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Abridged Consolidated Audited Results for the Year Ended 30 June 2013, Dividend Declaration and Notice of AGM
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”)
ABRIDGED CONSOLIDATED AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE
2013, DIVIDEND DECLARATION AND NOTICE OF ANNUAL GENERAL MEETING
HIGHLIGHTS:
• Group revenue up 9%
• Profit before tax increased by 10%
• Cash and cash equivalents up by 11%
• Earnings per share up 11%
• Dividend per share up 71%
• Net asset value per share up 13%
The Group’s performance during the year under review was purely organic and was achieved within a
demanding macroeconomic environment and during a protracted and challenging period where senior
management’s time was consumed with trying to facilitate a merger with Value+ Nettwork Proprietary Limited
("Value+") and the Kirsh Consortium. The FoneWorx board of Directors ("the Board") came to the conclusion
that to continue with the proposed transaction, based on additional revised financial information received
from Value+, would be reckless and would significantly endanger the financial stability of the FoneWorx
Group and substantially change the nature of the transaction. The transaction was ultimately cancelled by
consensual agreement. The shares held by the William and Isaac Kirsh Trusts (32.7%) were subsequently
acquired by Caxton and CTP Publishers and Printers Limited ("Caxton").
ABRIDGED CONSOLIDATED AUDITED STATEMENT OF FINANCIAL POSITION
Audited Audited
Figures in Rands Change as at as at
30 June 2013 30 June 2012
Assets
Non-Current Assets
Property, plant and equipment 15 893 812 17 760 389
Intangible assets 8 822 532 6 628 170
Deferred tax asset - 118 414
0.9% 24 716 344 24 506 973
Current Assets
Inventories 347 953 557 293
Current tax receivable 39 145 147 936
Trade and other receivables 25 244 238 17 139 053
Cash and cash equivalents 109 334 359 98 322 319
16.2% 134 965 695 116 166 601
Total Assets 13.5% 159 682 039 140 673 574
Equity and Liabilities
Equity
Share capital 52 624 736 36 509 029
Retained income 73 946 903 75 597 691
12.9% 126 571 639 112 106 720
Liabilities
Non-Current Liabilities
Interest bearing liabilities 4 574 026 6 396 411
Deferred tax liability 334 918 -
(23.3%) 4 908 944 6 396 411
Current Liabilities
Current tax payable 11 518
Interest bearing liabilities 1 808 614 1 704 349
Trade and other payables 20 020 167 14 816 323
Provisions 6 303 389 5 591 303
Unclaimed dividends 69 286 46 950
27.3% 28 201 456 22 170 443
Total Liabilities 16.0% 33 110 400 28 566 854
Total Equity and Liabilities 13.5% 159 682 039 140 673 574
Net asset value per share (cents) 13.0% 93.1 82.4
Net tangible asset value per share (cents) 11.6% 86.6 77.6
ABRIDGED CONSOLIDATED AUDITED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
Figures in Rands Change year ended year ended
30 June 2013 30 June 2012
Revenue 8.9% 107 367 235 98 617 135
Cost of services 17.6% (41 179 935) (35 026 174)
Gross profit 4.1% 66 187 300 63 590 961
Other income (32.3%) 659 989 975 399
Operating expenses (5.8%) (10 487 865) (11 130 338)
Staff costs (7.2%) (19 101 804) (20 583 686)
Legal costs (1 387 617)
Depreciation and amortisation expense 6.3% (4 519 642) (4 252 935)
Operating profit 9.6% 31 350 361 28 599 401
Investment income 5.2% 4 833 110 4 595 715
Finance costs (28.3%) ( 547 838) ( 763 775)
Profit before taxation 9.9% 35 635 633 32 431 341
Taxation 7.4% (10 704 177) (9 969 739)
Profit and total comprehensive income 11.0% 24 931 456 22 461 602
for the year attributable to the equity
holders of the parent
Basic earnings per share (cents) 10.9% 18.33 16.52
Diluted earnings per share (cents) 10.9% 18.33 16.52
Headline earnings per share (cents) 10.9% 18.33 16.52
ABRIDGED CONSOLIDATED AUDITED STATEMENT OF CHANGES IN EQUITY
Share Retained
Figures in Rands Share Capital Total Share Total Equity
Premium Income
Balance at 01 July 2011 136 002 36 373 027 36 509 029 60 616 201 97 125 230
Changes in equity
Total comprehensive
income for the year - - - 22 461 602 22 461 602
Dividends - - - (7 480 112) (7 480 112)
Total changes - - - 14 981 490 14 981 490
Balance at 01 July 2012 136 002 36 373 027 36 509 029 75 597 691 112 106 720
Changes in equity
Total comprehensive
income for the year - - - 24 931 456 24 931 456
Share repurchase 1
( 40 801) (36 373 027) (36 413 828) (17 062 101) (53 475 929)
October 2012
Share issue 1 October
40 801 53 435 128 53 475 929 - 53 475 929
2012
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 30 June 2013 136 002 52 488 734 52 624 736 73 946 903 126 571 639
ABRIDGED CONSOLIDATED AUDITED STATEMENT OF CASH FLOWS
Audited Audited
Figures in Rands year ended year ended
30 June 2013 30 June 2012
Cash flows from operating activities
Cash generated from operations 33 890 090 35 507 817
Interest income 4 833 110 4 595 715
Finance costs (547 838) (763 775)
Tax paid (10 153 573) (10 078 980)
Net cash from operating activities 28 021 789 29 260 777
Cash flows from investing activities
Purchase of property, plant and equipment (890 400) (2 157 424)
Proceeds on disposal of property, plant and
174 705
equipment
Purchase of intangible assets (3 957 027) (1 781 597)
Net cash from investing activities (4 847 427) (3 764 316)
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 (1 718 121) (1 780 037)
Dividends paid (9 497 807) (7 460 850)
Net cash from financing activities (12 162 322) (9 240 887)
Total cash and cash equivalents movement for the
11 012 040 16 255 574
year
Cash and cash equivalents at the beginning of the year 98 322 319 82 066 745
Total cash and cash equivalents at end of the year 109 334 359 98 322 319
NOTES TO THE ABRIDGED CONSOLIDATED AUDITED FINANCIAL RESULTS
1. BASIS OF PREPARATION
The Group annual financial statements from which these abridged 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 abridged 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 2012. These abridged
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”).
2. RECONCILIATION BETWEEN EARNINGS AND HEADLINE EARNINGS
Audited Audited
Figures in Rands year ended year ended
30 June 2013 30 June 2012
The calculation of earnings per share is based on profits of
R24 931 456 attributable to equity holders of the parent 2012: R22
461 602) and a weighted average of 136 002 041 (2012: 136 002
041) ordinary shares in issue during the year
18.33 cents 16.52 cents
The calculation of headline earnings per share is based on profits of
R24 931 456 attributable to equity holders of the parent (2012: R 22
461 602 adjusted to R 22 435 253) and a weighted average of 136
002 041 (2012:136 002 041) ordinary shares in issue during the year
18.33 cents 16.52 cents
Reconciliation between earnings and headline earnings
Profit attributable to equity holders of parent 24 931 456 22 461 602
Profit on disposal of property, plant and equipment: ( 36 596)
Tax effect of the disposal of property, plant and equipment 10 247
Headline earnings 24 931 456 22 435 253
The calculation of diluted earnings per share is based on profits of
R24 931 456 (2012: R 22 461 602) and a weighted average of 136
002 041 (2012: 136 002 041) ordinary shares issued during the year
18.33 cents 16.52 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 7.5% (2012: 7.2%) of MediaWorx 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 30.9% and 14.37% (2012:
24.5% and 16.4%) of its revenue through two customers respectively. BizWorx generated 96% (2012: 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 be reviewed on a group basis as well. There is no inter-segmental revenue in the
Group.
Audited Audited
Figures in Rands year ended year ended
30 June 2013 30 June 2012
Revenue
BizWorx 64 922 306 62 764 706
MediaWorx 42 444 929 35 852 429
107 367 235 98 617 135
Cost of services
BizWorx (15 596 846) (16 422 082)
MediaWorx (25 583 089) (18 604 092)
(41 179 935) (35 026 174)
Gross Profit
BizWorx 49 325 460 46 342 624
MediaWorx 16 861 840 17 248 337
66 187 300 63 590 961
COMMENTARY
The board of directors of FoneWorx (“the Board”) is proud to announce their results for the year ended
30 June 2013.
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 8.9% during the past year, from R98.6 million to R107.3 million. This
increase is mostly attributed to the 18.4% increase in revenue from MediaWorx division up to R42.4 million
from R35.8 million in the previous year.
The BizWorx division showed marginal revenue growth of 3.5%, however the gross profit increased by 6.4%
for the year from R46.3 million to R49.3 million. This improvement is due to an improved mix in sales via our
dealer network and directly via FoneWorx, with the latter enjoying greater gross profit margins.
Operational expenditure that included legal expenditure of R1.4 million increased by 7.1% from R11.1 million
up to R11.9 million whereas personnel costs for the same period decreased by 7.2% from R20.6 million in
the year before to R19.1 million. In addition to this the Group spent R1.4 million on legal expenditure relating
the proposed Value+ transaction as discussed in the CEO’s report The net result of the revenue growth and
the reduction in operating cost is a 9.8% in operating profit (up from R28.6 million to R31.4 million) and a 4.8
% increase in Earnings Before Interest Depreciation and Amortization (“EBITDA”) from R32.8 million to
R35.9 million.
Based on the weighted average number of shares in issue, earnings per share (“EPS”) increased by 11.3%
to 18.33 cents from 16.52 cents in the previous corresponding period. Profit before tax increased by 9.8% to
R35.6 million (2012: R32.4 million) and gross profit increased by 4.1% to R66.2 million (2012: R63.6 million),
equating to a gross profit percentage of 61.6% (2012: 64.5%). Net profit for the year under review increased
to 24.93 million (2012: R22.46 million) reflecting a 11% increase.
During the year the Group entered into a specific share buyback agreement with the Independent
Development Corporation (“IDC”) and a back to back share issue agreement with the Kirsh Consortium. The
Group bought back 40 800 612 shares at a strike price of 130.81 cents totalling R53 475 929 and issued at
the same quantity and value to the Kirsh Consortium. Subsequent to this, the shares were sold by the Kirsh
Consortium to Caxton & CTP Publishers & Printers.
The assets held by the Group increased by 13.4% from R140.6 million to R159.6 million. Non-current assets
remained at R24.7 million (2012: R24.5 million) with current assets increasing by 16.1% to R134.9 million
from R116.1 million. Cash and cash equivalents were the biggest attributer to this, growing by 11.2% from
R98.3 million to R109.3 million.
All capital acquisitions during the past financial year were funded through the Group’s own cash resources
and therefore non-current liabilities reduced to R4.9 million from R6.4 million through the normal loan
repayments made. Current liabilities increased by R6.0 million supported by a corresponding increase of
R8.1 million in current assets excluding the increase in cash and cash equivalents. This increase is attributed
to the increased revenue during the last six months of the financial year.
The net asset value per share has increased to 93.1 cents from 82.4 cents over the past year, an increase of
13.0% and the net tangible asset value per share increase 11.6% from 77.6 cents to 86.6 cents.
During the year under review the Group declared and paid a dividend of 7 cents per share totalling
R9 520 143 (2012: R7 480 112). On 27 September 2013 the Board of FoneWorx declared a dividend of 12
cents per share totalling R16 320 245, an increase of 71.4%. The cost of the specific repurchase and issue
of shares of R946 394 was accounted for against share premium and retained income.
OPERATIONAL PERFORMANCE
FoneWorx is an information, communication and technology (“ICT”) business that provides a range of multi-
channel communications in both voice and data which is switched via our proprietary technical platform with
software developed by our own internal programmers. The Group’s intellectual property is accordingly:
• the software and hosting environment;
• our route to market; and
• our broad range of services offered as a “turnkey solution” under one roof.
Our target markets, in respect of clients, are relatively broad and include: media houses, advertising
agencies, brand managers of large Fast Moving Consumer Goods (“FMCG”) companies, broadcasters
(SABC and DSTV Africa) and general corporates. Our services, via our clients, are either offered as
Business to Business (“B2B”) applications or Business to Consumer (“B2C”). The consumer profile covers
the entire LSM1 to LSM10 spectrum.
Our services are offered via divisionalised brands as follows:
BizWorx
BizWorx provides a range of unified communication services (“UCT”) to individuals, small business and
larger corporates. Unified communication includes: Fax2Email, Email2Fax, Short Message Services (“SMS”),
Interactive Voice Response (“IVR”), Instant Messaging (“IM”) and similar technologies.
Our Virtual Business Centre (“VBC”), which is a web-based application with an aggregation of a number of
modules such as: SMS, Auto Receptionist, Conference Call, Virtual Airtime etc, continues to be positively
received by small businesses that require access to technology on a prepaid basis without capital
expenditure. During the year under review free training sessions were provided to small businesses to upskill
them on the benefits of VBC. 217 business owners were trained by our Business Manager in our training
centre during the year under review.
There is a market perception that faxing is a declining technology, yet all our indications and internal trends
clearly show that faxing still is and will remain a dominant aspect of messaging. BizWorx has over 320,000
unique subscribers to its hosted service with an increase of around 2,000 new subscribers per week. Our ten
year history in this environment has shown that there are certain subscribers who don’t use the service as
regularly as others and certain subscribers “drop off” the system as they may forget that they have
subscribed. However, we continue to see usage north of the 300,000 mark.
Frost and Sullivan evaluated the international faxing market in 2010 and reported that “the overall computer-
based fax market will grow 6.9% compound annually through to 2017”. FoneWorx processes in excess of
300,000 unique images per day via its three fax platforms. Faxing in the “cloud” is a phenomenon which has
captured the interest of many businesses that want to outsource their faxing capabilities. BizWorx offers a
cloud environment which enables in-bound and out-bound faxing to be managed seamlessly and securely.
The BizWorx faxing solution provides users with the following features: safety, security, auditability, reliability
and trusted exchange. Our newly released Email2Fax service, which enables subscribers to send a fax from
their computer to any destination in the world, has taken off well, with many repeat users topping up their
“virtual wallet” on a monthly basis.
Our fax services and other multi messaging services offered via BizWorx are marketed via a strong dealer
network of 82 independently run business owners. The Premium Rate Fax2Email services are provided by
FoneWorx as a licensed service provider to Telkom under contract. Our contract has been renewed as from
the 1st of September 2013 for a period of five years. This will enable us to develop a number of additional
“value-added” layers to Fax2Email with the security of the contract in place.
Our strategy going forward in this division is to:
• add layers of modernization to fax
• increase the dealer network
• promote Email2Fax as the “reverse process” of Fax2Email
• promote training to small business to adopt or “unified messaging”
• promote awareness of the services via our own out-bound call centre
• offer free training sessions to SMME’s
MediaWorx
MediaWorx provides a range of services such as: SMS, MMS, USSD, vMail, IVR, IM, Call Centre, Fulfillment
and bespoke services to advertising agencies, FMCG companies and corporates in general. These
technologies are deployed for sales, marketing, customer relationship management (“CRM”) and promotional
activities such as:
• Competitions (SMS/IVR/USSD/MMS)
• Voting services (SMS/IVR/USSD)
• Community or eco-system building
• Product or prize fulfillment
• Market research / surveys
• Database building and management
This division has huge organic growth opportunity, particularly in line with the widespread adoption by
consumers of technologies such as social media and mobile telephony, coupled with the acceptance of on-
line shopping, e-banking and content sharing, all of which is collectively referred to as the “Digital Economy”.
It is clear that with the “internet economy” migrating to mobile platforms, businesses need to be ready to
service their customers effectively via multiple channels. MediaWorx is well positioned to provide clients with,
not only the technical solutions, but also the business strategy around effectively communicating with the
consumer, building up a database and providing a customer relationship programme linked to a loyalty club
or programme.
In order to “service their customers” businesses need to have a sound knowledge of their customers and
ensure they have an “opted in” database particularly in line with the imminent Protection of Personal
Information Bill (“POPI”). Mass markets have fragmented and with these changes impersonal mass
communication has become less effective. Targeted one-to-one marketing (MediaWorx’s core business) has
thus become more important. MediaWorx consults with its clients to assist in integrating a mobile strategy
into a firm’s marketing communications strategy for long-term and not ad hoc gains.
During the year under review MediaWorx performed extremely well and managed over 900 campaigns
spread over 300 different clients. We are working with a number of clients in developing their “eco-systems”
(marketing, loyalty, communications) in line with the new digital economy. Unstructured Supplementary
Service Data of “USSD” as a technology continues to perform well for MediaWorx and MediaWorx has
developed a robust USSD platform and provides services to blue chip clients such as: Pep, Supercard, Pick
n Pay, Tiger Brands, Unilever, SAB (Hansa/Castle/Black Label) and Caxton, to mention a few.
Campaigns were provided to a number of established brands such as: Albany Bread, Yum Yum, Sofn’free,
Ola Magnum, Robertson Spices, Huletts Sugar, Pep, Coca-Cola, Huggies, Spier Wines, Lucky Star,
Bokomo, Mr Delivery, Clover, Sasko, Kleenex, BP Express, Piemans Pies, Limosin Brandy, Beeld, Black
Like Me, Capitec, Bobtail, Millward Brown, Nedbank, Telkom Knockout, Adidas, Amka, SABC, DSTV Africa
and many more. Some of the agencies that MediaWorx provided services to include: Hg80 éKapa, 34,
Zoom, Limelight, Ogilvy, Millward Brown, Hardy Boys, Initiative, Paton Tupper, Wired, Wanted, Y&R, 7 Dffrnt
Knds of Smke and many more.
FoneWorx has received a renewal of its preferred service provider contract to SABC Mobile for a further
3 (three) years.
MediaWorx Africa
MediaWorx Africa has a presence in 40 countries in Africa and has contractual relationships with over 90
mobile networks in those countries. This division has successfully managed a number of campaigns
incorporating: competitions, voting and mobile surveys for well-known brands such as DSTV Africa (Big
Brother), Distill, Clere, Sybase and Samsung.
MediaWorx Africa has managed interactive mobile surveys on behalf of Millward Brown in Kenya, Tanzania
and Ghana. MediaWorx has also established a supply agreement for the importation and sale of dual-SIM
based cellphones and tablets to enhance its digital offering to its broad client base. The strategy going
forward for MediaWorx is very promising and includes:
• Increasing sales executives in Cape Town and Johannesburg due to a number of new clients being
appointed.
• Increasing the number of advertising/media agencies, which will be the source of new clients.
• Introducing premium rated IVR which has been introduced by the networks.
• Increasing loyalty services to existing and new clients.
• Deploying more instant messaging services to new clients to develop communities.
IDWorx
IDWorx is, in essence, a sub-division or service offered by BizWorx. Due to this service having the potential
to make substantial market inroads, it has been divisionalised for marketing and sales purposes.
"YourIdentity4U" is the trading brand that will go to market in October 2013 and will be targeted to
consumers who are conscious of having a secure “private cloud” to store vital information pertaining to their
identity and when interfacing with businesses that require vital information or documents at very short notice.
The "YourIdentity4U" suite of services is web-based with mobile interfaces using “Apps” and “USSD”. The
service offering includes:
• Document Storage
• Medical Record Storage
• Personal Information Update
• Reminder Service
• Medical Alert Service
• Phone Apps
• General Alerts
• Electronic Document Distribution
• Barcode Identification
• Password Storage
• Credit Profile Change Alert
• Identity Theft Restitution
The “YourIdentity4U” service also incorporates an identity theft restitution service which is underwritten by
Hollard Insurance.
Our strategy in the deployment will be to market the service via:
• our 82 dealers
• websites
• call centre
• insurance companies
• corporates who provide value-added services to clients or staff
DRWorx
DRWorx is a niche disaster recovery and back-up hosting facility which was primarily set up for stockbrokers
and similar trading institutions. The hosting facility is an approved JSE Limited ("JSE") site and we have
provided services to limited brokers via this hosting environment.
The JSE has recently announced that it will launch its own co-location facility next year. This is a clear
indication to us that they will compete directly with facilities such as this and accordingly we intend to change
our strategy to form a relationship with specialist hosting and DR companies and enable the facility to be
used for business other than stockbrokers. We are currently evaluating these opportunities. We have already
expensed four fifths of the capital expenditure for the facility which makes future contracts attractive.
CarbonWorx
CarbonWorx is, de facto, a product and service offering spawned out of MediaWorx. Due to third party equity
involvement it is housed in a separate legal entity, CarbonWorx Proprietary Limited, and reported separately.
CarbonWorx operates off the same technical platform as that of MediaWorx and BizWorx and has been
refined to three key drivers.
Learning Understanding sustainability and its key facets in corporate life
Sharing Creating a platform (web) for service providers who share similar values.
Benefitting Enabling individuals to calculate their CO2 footprint and then offset their footprint by
planting trees
Good progress was made in growing over 4 000 trees in our nursery based at Mqanduli. In addition, over 2
600 trees were planted in four of the six sites operated by CarbonWorx in the area. Trees planted are based
on purchases made by individuals and businesses who have calculated their footprints and then offset their
impact by planting trees. The project in Mqanduli managed in association with the Hegebe Trust and the
Department of Environmental Affairs, has created 76 “green jobs” for the last three years. We were most
saddened by the passing of one of our founding Directors, Mr Ronald Graver, who was very instrumental in
CarbonWorx. The trees planted will remain his legacy for years to come.
PROSPECTS – POSITIONED FOR FURTHER GROWTH
We remain positive about the outlook for the ensuing year to June 2014. BizWorx continues to provide the
Group with solid and predictable income with Fax2Email and Email2Fax showing good growth. Although we
don’t foresee double digit growth in this division, stable single digit growth is anticipated. This division is
entirely automated and requires very little maintenance. It is very scalable with limited human resource and
minimum Capex.
MediaWorx has huge potential going forward in line with the emerging “digital economy” and growth in
mobile e-commerce. Mobile is the new face of engagement and will put power in the pocket of millions of
global consumers. Mobile, social, cloud and big data (opted in) are now being integrated delivering Apps and
smart products precisely in the context of real-time workflows to the benefit of both consumers and business.
FoneWorx, as a Group, is well positioned to provide its broad range of clients with such services. Our focus
over the next few years will be to deploy our systems, intellectual property and technology in assisting our
clients to develop databases which enable one-to-one marketing and e-commerce solutions linked to loyalty
programmes. We are also very excited about our new shareholders, Caxton, who acquired 32.7% in
FoneWorx. Caxton has exceptionally well established and solid communication brands in the form of 163
local newspapers with linked websites and numerous well established branded magazines. We have already
engaged with a number of these brands and believe that we can establish a symbiotic relationship with these
publishing channels by adding a digital element, coupled with loyalty and e-commerce.
Our relationship with Caxton will not only provide FoneWorx with a solid strategic shareholder, but an
excellent client with many touchpoints for FoneWorx to complement and provide a mobile strategy. I would
like to extend my sincere thanks to all my staff, valued dealers and co-directors for their continued hard work,
team spirit, passion and entrepreneurial spirit which has made FoneWorx a leader in this sector.
SUBSEQUENT EVENTS
No significant events other than those mentioned above have occurred between the financial year end, and
the date of this report.
AUDIT REPORT
The abridged consolidated annual financial statements for the year ended 30 June 2013 have been audited
by Grant Thornton (Jhb) Inc., the Company’s auditors. Their unqualified audit report is available for
inspection at FoneWorx’s registered office during office hours.
CHANGES TO THE BOARD
Executive directors
Ronald Graver (passed away on 22 March 2013)
Graham Groenewaldt (appointed on 27 March 2013)
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 Boards 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
The role of the Company Secretary was performed by Pieter Scholtz, the Financial Director, for the year
under review. In order to comply with requirements of King III, The Board is in the process of appointing an
Independent external Company Secretary. During the year under review the Company Secretary was able to
ensure good governance by relying on the JSE accredited Designated Advisor of the Company for guidance
and review.
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 2013 (2012: 7 cents per share), which is adjusted for withholding tax. The final dividend
has not been included as a liability in these condensed financial statements as it was declared subsequent to
year end. The final dividend for June 2013 is payable to all shareholders on the Register of Members on
Friday, 18 October 2013. 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 dividends 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
dividends 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: Friday, 27 September 2013
Last day to trade cum the dividend Friday, 11 October 2013
Date trading commences ex the dividend Monday, 14 October 2013
Record date Friday, 18 October 2013
Date of payment Monday, 21 October 2013
Share certificates may not be dematerialised or rematerialised between Monday, 14 October 2013 and
Friday, 18 October 2013, both dates inclusive.
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the 15th Annual General Meeting of shareholders of the Company will be held at
the offices of the Company, FoneWorx House, Corner Bram Fischer Drive and Will Scarlet Road (entrance
on Will Scarlet Road), Ferndale, Randburg, at 10:00, on Thursday, 21 November 2013, to transact the
business stated in the Notice of Annual General Meeting, which is contained in the Annual Report.
The Board has determined that, in terms of section 62(3)(a), as read with section 59 of the Companies Act,
2008 (Act 71 of 2008), as amended, the record date for the purposes of determining which shareholders of
the Company are entitled to participate in and vote at the Annual General Meeting is Friday,
15 November 2013. Accordingly, the last day to trade FoneWorx shares in order to be recorded in the
Register to be entitled to vote will be Friday, 8 November 2013.
Shareholders are advised that the Annual Report for the year ended 30 June 2013 was dispatched today.
For and on behalf of the Board
Ashvin Mancha Mark Smith Pieter Scholtz
Chairman Chief Executive Officer Financial Director
Johannesburg
27 September 2013
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: Pieter Scholtz (CA(SA))
Auditors: Grant Thornton (Jhb) Inc.
Transfer Secretaries: Computershare Investor Services Proprietary Limited
Designated Adviser: Merchantec Capital
Date: 27/09/2013 11:16:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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