured during May and June 2008 and will contribute significantly to revenues through second half of the year. The major benefit of the contracts will be appreciated in the 2009 and 2010 financial years.
The results for the six months ended 30 June 2008 reflect earnings and headline earnings attributable to ordinary shareholders of R162 000.00 (R2,7-million in 2007) and R162 000 (R2,3-million in 2007) respectively for the period.
Turnover has increased by 17,5% over the prior period.
The group has focussed on reducing turnover from low margin business to service and contract type business, which, typically attracts a higher gross margin for the group. Consequently, gross margins in the operating units are well up year-on-year for the same period and the group's blended gross margin percentage is holding steady at more than respectable levels.
The contracts being signed with customers vary from one-year to five-year service and/or rental contracts. These long-term contracts and initiatives will provide Square One with a predictable and sustainable project based revenue flow through the 2009 and 2010 periods, the statement says. As such, a strategic decision was taken to absorb the upfront expenses in order to get the initiatives underway.