Interconnective Solutions (Isolution) has reported higher earnings for the six months to December, despite a 15.3% decline in revenue from R16.06 million to R13.61 million.
Headline earnings per share rose to 0.73c from 0.62c for the same period a year before, while basic earnings per share of 0.58c compare with a previous 0.48c. The group achieved a R0.59 million profit from operations (2004: R0.57 million) and a retained profit of R0.65 million (R0.53 million).
At the end of the trading period, current assets of R7.66 million (R9.48 million) compared with current liabilities of R4.09 million (R7.61 million).
The improved earnings were achieved by a change in the group`s revenue profile, says CEO Mark Smith.
The improved margins were mainly due to the sales mix moving more favourably to the group`s suite of business services, which also offer more predictable sales and annuity-based income.
"The group continues to have no debt, save for short-term finance for capital equipment," Smith adds.
He says the dealer network - independently owned and managed businesses trained to sell Isolution`s business services - is now more than 100 dealers, which represents an almost 300% growth over the year-earlier period.
The group spent almost R500 000 on research and development during the six months, with the result that two new services are to be launched this month, contributing to revenue for the last three months of the financial year, he says.
"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," Smith says.
The group was awarded a tender by the SABC as a wireless application services provider for all the SABC`s value-added services.
Smith adds that Isolution recently agreed to acquire 40% of the equity of a South African first-tier Internet hosting and data network company. He says further details will be announced once the due diligence investigation has been concluded.
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