Wrap Text
Value+ Nettwork Proprietary Limited (“Value+”): Media release
FoneWorx Holdings Limited
Incorporated in the Republic of South Africa
(Registration number 1997/010640/06)
Share code: FWX ISIN: ZAE000086237
(“FoneWorx”)
VALUE+ NETTWORK PROPRIETARY LIMITED (“VALUE+”): MEDIA RELEASE
CREATING A WORLD FIRST: FONEWORX TO MERGE WITH VALUE+ NETTWORK
HIGHLIGHTS
* Value+Nettwork is the first group of its kind in the world
* Business plan capitalizes on many substantial growth and fragmented sectors
* Estimated group value of R478 million
* Merger share price of R2,11 up 100% from first FoneWorx cautionary
* FoneWorx had approximately R100 million cash on hand as at 30 June 2012
* Merged group a good free cash flow generator
FoneWorx Holdings Limited, a Telecoms and IT solutions provider, and Value+ Nettwork (“V+”), a
group founded by William Kirsh, today announced their intention to merge - creating a world first.
The boards of directors of both companies have unanimously approved the transaction, as have
the shareholders of V+.
Post the merger, V+ group companies will comprise:
* FoneWorx - 100%
* Opengate - 50,1%
* Amazing Vouchers - 74%
* Eighty20 - 50,1%
* WOW Marketing - 50,1%
* One Point - 50, 1%
Each of these companies is strategically aligned with different elements of the V+ business plan.
The V+ business plan is centred on distributing or selling Value, commonly referred to as any
form of rewards e.g. discounts or benefits e.g. road side assistance.
Such Value is increasingly becoming accessible to all due to the plethora of cost effective digital
delivery platforms, enabled by new and innovative digital technologies. In this regard, V+ has
identified the telephone, loyalty card, stored value card, internet and mobile phone as its current
chosen platforms for delivering Value. The phenomena of social networks straddle all these
platforms. All people also have an innate need for Value.
V+ has developed proprietary definitions and a proprietary system to best identify Value
categories and to ensure that Value is best packaged and sold to target markets. V+ has
concluded from such discovery that Value can be created from any product or service, creating a
potentially large universe of opportunity.
V+ has further resolved that Value delivered via these digital delivery platforms is best supported
by a data and analytics (“intelligence”) capability incorporating data segmentation and predicative
modelling skills.
The three components: Value, digital technology (the Group currently employs 25 developers)
embedded in digital delivery platforms and intelligence is considered by V+ to be the most
appropriate way to engage with its target markets in the future.
These three pillars are intended to monetise the markets for revenue generation identified by V+,
being both the corporate market (loyalty programs including customer, staff and dealer/supply
chain programs) and the consumer market (mass and niche).
Though unique in its strategic design, the V+ business model has been established from
businesses that have a successful track record as well as trends and themes that are ever
present in society today.
The Group has identified over 10 areas of potential synergy to be unlocked. One of the more
important, and that had a major influence on the strategic design of the V+ business model, is that
Value sold to the consumer, can be repurposed or “white labelled” into any loyalty program and
vice versa
V+ will be led by William Kirsh, founder and Executive Chairman designate and Mark Smith,
currently CEO of FoneWorx, will be CEO.
William Kirsh said: “I feel privileged to lead this new exciting group. We have clarity on our vision,
our strategic purpose and have businesses which form a solid foundation from which to start
building. We also have a mix of established businesses and others with “blue sky” potential.
Furthermore, we are targeting big, growing and fragmented markets.”
Mark Smith sees tremendous opportunities in the merger. “Merging with V+ provides us with the
asset base and expertise to grow faster than previously anticipated. We are also fortunate to be
able to partner with William, who founded Primedia, and to leverage his skills and vast experience
in establishing another new group in a fragmented and growing market.”
The merger is being concluded placing a R2, 11 per share value on FoneWorx shares.
The value placed on V+ is R191 million, and added to FoneWorx gives an estimated group value
of R478 million. The merger is an all share transaction.
Over the past five years FoneWorx has grown its revenue, EBITDA and PBIT at 11%, 20% and
20%, per annum, respectively. For the financial year ended 30 June 2012 FoneWorx generated
turnover of R 98,6 million, EBITDA of R 33,1 million (EBITDA margin of 33,6 %) and PBIT of
R 28,6million (PBIT margin of 29,0%). FoneWorx has a strong balance sheet and cash on hand
approaching R100 million.
Based on the most recent audited financials and management accounts for V+, the group
generated consolidated annual turnover of R 154,4million. Over the last five years compound
annual growth rate in turnover for V+ has been 39%, and in excess of 25% per annum for
EBITDA and PBIT, respectively. Greater detail on the V+ results will be released when the pro
forma results for the Group are released in 2013.
The V+ group also generates almost 100% of its earnings in cash, which augurs well for dividend
distributions.
Post the merger, the Isaac and William Kirsh Family Trusts will be the largest shareholders of the
new Group with an approximate 49% stake, with key management and non-executive directors of
FoneWorx retaining their existing stakes.
The merger will take effect from the date on which the conditions precedent, as will be set out in
the Circular to Shareholders, are fulfilled
-Ends-
Enquiries: V+
W Kirsh 011 242 5288
082 441 2714
Interviews:
Taryn Wulfsohn 083 273 1301
*Photographs are available on request
NOTES TO EDITORS: Profile of Value+ Nettwork businesses
FoneWorx (100%)
* FoneWorx Holdings Limited is listed on AltX on the JSE and is the holding company for
FoneWorx (Pty) Limited ("FoneWorx") and other subsidiary companies, which are, in the
main, Telecoms and IT solutions providers.
* FoneWorx is the largest independent proprietary switch which is connected to all the mobile
networks (MTN, Vodacom, Cell C and 8ta) and Telkom.
* The FoneWorx platform currently constitutes 1,200 channels of voice and data capability and
operates as a bureau for the hosting of a broad range of services including: IVR, SMS, USSD,
fax, email and data storage, to mention a few.
* FoneWorx has over 18 full-time programmers who have developed and maintain the
proprietary platform. We also provide our clients with a "turnkey solution" from scripting,
studio recording, programming, hosting, web statistics and post-campaign analysis.
* FoneWorx has hosted many large promotions, competitions and voting services such as Idols
(SA), Idols (West Africa), Telkom Knockout, Big Brother Africa, Pep Club, African Cup of
Nations, Strictly Come Dancing and Ola Magnum.
* In addition, FoneWorx has provided a plethora of infotainment services to over 200 agencies
who service in excess of 500 Fast Moving Consumer Goods ("FMCG") brands and business
services to over 150 corporates.
* FoneWorx also has a number of operating divisions which include CarbonWorx (sustainability
services), IDWorx (Identity Access Management) and DRWorx (Disaster Recovery Services).
www.foneworx.co.za
Opengate (50, 1%)
* Opengate comprises two business units referred to as the Product Division and the Network
Services Division.
* The Product Division is the largest supplier of gift, loyalty and store cards to the South African
retail sector. Over the past 5 years the Product Division has established a lead role in
transitioning the gift card industry into a stand-alone product offering for most big retail
groups. In support of this strategy the Product Division has developed the infrastructure and
capabilities to operate a centralised service to retailers managing all facets of the card
program, from creative design to production and personalisation through to stock
management, distribution and merchandising.
* Outside of retail the Product Division is involved in the supply of chip card products to certain
markets such as gaming and mass-transit amongst others and is well positioned to provide
more advanced payment services as card issuers move from magnetic-stripe to chip card and
eventual to mobile. The Product Division has a clear technology roadmap and service offering
that could produce significant growth potential over the ensuing 3-5 years.
* South African gift card markets currently generate aggregate load of R4bn per annum.
Including prepaid financial services and other similar products, the markets are substantially
larger due to the strong prevalence of prepaid within the region.
* The annual value of the prepaid markets comprising gift and store-value, music, games, and
payments is forecast to be worth approximately R 15bn within the next 5 year period, of which
R 4bn is considered „retailable? (i.e. requires an aggregator to process the transactions).
* The largest prepaid category, excluded in the forecast above, will be financial services. Retail
outlets will be used as „agents? to market and process an array of prepaid banking services,
such as money transfer and debit load.
* In an effort to capitalise on these market opportunities Opengate has spent the past 4 years
investing in the development of the infrastructure and capabilities required to create the retail
distribution channel of the Network Services Division.
* The retail network is seen as a key imperative as it creates the wherewithal for a number of
leading local and global brands to access a potential retail network comprising of 7000+
points-of-presence, through which to market and sell their products.
* Opengate is uniquely placed to deploy and manage an interoperable load network of this
scale due to a combination of industry expert resource, proprietary technology, key retail
relationships and access to global brands and content. This channel has significant potential
over the medium term.
* The insurance channel, being the second channel to market of the Network Services Division,
operates a centralised processing service on behalf of leading insurance providers. Claims
are processed and the value loaded to an open-loop ClaimsCard.
* Phase one is focused on the cash-in-lieu portion of the short-term insurance markets
estimated to be worth approximately R11bn per annum.
* During 2013 the offering will target other segments of the overall insurance markets to include
the "motor" and "life" markets estimated to be worth in excess of R100bn annually.
* Migration of the solution from card to virtual vouchers and ultimately mobile, using a "claims
wallet" is a key strategic imperative. The introduction of digital delivery will enable the
business to remove cost associated with physical card and enable the service to the delivered
in almost real-time.
* During the 2012 year ClaimsCard has built a network of 50 insurers and brokers and intends
to build out the partner network in the year ahead.
* The third leg of the Network Services Division is the corporate market comprising channels
such as Reward, Incentive, Bank and Subscriber. This unit is in its formative stage of
development but uses technology and content already developed for the other two markets.
* Due to the nature of the corporate channels they are optimally served using digital vouchers.
Opengate has been in a holding pattern until the acceptance of these vouchers becomes
more pervasive.
* With the advent of digital content (music, games and applications) together with a growth in
the number of online merchants the corporate channels can now be pursued more
aggressively.
* 2013 will be focused on building the distribution network and completing the development of
technology required to service these markets.
* Opengate has offices in Johannesburg and Cape Town.
* www.opengate.co.za
Amazing Vouchers (74, 9%)
* South Africa?s only voucher subscription based service that enables thousands of consumer
facing subscribers to access over 20 000 vouchers sourced from a supplier/partner network of
approximately 8 000 partners including retailers , SME?s and small single owner businesses
as well as over 80 national brands.
* Due to consumers being bombarded with offers, in most cases not relevant to the individual,
Amazing Vouchers has developed and launched a personalisation portal allowing the
consumer to personalise his voucher offerings, thus receiving a personalised voucher of
relevance. Consumers can also search for vouchers based on location ,ie. Where they work,
live or play or even where they are at any given moment through location based services.
Voucher redemption can take place via the web, WAP enabled mobile phones as well as a
newly launched mobile offering USSD (Unstructured Supplementary Service Data) which is
similar to SMS, only much cheaper.
* Amazing Vouchers have several subscription offerings including a vacation subscription
which allows the subscriber free access to their vouchers as well as a holiday. Amazing
Vouchers owns, 5 star self-catering units in Cape Town and Ballito and rentals in Sandton.
* Launched its own daily deals site allowing consumer access to excellent discounted daily
deals. This has been created to offer its existing client base further product discounts as well
as to market its holiday units in “off peak” seasons.
* Amazing Vouchers is based in Cape Town and employs in excess of 200 people. Subscribers
are signed up via a call centre which has 120 seats and the supplier/partner network is
acquired and serviced by a marketing team of 10 agents.
* www.amazingvouchers.com
Eighty20 (50, 1%)
* Based in Cape Town, Eighty20 is a specialist consultancy focussing on data analytics,
projection modelling and consumer market profiling. Its highly skilled staff includes actuaries,
statisticians and economists.
* Eighty20 has pioneered the application of actuarial valuation techniques across a range of
non-traditional areas including the design and valuation of customer loyalty or rewards
programmes.
* Its analytics division analyses transactions data to provide insight on segmentation, customer
behaviour and customer lifetime value.
* Eighty20 provides access to a wide range of consumer market data sources through its online
consumer market portal known as XtracT. The product enables subscribers to analyse survey
data as well as masked credit bureau data.
* Eighty20's client base includes several leading corporates across a range of industries
including banking, hospitality, insurance and retailing.
* www.eighty20.co.za
Wow Marketing (50, 1%)
* Also based in WOW leads as South Africa?s most innovative service provider for incentives,
reward and recognition programmes. It is the fastest growing company in its peer group.
* WOW is a solutions-source for companies seeking behaviour modification programmes (eg.
productivity, safety, transformation, recognition and market share programmes) for either
their own staff or their sales channel.
* WOW design solutions and then implement them as an outsource partner of the client
company.
* WOW has developed 22 unique, replicable and practical incentive modules that can be
bespoke, customised and implemented according to the client?s needs.
* WOW has doubled in size year on year due to its track record in respect of service offerings
providing measurable results.
* WOW has developed a unique web based solution for 35 000 staff on 1 000 Engen service
station sites, blending mystery shopper, recognition and rewards to drive strategy for South
Africa?s largest fuel and convenience store network.
* WOW current clients include blue chip clients in the fuel, healthcare, manufacturing, financial
services, transportation and telecoms sectors.
* www.wow4results.co.za
One Point (50, 1%)
* A start-up venture which intends to consolidate an individual?s membership of loyalty
programmes customer clubs and gift cards into an easy to use web-based platform.
* A registered one point member will be able to redeem loyalty points ( as well as beans, bucks
or miles), swap points between different programmes, join additional programmes and clubs,
claim missing points, manage lost cards and update contact details for all their loyalty
programme and club relationships.
* An effective engagement driver for programme operators and sponsors helping them to
achieve KPI?s and healthy ROI?s for their programmes.
* Currently negotiating with key anchor clients in the airline, banking, hospitality and leisure and
retail market segments.
* Ability to synergise off the back of Opengate gift card structures to enable members to
purchase and top up gift cards ( either Rands or loyalty points).
6 December 2012
Date: 06/12/2012 03:46:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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