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Provisional Consolidated Audited Financial Results For The Year Ended 30 June 2014 And Dividend Declaration
FONEWORX HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number 1997/010640/06)
Share code: FWX ISIN: ZAE000086237
(“FoneWorx” or “the Group” or “the Company”)
PROVISIONAL CONSOLIDATED AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED
30 JUNE 2014 AND DIVIDEND DECLARATION
HIGHLIGHTS:
- Group Revenue up 10.1% to R118.2m
- Profit Before Tax up 8.3% to R38.6m
- Cash and Cash Equivalents up 8.97% to R119.1m
- Earnings Per Share up 10.26% to 20.21 cents
- Dividend Per Share Paid In Year up 71.43% to 12 cents
- Net Asset Value Per Share up 8.81% to 101.3 cents
CONSOLIDATED AUDITED STATEMENT OF FINANCIAL POSITION
Audited as at Audited as at
Figures in Rands Change 30 June 2014 30 June 2013
Assets
Non-Current Assets
Property, plant and equipment 15 847 284 15 893 812
Intangible assets 9 911 690 8 822 532
Deferred tax asset 180 983 -
Investment in associate 3 080 993 -
17.4% 29 020 950 24 716 344
Current Assets
Inventories 460 095 347 953
Current tax receivable - 39 145
Trade and other receivables 18 943 686 25 244 238
Cash and cash equivalents 119 142 094 109 334 359
2.7% 138 545 875 134 965 695
Total Assets 4.9% 167 566 825 159 682 039
Equity and Liabilities
Equity
Share capital 52 624 736 52 624 736
Retained income 85 107 940 73 946 903
8.8% 137 732 676 126 571 639
Liabilities
Non-Current Liabilities
Interest bearing liabilities 3 478 698 4 574 026
Deferred tax liability 946 222 334 918
-9.8% 4 424 920 4 908 944
Current Liabilities
Current tax payable 720 268 -
Interest bearing liabilities 1 432 559 1 808 614
Trade and other payables 16 826 921 20 020 167
Provisions 6 322 924 6 303 389
Unclaimed dividends 106 557 69 286
-9.9% 25 409 229 28 201 456
Total Liabilities -11.3% 29 834 149 33 645 178
Total Equity and Liabilities 4.9% 167 566 825 159 682 039
Net asset value per share (cents) 8.8% 101.3 93.1
Net tangible asset value per share (cents) 8.5% 94.0 86.6
CONSOLIDATED AUDITED STATEMENT OF COMPREHENSIVE INCOME
Audited for Audited for
the year the year
Figures in Rands Change ended ended
30 June 2014 30 June 2013
Revenue 10.1% 118 197 594 107 367 235
Cost of services 16.9% (48 122 518) (41 179 935)
Gross profit 5.9% 70 075 076 66 187 300
Other income -11.0% 587 419 659 989
Operating expenses -7.8% (9 670 789) (10 487 865)
Staff costs 20.7% (23 063 331) (19 101 804)
Legal costs -100.0% - (1 387 617)
Depreciation and amortisation expense 1.3% (4 577 825) (4 519 642)
Operating profit 6.4% 33 350 550 31 350 361
Investment income 17.3% 5 669 212 4 833 110
Finance costs -19.6% (440 329) (547 838)
Profit before taxation 8.3% 38 579 433 35 635 633
Taxation 3.7% (11 098 151) (10 704 177)
Profit for the year attributable to the 10.2% 27 481 282 24 931 456
equity holders of the parent
Basic earnings per share (cents) 10.3% 20.21 18.33
Diluted earnings per share (cents) 10.3% 20.21 18.33
CONSOLIDATED AUDITED STATEMENT OF CHANGES IN EQUITY
Share Retained
Figures in Rands Share Capital Premium Total Share Income Total Equity
Balance at 1 July 2012 136 002 36 373 027 36 509 029 75 597 691 112 106 720
Changes in equity
Total comprehensive income
- - - 24 931 456 24 931 456
for the year
Share repurchase 1 October
(40 801) (36 373 027) (36 413 828) (17 062 101) (53 475 929)
2012
Share issue 1 October 2012 40 801 53 435 128 53 475 929 - 53 475 929
Cost to issue equity - (946 394) (946 394) - (946 394)
Dividends - - - (9 520 143) (9 520 143)
Total changes - 16 115 707 16 115 707 (1 650 788) 14 464 919
Balance at 1 July 2013 136 002 52 488 734 52 624 736 73 946 903 126 571 639
Change in equity
Total comprehensive income
- - - 27 481 272 27 481 272
for the year
Dividends - - - (16 320 245) (16 320 245)
Total changes - - - 11 161 027 11 161 027
Balance at 30 June 2014 136 002 52 488 734 52 624 736 85 107 930 137 732 666
CONSOLIDATED AUDITED STATEMENT OF CASH FLOWS
Audited for Audited for
the year the year
Figures in Rands Change ended 30 ended 30
June 2014 June 2013
Cash flows from operating activities
Cash generated from operations 40 932 689 33 890 090
Interest income 5 669 212 4 833 110
Finance costs (440 329) (547 838)
Tax paid (9 908 418) (10 153 573)
Net cash from operating activities 29.4% 36 253 154 28 021 789
Cash flows from investing activities
Purchase of property, plant and (2 180 238) (890 400)
equipment
Proceeds on disposal of property, plant 252 839 -
and equipment
Purchase of intangible assets (3 682 670) (3 957 027)
Investment - Livingfacts Proprietary (3 080 993) -
Limited
Net cash from investing activities 79.3% (8 691 062) (4 847 427)
Cash flows from financing activities
Cost to issue equity - (946 394)
Share repurchase - (53 475 929)
Share issue - 53 475 929
Repayment of interest bearing liabilities (1 471 383) (1 718 121)
Dividends paid (16 282 974) (9 497 807)
Net cash from financing activities 46.0% (17 754 357) (12 162 322)
Total cash and cash equivalents 9 807 735 11 012 040
movement for the year
Cash and cash equivalents at the 109 334 359 98 322 319
beginning of the year
Total cash and cash equivalents at end 9.0% 119 142 094 109 334 359
of the year
NOTES TO THE PROVISIONAL CONSOLIDATED AUDITED FINANCIAL RESULTS
1. BASIS OF PREPARATION
The Group annual financial statements from which these provisional consolidated audited financial
statements were derived have been prepared on the historical cost basis excluding financial instruments
which are accounted for in terms of IAS39 and conform to International Financial Reporting Standards
(“IFRS”) and with the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee.
The accounting policies applied in the preparation of these provisional consolidated audited financial results,
which are based on reasonable judgements and estimates, are in accordance with IFRS and are consistent
with those applied in the Group annual financial statements for the year ended 30 June 2013. These
provisional consolidated audited statements set out in this report have been prepared in terms of IAS 34 –
Interim Financial Reporting, the Companies Act, 2008 (Act 71 of 2008), as amended, and the Listings
Requirements of JSE Limited (“JSE”).
These provisional consolidated audited financial statements were prepared under the supervision of the
Financial Director, Pieter Scholtz CA(SA).
Audit Report
The auditors, Grant Thornton (Jhb) Inc., have issued their unmodified opinion on the Group’s annual
financial statements for the year ended 30 June 2014. The audit was conducted in accordance with
International Standards on Auditing. A copy of the auditor’s report together with a copy of the audited
financial statements are available for inspection at the Company’s registered office. These provisional
consolidated audited financial statements have been derived from the Group’s annual financial statements
and are consistent in all material respects with the Group’s annual financial statements. The contents of this
announcement are extracted from audited information, although the announcement is not itself audited. The
Directors of the Group take full responsibility for the preparation of this announcement and confirm that the
financial information has been correctly extracted from the underlying annual financial statements.
2. RECONCILIATION BETWEEN EARNINGS AND HEADLINE EARNINGS
udited for the Audited for the
Figures in Rands year ended year ended
30 June 2014 30 June 2013
The calculation of earnings per share is based on profits of
R27 481 282 attributable to equity holders of the parent
(2013: R24 931 456) and a weighted average of 136 002
041 (2013: 136 002 041) ordinary shares in issue during the
year 20.21 cents 18.33 cents
The calculation of headline earnings per share is based on
profits of R27 481 282 attributable to equity holders of the
parent (2013: R24 931 456) and a weighted average of 136
002 041 (2013:136 002 041) ordinary shares in issue during
the year 20.21 cents 18.33 cents
Reconciliation between earnings and headline earnings
Profit attributable to ordinary shareholders of parent 27 481 282 24 931 456
There were no reconciling items
Headline earnings 27 481 282 24 931 456
The calculation of diluted earnings per share is based on
profits of R27 481 282 (2013: R24 931 456) and a weighted
average of 136 002 041 (2013: 136 002 041) ordinary
shares issued during the year
There were no reconciling items
20.21 cents 18.33 cents
Reconciliation between earnings and diluted earnings per share:
Weighted average number of shares used in the calculation
of earnings per share
136 002 041 136 002 041
There were no instruments issued during the current year that have a dilutive impact.
3. SEGMENTAL REPORTING
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision-makers. These chief operating decision-makers (“the CODM”) have been identified as the
executive committee members who make strategic decisions. The CODM have organised the operations of
the company based on its brands and this has resulted in the creation of the following reportable segments:
- BizWorx: the segment focusing on business related products; and
- MediaWorx: the segment focusing on information and entertainment services.
The accounting policies of the operating segments are the same as those described in the basis of
preparation. MediaWorx provides services within South Africa as well as in 38 African countries (“Africa
sales”). Within the year under review 5.75% (2013: 7.5%) of MediaWorx’s revenue can be attributed to Africa
sales. The Company allocates revenue to each country based on the domicile of the related customer. All of
the Company’s assets are located in South Africa. MediaWorx currently generates 30.3% and 13.39% (2013:
30.9% and 14.37%) of its revenue through two customers respectively. BizWorx generated 96% (2013: 96%)
through one single customer. The reconciliation of gross profit to profit before taxation is provided in the
Statement of Comprehensive Income. The CODM reviews these income and expense items on a group
basis and not per individual segment. All assets and liabilities are reviewed on a group basis by the CODM.
Capital expenditure would also be reviewed on a group basis. There is no inter-segmental revenue in the
Group.
Audited for the Audited for the
Figures in Rands year ended year ended
30 June 2014 30 June 2013
Revenue
BizWorx 60 526 803 64 922 306
MediaWorx 57 670 791 42 444 929
118 197 594 107 367 235
Cost of sale
BizWorx (13 164 591) (15 596 846)
MediaWorx (34 957 927) (25 583 089)
(48 122 518) (41 179 935)
Gross Profit
BizWorx 47 362 212 49 325 460
MediaWorx 22 712 864 16 861 840
70 075 076 66 187 300
COMMENTARY
The board of directors of FoneWorx (“the Board”) are proud to announce their results for the year ended
30 June 2014.
NATURE OF THE BUSINESS
The Group provides interactive telecommunication, switching and business services, orientated around fixed
and mobile networks. These include a broad range of services to the Fast Moving Consumer Goods
(“FMCG”) market, business and financial community, as well as media groups.
FINANCIAL PERFORMANCE
The Group’s revenue has grown to a record high of R118.2 million representing a 10.1% increase on the
revenue of last year of R107.4 million. The increase can once again be attributed to the MediaWorx division
that had a 35.9% increase in revenue from R42.4 million to R57.7 million. This increase was due to
increased sales. Furthermore, MediaWorx was able to maintain a steady gross profit margin of around 40%
resulting in a gross profit of R22.7 million, a 34.7% increase on the gross profit of the previous year of R16.9
million. The BizWorx division showed marginal revenue decline of 6.8% with a slight improvement in its gross
profit margin. This improvement was due to the Group introducing a number of initiatives to maintain and
grow its own internal dealership network such as the use of outbound call centre agents to not only grow the
current user base but maintain the current users and reduce user churn. The resulting impact of this was that
the gross profit for the division amounted to R47.3 million which is 4% down on the previous year’s record
gross profit of R49.3 million. This division is still extremely cash generative as the earnings are achieved with
minimal direct operational cost. A key driver for management is to keep operating costs down to a minimum
and this year the Group was able to, once again, achieve a reduction in operating cost of 8.5%, reducing the
operating cost to R9.6 million, the lowest that it has been in 5 years.
The Group has increased its staff expenditure cost by 20.7% from R19.1 million to R23 million in the year
under review. At the end of the financial year the Group directly employed 83 staff members.
Earnings before interest, taxation, depreciation and amortisation (“EBITDA”) increased by 10.1% to R38
million (2013: R35.9 million). Based on the weighted average number of shares in issue, earnings per share
(“EPS”) and headline earning per share (“HEPS”) both increased by 10.3% to 20.21 cents from 18.33 cents
in relation to the previous corresponding year. Profit before tax increased by 8.3% to R38.6 million (2013:
R35.6 million) and gross profit increased by 5.9% to R70 million (2013: R66.1 million), resulting in a gross
profit percentage of 59.3% (2013: 61.6%). Net profit for the year under review increased to R27.5 million
(2013: R24.9 million) reflecting a 10.2% increase.
Statement of Financial Position
The Group has, over the past few years, built up a significant cash reserve. The aim of this is to enable the
Group to:
- Make value enhancing acquisitions;
- Invest into internal projects;
- Have adequate working capital to expand organically;
- Have the ability to weather tough economic conditions; and
- To achieve this while maintaining a good dividend flow to shareholders.
The Group purchased 44% equity in Livingfacts Proprietary Limited for an amount of R3 million and
subsequent to year end the Group made a further investment in BMi Research Proprietary Limited. We are
of the view that over and above the strategic benefit that these acquisitions will afford us, it will assist the
Group to achieve its revenue growth in the future as well as give us the ability to accrue the human capital
required to expand while still enjoying the revenue from a going concern. Furthermore, the Group continues
to invest in internal projects to the value of R3.6 million for the past year (2013: R4 million) as well as a R2.1
million investment in infrastructure and call centre assets (2013: R890 000) The assets held by the Group
increased by 4.6% from R160.2 million to R167.6 million with a significant reduction in trade and other
receivables from R25.2 million down to R18.9 million with a corresponding reduction in trade and other
payables from R20 million to R17 million. Currently the Group is not heavily geared and has a debt equity
ratio of 21.6% (2013: 26%) as it has adequate cash resources to fund growth and acquisition opportunities
resulting in the limited use of interest-bearing finance. The net asset value per share has increased to 101.3
cents from 93.1 cents over the past year, an increase of 8.8% and the net tangible asset value per share
increased 8.5% from 86.6 cents to 94 cents.
Cash movements
Cash generated from operations increased by 29% from R28 million to R36.3 million. This is again testimony
of the cash generative nature of the BizWorx and MediaWorx divisions. R8.7 million of the cash generated
was used for investing activities during the year. Furthermore the Group declared and paid a cash dividend
of R16.3 million (12 cents per share) to its shareholders, a 71.4% increase on the prior year dividend of R9.5
million (7 cents per share). The net effect of this is that the Group increased its cash holdings from R109.3
million to R119.1 million, a 9% increase.
Equity movements
During the year under review there were no share issues or share premium movements.
OPERATIONAL PERFORMANCE
Whilst the historical Group revenue generators (MediaWorx and BizWorx) continue to deliver consistent
earnings to varying degrees, the Group is embarking on an exciting new strategy which is dealt with under
“Strategic Position and Vision”.
Group Profile
The Group has developed a broad range of communication and technological services on the back of its own
proprietary technical platform with software primarily developed by our own internal programmers.
Our unique selling proposition, which has enabled us to make solid inroads in the market, is our ability to:
- offer a broad range of services (such as SMS, IVR, USSD, MMS, email etc) under one roof – a “one stop
shop”. This has paid dividends particularly as we have a number of competitors in each of these services,
although very few offer the range “under one roof”;
- design, program, host and maintain our services on our own proprietary platform. This methodology gives
us speed to market, the ability to design bespoke solutions and extract analytics on demand;
- be customer-centric and acknowledge the need to service our clients at the appropriate levels; and
- be innovative and keep abreast of new technology.
The Group’s target markets have traditionally been above and below the line media [television, radio and
print], fast moving consumer goods companies and advertising agencies as a channel to a broader range of
clients.
Our services have traditionally been offered as Business to Business (“B2B”), however there is a move to
enter the Business to Consumer (“B2C”) market which will be further explained under “Strategic Position and
Vision”.
Operational Performance
BizWorx
BizWorx provides unified communication services (“UCS”) such as Fax2Email, Email2Fax, Short Message
Services, Instant Messaging and related technologies to individuals, small, medium and micro enterprises
and larger corporates.
These services are offered to the market by our own sales executives and 48 independent dealers who have
been trained on the products and services.
Our faxing solutions, which are “cloud based” services, continue to provide the lion’s share of revenue to the
Group.
BizWorx’s faxing solutions provide subscribers with: safety, security, auditability, reliability and trusted
exchange.
The past year has seen a consolidation in the faxing industry which is a world-wide trend. Industries like
finance, recruitment, law and healthcare have historically used fax and continue to do so. In 2013 Gartner,
the world’s leading information technology research and advisory company, reported that multifunction
devices which couple fax capabilities with printing, scanning and copying remain in demand and that
manufacturers shipped 37 million multifunction devices worldwide in 2011 and 2012, a number which
Gartner expects to remain steady.
With data privacy and international regulatory compliance requirements, some industries, like health, tend to
move from email to fax for more of their communications.
This seemingly backward move is actually quite the opposite with modernised fax using fax server software
rather than the traditional fax machine. Because the communications are circuit-based and “point to point”,
they are considered more secure than email, which crosses the Internet and could be intercepted by
malicious users. Similarly, faxes don’t harbour viruses that can debilitate computers. In addition, faxes don’t
get blocked like emails. We anticipate that fax services will continue to consolidate further over the next few
years and that certain industries will maintain the technology and others will become less dependent on this
form of communication. There will also be a change in the service offering with a mix of traditional fax
technology with new mobile-powered business services.
Strategically the Group is planning for a plateau and eventually a decline in line with international trends;
however this service is completely automated and continues to be very profitable with very minimal human
resource intervention providing solid annuity income which we still anticipate to continue over the next few
years whilst new divisions and inorganic growth is achieved.
Email2Fax, which enables anyone to use their PC to “fax out” without the need for an actual printer or
machine, continues to show growth albeit from a low base. Year on year growth showed a 20% increase with
prepaid funds in “virtual wallets” increasing to R1,5 million. We anticipate this trend to continue as this
represents a small percentage of our Fax2Email subscriber base.
Our premium rated faxing service is offered under a Telkom license which remains valid until 2018 with only
two other licensed service providers in the market. The license is renewable at the end of each designated
period.
Our strategy will be to continue to “modernise fax” by integrating mobile fax and creating a unified storage
facility for document storage in one portal for faxes and scanned documents.
MediaWorx
MediaWorx is designed to provide our clients with, not only technical solutions, but also business strategy
orientated around enhanced communications to consumers on a one-to-one basis in line with the Digital
Economy.
Specially trained account executives operate from our offices in Randburg (Gauteng), Cape Town and
KwaZulu-Natal and interact with a broad range of clients particularly digital agencies and media houses that
provide above the line, below the line and through the line services to their principals. In addition, account
executives provide services directly to corporates and Fast Moving Consumer Goods companies.
During the year under review MediaWorx performed well and continues to show positive growth. Over 1 020
campaigns spread over 320 different clients were successfully developed and hosted.
MediaWorx offers a broad range of services which can be categorised as:
Infotainment Services: using technologies such as: Short Message Service (“SMS”), Interactive Voice
Response (“IVR”), Unstructured Supplementary Service Data (“USSD”) and Multimedia Message Service
(“MMS”). These services include: competitions, voting services and fulfilment of prizes.
These infotainment services were offered to a broad range of clients including: DSTV Africa – Big Brother,
Unilever, SAB, SABC, Pep, Samsung, Machine, Telkom, Caxton CTP, Bokomo, Sasko, 34' South, Hardy
Boys, 7DKS, Coca-Cola, Tropika, Amka, Millward Brown, Huggies, Imala, Jam Clothing, Initiative and
Huletts.
Community of Ecosystem Building: These services are designed to build clubs or loyalty programmes
with the intention of building databases integrated to communication strategies using Customer Relationship
Management (“CRM”) tools and Instant Messaging (“IM”) tools.
The core of the ecosystem is the database design, key performance indicators and marketing tools to
effectively communicate with ecosystem members. Ecosystem services such as Instant Messaging and
USSD were delivered to a number of blue chip clients including: Pep, SA Breweries (Hansa / Castle / Black
Label / Redds) and Clientèle Life.
Market Research: Market research, particularly embracing mobile devices, is becoming more relevant and
meaningful with the growth of the digital economy and mobile device penetration. MediaWorx developed a
number of mobile and web-based surveys for the research industry using both smart apps and Unstructured
Supplementary Service Data (“USSD”) together with reward systems incorporating pin-less airtime to the
respondent’s mobile device.
Bespoke Services: MediaWorx designs a number of bespoke services based on a client’s particular needs.
In addition, we consult with clients to assist in integrating a mobile strategy to complement an organisation’s
marketing and communications strategy for long-term sustainable benefits.
MediaWorx continues to be the preferred service provider to SABC Mobile and DSTV Africa.
This division has huge organic growth opportunities, particularly with the growth of mobile devices and the
widespread adoption by consumers of social media, e-commerce, e-banking and content sharing. Our
strategy continues to grow the base of clients and the depth of services offered to each client.
MediaWorx Africa
MediaWorx Africa, a sub-division of MediaWorx, has a presence in 38 countries in Africa and has
longstanding contractual relationships with over 95 mobile networks in those countries.
This division has successfully hosted a number of campaigns for blue chip companies including DSTV Africa
(Big Brother series 1 – 9), Distell, Clere, Sybase and blue chip mobile device manufacturers.
In addition, this division has managed mobile surveys for a range of research companies in Ghana, Tanzania
and Kenya.
MediaWorx is one of the few companies that has operated successfully in Africa over the large footprint of
networks on a consistent basis. Our formula, developed for Africa, promises good growth and we will
continue to add countries to our portfolio and the mobile networks associated to each country.
CarbonWorx
The afforestation project, in association with The Department of Environmental Affairs and The Hegebe Trust
in Mqanduli, ended on the 31st of March 2014. This project created 76 “green jobs” over the last 3 years and
over 10 000 trees were planted in the designated sites. In addition, hundreds of acres of land were cleared of
invasive lantana.
Over 9 000 trees still remain in the nursery and we will continue to plant them in the designated sites in the
foreseeable future. The designated sites will continue to be maintained with six staff for the next six months.
Strategic Position and Vision
Over the last 17 years the Group provided services to thousands of clients and collected large amounts of
data. Whilst the data existed there was very little around information or knowledge associated with the data.
The data was also collected in various forms of “calls to action” using mass media such as television, radio
and print. In essence, the data aged and was never leveraged to information and knowledge and thus
became meaningless and never monetised. The Group identified this pattern as an opportunity to re-visit
data and knowledge management.
With mass marketing declining and one-to-one marketing increasing, there is an accelerated need to
understand the customer better so as to communicate in a dialogue and not a monologue and to provide the
customer with marketing material that is meaningful, relevant and anticipated.
Over the next few decades, the intelligent use of data [knowledge] will become one of the biggest
competitive advantages a company can have.
However, collecting, processing and using this data to communicate will come with a number of challenges:
- consumer’s digital purchasing journeys are becoming more complex;
- companies need to differentiate between young consumers (13 – 34) and consumers aged 35 to 64 as
strategies around these different groups have implications on telecoms, media and entertainment; and
- companies can’t see consumers as “targets” in the process of collecting data and will have to respect that
consumers own their data and will have to respect the privacy around the data. This is particularly so in
South Africa in the context of the Protection of Personal Information Act (“POPI”).
Strategic Opportunity
These challenges have created exciting opportunities for the Group and we have established a new division
called Knowledge 350' to assist companies in managing these challenges and opportunities.
Knowledge 350' is a 15 step business process which creates an integrated and logical strategic process that
assists companies to build up meaningful databases in line with POPI and to move away from segmenting
customers to building “single customer profiles’ with detailed demographics and psychographics associated
to each customer. This will assist companies in building consent-based data (POPI and CPA compliant) with
in-depth knowledge (experiences, insights and inferences) so as to effectively monetise the knowledge in a
partnership with the consumer.
The technology developed by the Group is used to facilitate the 15 steps and enable the “strategic
objectives” to be executed with the deployment of the technology.
Future Prospects
Knowledge 350' represents an exciting new strategy for the Group for the following reasons:
- It opens up new market sectors, new clients and additional revenue streams;
- It is an extension of the Group’s technology capability and adds a consulting element to the traditional
sales approach;
- It establishes long-term relationships with existing and new clients;
- Deployment will be low risk, incremental and will enable the existing divisions’, BizWorx and MediaWorx,
offerings to continue without any negative financial or strategic impact; and
- It creates both organic and inorganic growth opportunities for the Group.
The Group’s vision is to assist its clients in building ecosystems with opt-in databases with capacity to move
the data to information and ultimately knowledge in a way that companies “self-create” intangible assets with
each “unit of knowledge” added to the database.
The Group would then:
- own its own databases;
- have right of use to third party databases; and
- manage databases for third parties.
With the impending impact of POPI we believe that Knowledge 350' will provide huge opportunities for the
Group.
Intellectual and Earnings Enhancing Acquisitions
In order to facilitate the deployment of Knowledge 350' the Board has decided to seek and acquire equity
positions in profitable companies that offer Knowledge 350' access to human capital to implement key facets
of Knowledge 350' and simultaneously enhance the Group’s earnings.
In line with this strategy and during the year under review, the Group acquired 44% in Livingfacts Proprietary
Limited. Livingfacts has extensive experience in research and offers specialist analytics, data processing and
statistical services which are crucial elements of Knowledge 350'.
In addition to this, and post year-end, the Group acquired 35% in BMi Research Proprietary Limited. BMi is a
research house specialising in consumer and industrial research in various sectors, including the retail,
wholesale and manufacturing sector.
Additional acquisitions are being evaluated to complement the various facets of Knowledge 350' and the
Group’s changing profile.
Changing Profile
In line with the introduction of Knowledge 350' the Group’s structure will be simplified into two distinct
offerings:
- Knowledge creation and management; and
- Active data services (existing services offered over the last 17 years).
The Board was accordingly of the view that, in line with these changes, it as opportune for the group to:
- Transfer the listing of FoneWorx from the Alternative Exchange to the Main Board of the JSE limited; and
- Propose a name change for FoneWorx Holdings Limited, in line with the new strategic position and vision
(shareholders will be notified in due course).
The Group is very well positioned to:
- Enjoy the benefits of the annuity revenue provided by BizWorx with minimal capex and human resource
requirements;
- Continue to grow MediaWorx’s existing offering to a broader base of clients which has longevity and a
growing revenue stream; and
- Incrementally introduce Knowledge 350' with educated and measured capex and the systematic and
controlled increase in human resource capabilities.
Appreciation and Moving Forward
The Board is very positive about the future direction of the Group in the Knowledge Economy and take this
opportunity to thank Management for their dedication and leadership.
FoneWorx’s ongoing prosperity will be a reflection of all the staff’s commitment, team spirit and appetite for
our new challenges and opportunities.
In addition, the Board wishes to send sincere thanks to all our dealers, customers, partners and our new
equity partners for their support and continued commitment.
SUBSEQUENT EVENTS
BMi Research Proprietary Limited
Subsequent to the end of the financial period of 30 June 2014 the Group acquired a 35% interest in BMi
Research Proprietary Limited for a purchase price of R8 000 000. The acquisition occurred on 31 July 2014,
and is indicative of conditions that arose after the reporting period. This is classified as a non-adjusting event
as per IAS 10 Events after the reporting period.
Financial assistance for the purchase of shares
On 25 June 2014, the Board approved financial assistance to the directors and staff of the Group for the
purpose of purchasing FoneWorx Holdings Limited’s shares. During the Annual General Meeting held on 21
November 2013 the members of FoneWorx Holdings voted in favour of a resolution that provided that
financial assistance may be provided for subscription of securities in the Company. The loans provided have
no fixed repayment terms and carry an interest rate of 5%, payable annually.
The shares purchased by the directors and staff relate to shares that were held by the Estate of the Late
Ronald Graver. The shares were purchased at a value of R2.28. The financial assistance was only advanced
to the employees after year end and the shares had not been allotted to the various employees at year end.
At year end there was no existing obligation and as such this is classified as a non-adjusting event as per
IAS 10 Events after the reporting period.
CHANGES TO THE BOARD
Independent Non-executive directors
Paul Jenkins (Appointed on 17 September 2013)
Roger Pitt (Appointed on 17 September 2013)
Non-Executive directors
Marc du Plessis (Appointed on 17 September 2013)
Piet Greyling (Appointed on 18 September 2013)
CORPORATE GOVERNANCE
The Board recognises the need to conduct the affairs of the Group with integrity and in compliance with the
principles of the King III report. Throughout the year under review the Group has complied with the principles
as set out in the King III report except for the following:
Composition of the Board
During the year the Board’s composition fell short of the requirements as set out in King III. This was due to
limitations imposed on the Board structure until the Kirsh Consortium / Value+ transaction was concluded.
Subsequent to this matter being resolved the Board appointed four additional Board members. The Board
now comprises of six non-executive directors (three independent) and three executive directors.
Composition of the Audit Committee
With the addition of four board members subsequent to the year end the Board was able to amend the
composition of the Audit and Risk Committee that did not comply with the requirements as set out in King III
as it was chaired by the Chairman of the Group and only consisted of two non-executive directors. The
Committee now consists of three non-executive directors.
Company Secretarial function
During the year under review and in order to comply with requirements of King III the Board appointed a non-
director as Company Secretary. Mr. Stefan Kleynhans was appointed as Company Secretary with effect
from 27 February 2014. All directors have unrestricted access to the Company Secretary, Company
Information, records and property.
FINAL DIVIDEND DECLARATION
Notice is hereby given that the directors have declared a gross final dividend of 12 cents for the financial
year ended 30 June 2014 (2013: 12 cents per share), which is adjusted for withholding tax. The final
dividend has not been included as a liability in these provisional consolidated audited financial statements
as it was declared subsequent to year end. The final dividend for June 2014 is payable to all shareholders on
the Register of Members on Friday, 24 October 2014. In terms of the dividends tax, effective 1 April 2012,
the following additional information is disclosed:
- the local dividend tax rate is 15%;
- the dividends will be payable from income reserves;
- no STC credits have been utilised. Accordingly, the dividend to utilise in determining the dividend tax
is 12 cents per share;
- the dividend tax to be withheld by the Company amounts to 1.8 cents per share;
- therefore the net dividend payable to shareholders who are not exempt from dividends tax amounts to
10.2 cents per share, while the gross dividend payable to shareholders who are exempt from dividend
tax amounts to 12 cents per share;
- the issued share capital of the Company at the declaration date comprises 136 002 041 ordinary
shares; and
- the Group’s income tax reference number is 9087/450/84/8.
Declaration date: Thursday, 18 September 2014
Last day to trade cum the dividend Friday, 17 October 2014
Date trading commences ex the dividend Monday, 20 October 2014
Record date Friday, 24 October 2014
Date of payment Monday, 27 October 2014
Share certificates may not be dematerialised or rematerialized between Monday, 20 October 2014 and
Friday, 24 October 2014, both dates inclusive.
For and on behalf of the Board
Ashvin Mancha Mark Smith Pieter Scholtz
Chairman Chief Executive Officer Financial Director
Johannesburg
18 September 2014
Business and Registered Office:
FoneWorx House
Corner of Bram Fischer Drive and Will Scarlet Road
Ferndale, Randburg, 2194
PO Box 3386, Pinegowrie, 2123
Telephone +27-11-293-0000
Fax 086-610-1000 / +27-11-787-2137
Directors: Ashvin Mancha *# - Chairman, Mark Smith – Chief Executive Officer, Pieter Scholtz - Financial
Director, Gaurang Mooney* (Botswana), Graham Groenewaldt – Sales Director, Paul Jenkins *#, Roger
Pitt #*, Marc du Plessis #, Piet Greyling#
# Non-executive
* Independent
Company Secretary: Stefan Kleynhans BA BIuris LLB LLM (Banking Law)
Auditors: Grant Thornton (Jhb) Inc.
Transfer Secretaries: Computershare Investor Services Proprietary Limited
Designated Adviser: Merchantec Capital
Date: 18/09/2014 10:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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