| Mon 6 Mar 2006, 12:53 | | Interconnective Solutions Ltd - Interim Reviewed R |
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ILT
ILT
Interconnective Solutions Ltd - Interim Reviewed Results
INTERCONNECTIVE SOLUTIONS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/010640/06)
Share code: ILT ISIN: ZAE000017943
("the group" or "the company")
REVIEWED RESULTS FOR THE PERIOD 1 JULY 2005 TO 31 DECEMBER 2005
* EPS up - 22%
* HEPS up - 17%
* Margins up - 17%
* Cash up - 16%
INCOME STATEMENTS
31 December 30 June
2005 2004 2005
(Reviewed) (Reviewed) (Audited)
six months six months twelve months
R"000 R"000 R"000
Revenue 13 605 16 063 30 530
Other operating income 4 179 54
Direct operating costs (6 478) (8 889) (16 877)
Staff costs (3 773) (3 705) (6 839)
Depreciation and amortisation
expenses (551) (652) (1 304)
Other operating expenses (2 219) (2 425) (4 509)
Profit from operations 588 571 1 055
Finance costs (25) (51) (84)
Investment income 91 14 50
Profit from ordinary
activities 654 534 1 021
Attributable to outside
shareholders - - 22
Retained profit for the period 654 534 1 043
Opening accumulated losses (8 482) (9 525) (9 525)
Closing accumulated losses (7 828) (8 991) (8 482)
Number of shares in issue
at end of period 112 100 000 112 100 000 112 100 000
Weighted number of shares in
issue at end of period 112 100 000 112 100 000 112 100 000
Basic earnings per share -
cents 0.58c 0.48c 0.93c
Deadline earnings per share -
cents 0.73c 0.62c 1.22c
Reconciliation between
earnings and
headline earnings R"000 R"000 R"000
Per the income statement 654 534 1 043
Items included in other
operating expenses above:
Intellectual property
amortised 163 163 326
Headline earnings 817 697 1 369
STATEMENTS OF CHANGES IN EQUITY
31 December 30 June
2005 2004 2005
(Reviewed) (Reviewed) (Audited)
six months six months twelve months
R"000 R"000 R"000
Share capital 112 112 112
Balance at beginning of period 112 112 112
Issue of share capital - - -
Share premium 14 096 14 096 14 096
Balance at beginning of period 14 096 14 096 14 096
Issues during period - - -
Share issue costs - - -
Accumulated losses (7 828) (8 991) (8 482)
Balance at beginning of period (8 482) (9 525) (9 525)
Attributable profits 654 534 1 043
6 380 5 217 5 726
BALANCE SHEETS
31 December 30 June
2005 2004 2005
(Reviewed) (Reviewed) (Audited)
six months six months twelve months
R"000 R"000 R"000
ASSETS
Non-current assets 3 168 3 680 3 463
Property, plant and equipment 1 744 2 040 1 781
Intangible assets 624 840 882
Other non-current assets 800 800 800
Current assets 7 659 9 478 9 371
Inventory 120 119 90
Trade and other receivables 5 061 7 226 6 135
Cash and cash equivalents 2 478 2 133 3 146
Total assets 10 827 13 158 12 834
EQUITY AND LIABILITIES
Capital and reserves 6 380 5 217 5 726
Non-current liabilities
Long-term loans 359 332 301
Current liabilities 4 088 7 609 6 807
- Trade and other payables 3 888 7 370 6 393
- Current portion of
non-current liabilities 200 239 282
- Bank overdraft - - 132
Total equity and liabilities 10 827 13 158 12 834
CASH FLOW STATEMENTS
31 December 30 June
2005 2004 2005
(Reviewed) (Reviewed) (Audited)
six months six months twelve months
R"000 R"000 R"000
Cash flow from operating activities (257) 472 2 450
Net cash (utilised)/generated by operations (323) 509 2 484
Finance costs (25) (51) (84)
Investment income 91 14 50
Cash flow from investing activities (255) 160 (575)
Cash flow from financing activities (24) 176 (186)
Net increase/(decrease) in cash
and cash equivalents (536) 808 1 689
Cash and cash equivalents
at beginning of period 3 014 1 325 1 325
Cash and cash equivalents
at end of period 2 478 2 133 3 014
COMMENTS
RESULTS
We are pleased to report a favourable set of results for the six months ended
31 December 2005. Earnings per share increased by 22% and headline earnings by
17% when compared to the previous corresponding period. The improved earnings
were achieved by a change in the profile of revenue, with margins increasing
from 45% for the previous corresponding period to 52% for the current period,
which is a 17% improvement.
This improved margin is primarily due to the sales mix moving more favourably
to the group"s suite of business services which, by their nature, also offer
more predictable sales and annuity-based income. Thus, although sales were
slightly lower against the same period last year, the group"s earnings were
substantially improved reflecting the improved quality of earnings.
Cash in the bank was up 16% compared to the same period last year. The group
continues to have no debt, save for short-term finance for capital equipment.
The group"s portfolio of business services continues to show good potential.
Our dealer network, comprising independently owned and managed businesses
trained to sell the group"s business services, is now over 100 dealers which
represents a growth of almost 300% over the same period last year.
The group"s Fax2Email subscriber base has shown exceptional growth of 255% over
the same period last year and the trend shows promising growth, which will
further enhance the quality of the group"s earnings.
The group expensed close to R500 000 in research and development in the six
months to 31 December 2005 for two exceptionally exciting new services that
will be launched in March 2006. These two new products will contribute to
revenue for the last three months of this financial year.
IFRS
The interim reviewed results and financial statements have been prepared in
accordance with IFRS (International Financial Reporting Standards) and IAS34 -
Interim Financial Reporting. All adjustments necessary for full compliance were
of a non-material nature, and accordingly no separate disclosure or restatement
of comparatives was necessary. The accounting policies used are consistent with
those used in the annual financial statements for the year ended 30 June
2005.
PROSPECTS
The group"s infotainment division, which focuses on providing Interactive Voice
Response, SMS and related telecommunication value-added services, continues to
show promising growth although margins are constantly under pressure due to
the high levels of competition. We are pleased to announce that the group has
been awarded a tender by the SABC as a Wireless Application Services Provider
to the SABC for all its value-added services. This will positively bolster the
infotainment division of the group.
Within our business division the group will be launching an exciting new
product called "SurveyOnline" which provides clients with the ability to
provide fully automated surveys using the Web or email. This methodology has
proved to be extremely popular in the United States and Europe.
In addition to this, the group will be launching a fascinating online
application, which is the aggregation of over thirteen previously discrete
applications via a single converged portal known as the "Virtual Business
Centre". This innovative product is aimed at the growing small, medium and
micro-enterprise market (SMME) and includes services such as: Fax2Email, Data
Storage, VOIP Calls, Credit Card Processing, Business and Legal Forms,
Accounting, Auto Receptionist and many more services. The application operates
on a pre-paid basis and will elevate the group"s business offering to new
heights.
The group has recently concluded an agreement for the acquisition of 40% (forty
percent) of the equity of a South African first tier Internet hosting and data
network company which offers dial-up, ADSL and Diginet access. This strategic
acquisition will add tremendous value to the launch of our Virtual Business
Centre. The agreement includes an option to acquire a further 11% (eleven
percent) after 12 (twelve) months. On the successful conclusion of the due
diligence, further details will be announced.
We are optimistic that the new range of products will continue to enhance the
group"s earnings and will demonstrate the group"s sound technical capabilities
and its wealth of intellectual property which is evident in the launch of the
"Virtual Business Centre".
DIRECTORATE
There have been no changes to the directorate during the period under review.
AUDIT REVIEW
These interim results have been reviewed by G Cambanis Inc, and a copy of their
report is available for inspection at the company"s registered office.
For and on behalf of the board
Ashvin Mancha - Chairman Mark Smith (CEO)
Johannesburg
28 February 2006
Registered Office:
372B, Oak Avenue, Randburg, 2194. Contact number: (011) 293-0000
Directors:
A G Mancha# (Chairman), G Mooney #*, R Graver, M A Smith (CEO)*
G H Tudor (Financial) (#Non-executive *Zimbabwean)
Company Secretary G H Tudor, CA(SA)
Auditors G Cambanis Inc
Transfer Secretaries Computershare Investor Services 2004 (Pty) Ltd
Sponsor LPC Manhattan Sponsors (Pty) Ltd
Date: 06/03/2006 12:53:07 PM Produced by the JSE SENS Department
