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Interconnective Solutions Limited - Reviewed Interim Report For The 6 Months
Release Date: 25/03/2004 10:40:31 Code(s): ILT
Interconnective Solutions Limited - Reviewed Interim Report for the 6 months
ended 31 December, 2003
INTERCONNECTIVE SOLUTIONS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/010640/06)
("Solutions" or "the Company")
Share Code: ILT ISN Code: ZAE000017943
Reviewed Interim Report for the 6 months ended 31 December, 2003
RESULTS:
The group made a headline earnings profit of R467 000 for the six months ended
31 December, 2003, and a net profit of R331 000 for the period. During this
reporting period, the group again ran the Telkom Charity Cup voting lines, and
as well as the Idols lines, which enhanced volumes. Further, a solid investment
was made in establishing business services, details of which are elaborated or
in the Prospectus below.
PROSPECTS
The integration of Telemessage into the group has been successfully concluded
and has enabled the group to:
- achieve some consolidation in the industry
- accelerate the group"s focus on a defined range of services
- increase the company"s intellectual knowledge pool
The combined force of Telemessage and Solutions now positions the group to be
the largest premium rate service provider for MTN and Telkom.
The group is currently concluding a contractual relationship with Cell C
whereafter it will have service provider agreements with Telkom, Vodacom, MTN
and Cell C and operate as an independent platform to all networks.
The group has a clearly defined strategy which has been continuously refined
over the last 18 months. This strategy is founded on three distinct pillars,
namely:
Infotainment services, which has a primary target market of advertising agencies
and FMCG companies
Business services, which incorporates a host of business services including fax
to e-mail, e-mail to fax, PC to fax, StorDoc, fax on demand, message on hold,
fax broadcast and call conferencing. The target market for business services is
government, corporates, SME"s and SOHO"s.
African services, which extracts intellectual assets and commercial products
from the former two pillars and is primarily focussing on establishing a
telecommunications blanket across Africa. This will enable FoneWorx to launch
services on behalf of clients from South Africa into African countries,
providing text and voice services originating in those countries in Africa, but
with these services terminating on the group"s platform in South Africa or
focused in a designated territory.
The group is rapidly becoming more focused on being marketing orientated by
systematically packaging its intellectual talents into tangible commercial
products. These will provide sustainable business solutions and annuity income
in the future.
The group has launched a suite of business services under the EasyLink banner
pursuant to an exclusive South African dealership agreement entered into with
EasyLink, New York. In addition, the group has launched its own proprietary
document storage services "StorDoc" which leverages off the group"s existing 780
channel digital platform. This product is aimed at government, corporates,
SME"s and individuals.
The group has also concluded an exclusive agreement for South Africa for a music
recognition service. This was patented and launched in the United Kingdom and
is known as "Shazam". The group also has a right of first refusal for eight
African territories for this product.
Collectively, these products have the potential to provide the group with
sustainable and growing annuity income to smooth out erratic revenue streams
associated with our infotainment business.
Despite agreement being reached with a Black Empowerment company, that company
was unable to meet its financial obligations and the agreement was automatically
terminated. The group continues to look for a suitable BEE partner to further
enhance its BEE status, which will be in addition to the empowerment
shareholders that currently own approximately 14% of the issued shares.
The next 12 months provide exciting opportunities for the group and we look
forward with positive anticipation that the new products being launched will
provide the company with its desired annuity income which will provide month-on-
month sustainable growth.
DIRECTORATE:
Molefe Mokgatle resigned as a director at the Annual General Meeting held on 5
March, 2004. The board would like to thank him for his loyal services to the
group in the past.
DIVIDENDS:
No dividends have been declared, and no dividend is proposed.
ACCOUNTING POLICIES:
The results for the period have been prepared in accordance with South African
Generally Accepted Accounting Practice. The accounting policies are consistent
with those of the previous financial period. The results have been reviewed by
our auditors, and the reviewed report is available for inspection at the
registered office of the company.
For and on behalf of the board
Mark Smith
Chairman & CEO
Johannesburg
23 March, 2004
Interconnective Solutions Ltd, Reg no: 1997/010640/06
Transfer Secretaries: Computershare Ltd, P O Box 61051, Marshalltown, 2107
Registered Office: 372B, Oak Avenue, Randburg, 2194 Contact number: 011-293-
0000
Directors: M A Smith (Chairman & CEO), R Graver, A Mancha*, G Mooney*+ R
Russell, G H Tudor (Financial), (*Non-Executive) (+ Zimbabwean)
Company Secretary: G H Tudor CA (SA)
Auditor: G Cambanis Inc
Sponsor: LPC Manhattan Sponsors (Pty) Ltd
GROUP REVIEWED INTERIM RESULTS FOR THE PERIOD 01 JULY 2003 TO 31 DECEMBER 2003
INCOME STATEMENT
31 December 30 June 31 October
2003 2003 2002
(Reviewed) (Audited) (Reviewed)
6 months 14 months 6 months
R" 000 R" 000 R" 000
Revenue 13518 19021 7897
Other operating income 387 672 231
Changes in inventory 0 0 (111)
Direct operating costs (6611) (8655) (3853)
Staff costs (4183) (5475) (1933)
Depreciation and (577) (1234) (449)
amortisation expenses
Other operating expenses (2273) (3738) (1679)
Profit from operations 261 591 103
Finance costs (37) (59) (83)
Investment income 31 57 17
Profit from ordinary 255 589 37
activities
Attributable to outside 20 (22) -
shareholders
Retained profit for the 275 567 37
year
Opening (8176) (8743) (8916)
accumulated losses
Closing (7901) (8176) (8879)
accumulated losses
Number of shares in issue 111,090,000 111,090,000 96,600,000
at end of period
Weighted number of shares 111,090,000 98,152,500 96,600,000
in issue at end of period
Basic earnings per share 0.25 0.58 0.04
(cents)
Headline earnings per 0.39 0.90 0.04
share (cents)
R" 000 R" 000 R" 000
Reconciliation between
earnings and headline
earnings
Per the income statement 275 567 37
Items included in other
operating expenses above
:
Goodwill amortised 156 312 -
Loss on disposal of - 1 -
investments
Headline earnings 431 880 37
R" 000 R" 000 R" 000
STATEMENT OF CHANGES IN EQUITY
Share Capital 111 111 97
Balance at beginning of period 111 97 97
Issue of share capital - 14 -
Share Premium 14034 14034 12483
Balance at beginning of period 14034 12483 12483
Issues during the year - 1551 0
Accumulated losses (7901) (8176) (8879)
Balance at beginning of period (8176) (8743) (8916)
Attributable profits 275 567 37
6244 5969 3701
BALANCE SHEET
31 December 30 June 31 October
2003 2003 2002
(Reviewed) (Audited) (Reviewed)
6 months 14 months 6 months
R" 000 R" 000 R" 000
ASSETS
Non Current Assets 4244 4512 3524
Property, 1617 1407 1402
plant and equipment
Intangible assets 1827 2305 1321
Loans receivable 800 800 800
Investments - - 1
In associates and
subsidiaries
Current Assets 8941 6418 3345
Inventory 315 255 165
Trade 5633 4154 2474
and other receivables
Cash 2993 2009 706
and cash equivalents
Total Assets 13185 10930 6869
EQUITY AND LIABILITIES
Capital and reserves 6244 5969 3701
Non current liabilities
Long term loans 313 148 310
Minority 2 22 0
shareholders interest
Current Liabilities 6626 4791 2858
Trade and other payables 6259 4568 2603
Current portion of non 367 223 255
current liabilities
Total Liabilities 13185 10930 6869
CASHFLOW STATEMENT 31 Dec 30 June 31 October
2003 2003 2002
(Reviewed) (Audited) (Reviewed)
6 months
R" 000 R" 000 R" 000
Cash flow from operating 1003 1571 (111)
activities
Net cash (utilized) / 1009 1573 (45)
generated by operations
Finance costs (37) (59) (83)
Investment income 31 57 17
Cash flow from investing (308) (1825) (53)
activities
Cash flow from financing 289 1391 (3)
activities
Net increase / (decrease) 984 1137 (167)
in cash and cash
equivalents
Cash and cash equivalents 2009 872 872
at the beginning of the
year
Cash and cash equivalents 2993 2009 705
at end of the year
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