SARHWU Investments acquires stake in IT group I-fusion

Johannesburg, 24 Jun 1999

In a deal announced today, SARHWU Investment Holdings Limited, the investment arm of the South African Transport & Allied Workers Union (SATAWU), has an option to acquire a 20 percent shareholding in JSE-listed I-Fusion Ltd. (formerly Impotek), subject to the requisite approvals.

If, at the time of exercising of the option, there have been no new shares in issue, the initial 15 percent shareholding will be acquired at R43,8 million.

I-Fusion recently consolidate the Group`s 12 companies into three focused divisions, namely networking, services and systems integration, offering a total business solution to its clients. The company has a comprehensive range of products and services backed by a highly skilled team and spanning anything from local area networks to wide area networks.

Says Israel Skosana, group managing director of SARHWU Investments: "We recognise the advantages of investing in I-fusion, where we can add significant value through our strategic input as well as through the membership of SATAWU. I-Fusion is a successful IT company which has found its niche in a growing sector of business that requires an outsourced services capability."

He adds: "SARHWU Investments is a dynamic broad-based empowerment grouping with its investment focus in three core areas - IT, financial services and logistics. All of our investments have to meet established and proven criteria which has resulted in our growth in over R400 million in net asset value in the two years since inception."

Ron Sackstein, chief executive officer of I-Fusion comments: "When we released our year end results in April, we stressed our objective of becoming a leader within our target market through achieving strong organic growth as opposed to the route of acquisitions. To meet this, it was vital that we strengthen our empowerment initiatives."

He adds that the Group was determined to choose a shareholder that would add real value to the business.

"SARHWU Investments has the potential to add substantial value to I-Fusion and, at the same time, assist us in our mission of continued skills transfer to the previously disadvantaged sector."

Israel Skosana will represent SARHWU Investments on the I-Fusion board.

I-Fusion Limited

I-Fusion`s results for the financial year ended 28 February 1999 saw turnover increasing by 216 percent (R125,3 million from R39,6 million) and headline earnings attributable to shareholders up by 130 percent (R13,6 million from R5,9 million).

Organic growth, which comprised 93 percent of increase in turnover, is key strategy for the Group. Ron Sackstein, chief executive officer of I-Fusion Limited, says: "Through our restructuring; significant investment in a strong and experienced operational and management team; and focus on skills development, we are well positioned to maintain strong organic growth. Indeed, with the synergies that have developed within the group and our positioning in the high value services arena, ensuring sustainable organic growth, we expect this to increase during the coming year."

Commenting on the recent name change from Impotek to I-Fusion, Sackstein says: "We believe this more accurately reflects our offerings and skills as we are focusing on high value-add services and solutions, fusing these and seeking cross-pollination of customer bases and intellectual capital to provide customers with holistic solutions."

During the year under review, the Group moved its head office and consolidated its Gauteng region operations into a new high-tech facility in Midrand. "We are already enjoying greater economies of scale and the emergence of a distinct group culture through this," says Sackstein.

Of the 1998 revenue, the Networking division contributed 56 percent, Services 28 percent and Systems Integration 16 percent. In line with the sales mix moving towards the high-end service arena, Sackstein expects this to swing to 28 percent Systems Integration, 19 percent Services and the remaining 53 percent from Networking in fiscal 1999.

"We`re looking to compete for larger IT projects, in line with our vision of becoming the number one IT solution provider within our target market, the mid-sized sector, within the next four years."

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