Interconnective Solutions has reported a net loss of R1.35 million for the year to end-June, compared with a profit of R0.57 million the previous year.
"It is disappointing to post a loss for the period under review, particularly as the company had turned the corner," says CEO Mark Smith.
While the company broke even on earnings before interest, tax, depreciation and amortisation basis, the inclusion of depreciation, amortisation and exchange losses led to a loss.
Last year`s profit came after several years of losses before the group restructured to become a telecommunications service provider.
The group experienced a downturn in the group`s "infotainment services", which comprise voting, promotions and competitions with the main clients being advertising agencies, fast-moving consumer goods companies, and electronic and print media vendors.
"During the year under review, FoneWorx increased the number of services it is hosting for this target market by 15% year on year," Smith says. "However, call volumes on a campaign-by-campaign basis are down by as much as a third.
"This downturn in consumer response to phone-in services became evident in the last five months of the financial year. Research shows that this downturn is industry-wide."
Smith says the group is repackaging its infotainment portfolio to adapt to the changing market, while at the same time it has introduced five primary business products to allow the group to cease to be reliant on infotainment revenue.
The products - fax to e-mail, e-mail to fax, PC to fax, international fax and digital document storage - were introduced to the FoneWorx portfolio over the past two years after it became evident that infotainment services, which are prone to peaks and valleys through the year, needed to be supplemented by more stable annuity-based income.
"Sales growth is at a rate of around 15% per month. We anticipate that these products will exceed the turnover of infotainment services within the next 12 months. The resulting annuity income will assist the group to obtain more predictable revenue in the future."
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