| Thu 21 Feb 2008, 15:02 | | FWX - Foneworx Holdings - Unaudited Interim Results For The Period 01 July 2007 |
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FWX
FWX
FWX - Foneworx Holdings - Unaudited Interim Results For The Period 01 July 2007
To 31 December 2007
FONEWORX HOLDINGS LIMITED
(Registration Number: 1997/010640/06)
Share Code: FWX & ISN Code: ZAE000086237
Website: www.foneworx.co.za
("FoneWorx" or "the group" or "the company")
UNAUDITED INTERIM RESULTS FOR THE PERIOD 01 JULY 2007 TO 31 DECEMBER 2007
- Earnings:UP by 66% to R6,9m
- Revenues: UP by 20% to R35m
- Headline earnings: UP by 59% to R6,9m
- Cash: UP by 101% to R25,5m
INCOME STATEMENTS
31-Dec 31-Dec 30-Jun
2007 2006 2007
(Unaudited) (Reviewed) (Audited)
six months six months twelve
months
R`000 R`000 R`000
Revenue 35,045 29,217 58,241
Other operating income 87 37 319
Direct operating costs (15,406) (15,465) (27,731)
Staff costs (6,495) (5,708) (11,565)
Depreciation and (967) (779) (1,764)
amortisation expenses
Other operating expenses (3,240) (2,585) (6,152)
Profit from operations 9,024 4,717 11,348
Finance costs (384) (133) (256)
Investment income 932 279 845
Profit from ordinary 9,572 4,863 11,937
activities
Taxation (2,580) (652) (2,933)
Retained profit for the 6,992 4,211 9,004
period
Opening accumulated 3,029 (5,975) (5,975)
profits / (losses)
Closing retained profit / 10,021 (1,764) 3,029
(loss) for the period
Number of shares in issue
at end of period 114,071,429 114,071,429 114,071,429
Weighted number of shares
in issue
at end of period 114,071,429 114,071,429 114,071,429
Basic earnings per share 6.13 c 3.69 c 7.89 c
- cents
Headline earnings per 6.13 c 3.85 c 8.20 c
share - cents
Reconciliation between
earnings and
headline earnings R`000 R`000 R`000
Per the income statement 6,992 4,211 9,004
Items included in other
operating
expenses above:
Intellectual property - 176 350
amortised
Headline earnings 6,992 4,387 9,354
BALANCE SHEETS
31-Dec 31-Dec 30-Jun
2007 2006 2007
(Unaudited) (Reviewed) (Audited)
six months six months twelve
months
R`000 R`000 R`000
ASSETS
Non-current assets 11,032 5,258 6,782
Property, plant and 10,458 3,981 5,927
equipment
Intangible assets 44 219 46
Other non-current assets - - -
Investment in associate 530 750 809
Deferred taxation - 308 -
Current Assets 37,187 22,167 29,354
Inventory 30 87 30
Loans to directors, 12 2 1
managers and employees
Current tax receivable - - 256
Trade and other 11,610 9,381 14,420
receivables
Cash and cash equivalents 25,535 12,697 14,647
Total assets 48,219 27,425 36,136
EQUITY AND LIABILITIES
Capital and reserves 24,179 12,394 17,187
Non-current liabilities 6,977 1,673 2,930
Instalment sale agreement 1,266 - 1,905
Deferred tax liability 373 - 554
Loans payable 5,338 1,673 471
Current liabilities 17,063 13,358 16,019
Trade and other payables 15,466 12,027 15,023
Current portion of non- 1,273 371 996
current liabilities
Taxation payable 324 960 -
Total equity and 48,219 27,425 36,136
liabilities
STATEMENT OF CHANGES IN EQUITY
31-Dec 31-Dec 30-Jun
2007 2006 2007
(Unaudited) (Reviewed) (Audited)
six months six months twelve
months
R`000 R`000 R`000
Share capital 114 114 114
Balance at beginning of 114 114 114
period
Issue of share capital - -
Share premium 14,044 14,044 14,044
Balance at beginning of 14,044 14,044 14,044
period
Issues during period - - -
Share issue costs - - -
Accumulated losses 10,021 (1,764) 3,029
Balance at beginning of 3,029 (5,975) (5,975)
period
Attributable profits 6,992 4,211 9,004
24,179 12,394 17,187
CASH FLOW STATEMENTS
31-Dec 31-Dec 30-Jun
2007 2006 2007
(Unaudited) (Reviewed) (Audited)
six months six months twelve
months
R`000 R`000 R`000
Cash flow from operating 11,564 9,556 12,998
activities
Net cash 13,196 9,410 15,044
(utilised)/generated by
operations
Finance costs (384) (133) (256)
Investment income 933 279 845
Normal tax paid (2,181) - (2,635)
Cash flow from investing (5,181) (675) (3,495)
activities
Cash flow from financing 4,505 (713) 615
activities
Net increase/(decrease)
in cash
and cash equivalents 10,888 8,168 10,118
Cash and cash equivalents
at
beginning of period 14,647 4,529 4,529
Cash and cash equivalents
at
end of period 25,535 12,697 14,647
COMMENTS:
The directors of FoneWorx are pleased to present the unaudited interim results
for the six months ended 31 December 2007. These results reflect continued good
growth in all key performance indicators.
Revenue for the group increased by 20% to R35 million from R29,2 million for the
corresponding period last year. Net operating profit after tax grew by 66% to R7
million from R4,2 million. Headline earnings rose by 59% to R7 million from R4,4
million.
The increase in revenue can largely be attributed to the group`s Business
Services which continue to show good growth. In addition, improved margins from
both our Infotainment Services and Business Services have contributed to
profitability.
The group`s cash position improved with cash on hand of R25,5 million compared
to R12,6 million in the corresponding period, which represents an increase of
101%. The group remains debt free save for short-term finance for vehicles and
capital equipment.
The group is structured in four distinct divisions namely: Infotainment
Services, Business Services, Content Services and Switching Services.
Infotainment Services provide a range of services aimed at above-the-line
electronic networks such as SABC and MultiChoice Africa. Services include:
competitions, promotions and information services. The mobile service offering
incorporates interactive voice response ("IVR"), short message services ("SMS")
and multi media solutions ("MMS"). This division showed good growth during the
period under review. In addition, a number of campaigns were hosted throughout
Africa including: Big Brother, Idols West Africa, Supersport Interactive,
Channel O and Shell Site of the Year Kenya and Malawi. In the second six months
a number of new campaigns in Africa will be hosted including: Idols East Africa,
Deal or No Deal, and Telkom Charity Cup (South Africa).
Business Services continues to show exceptional growth. The bouquet of service
offering incorporates a broad range of services which include: SMS, Fax2Email,
PC2Fax, Document Storage, Fax2Web, Fax on Demand, Auto Receptionist and a range
of services which have been orientated around small, medium and micro
enterprises. The Virtual Business Centre is a prepaid solution which provides an
aggregation of all the FoneWorx business services which is driven by a prepaid
billing engine. The potential for this product is very positive both inside
South Africa and Africa. A mobile application linked to the web interface will
broaden the user market exponentially.
PROSPECTS
The outlook for the full financial year to June 2008 remains positive, with the
two new divisions (content and switching) launching new and innovative services.
Content Services will launch a logistics portal for the dissemination of digital
content (music) between music companies and radio stations. This will
incorporate features of our Infotainment Division, including SMS promotions and
other interactive campaigns. In addition, the group has concluded an agreement
with ROK TV (United Kingdom) for the marketing of this technology to mobile
handsets via the mobile networks throughout Africa. This will enable
subscribers to view "streaming content" directly to their handset.
Switching Services has enormous potential and is the culmination of two years`
development. This division incorporates exciting and innovative solutions
around the Financial Intelligence Centre Act, No 38 of 2001 ("FICA") and the
Regulation of Interception of Communications and Provision of Communication-
Related Information Act, No 70 of 2002 ("RICA").
The FICA/RICA solution will be launched in March 2008 and will be aimed at all
accountable institutions, such as banks, accounting firms, legal firms and
gambling institutions to mention a few. This solution will result in a national
database being developed of prescribed documents in a digital format using
secure public key infrastructure. The solution is transaction-based and it is
anticipated that large volumes will be generated. This solution will
revolutionise the way FICA authentication is undertaken and will add tremendous
value to both accountable institutions and consumers alike.
Switching Services incorporates a fully fledged loyalty service which
incorporates a range of value-added services such as prepaid airtime. The group
has acquired cutting-edge technology for terminal devices and is in the process
of deploying a large footprint throughout South Africa. This footprint currently
incorporates 1 400 terminals deployed in restaurants, fast food outlets and bed
& breakfasts and small businesses. The group`s Loyalty Services will leverage
off the large footprint of clients that are customers via the group`s
Infotainment Services division. Loyalty Services will provide a new and exciting
revenue stream to the group.
The group has also made very good inroads into Africa and will be deploying a
number of its services and solutions, such as Fax2Email, airtime and SMS
gateways, directly into a number of the fixed line and mobile networks. The
group has formed contractual relationships with 52 networks in 42 countries in
Africa for the hosting of interactive SMS campaigns aligned to large well-known
brands such as Idols, Big Brother etc. The potential to host more of these
services throughout Africa is exceptionally promising.
The group provided for taxation at 27%, which is likely to be close to the rate
for the full year as previous tax losses are absorbed. Profits in the next
financial year are likely to attract tax at the normal rate of company tax.
During the previous financial year, the investment in an associated company was
written down from R750 000 to R530 000. Subsequent to 31 December 2007, the
investment was sold for R800 000.
The unaudited interim results have been prepared in accordance with
International Financial Reporting Standards ("IFRS") and IAS34 - Interim
Financial Reporting, and the South African Companies Act of 1973 as amended, and
the Listings Requirements of the JSE Limited. The accounting policies adopted in
preparation of the unaudited interim results are consistent with those applied
in the audited financial statements for the previous full year. The Group is
engaged in the "ICT" (Information and Communications Technology) sector. As
these activities comprise an integrated operation, the Group regards this as a
single primary business segment, on which all information is disclosed in this
results announcement.
We would like to thank all our management, employees, partners, dealers and
other business stakeholders, customers and shareholders for their support.
DIRECTORATE
There have been no changes to the directorate during the period under review.
For and on behalf of the board
Ashvin Mancha Mark Smith Gareth Tudor
Chairman CEO Financial Director
Johannesburg
21 February 2008
Business and Registered Office:
1st Floor, Corner of Bram Fischer Drive and Will Scarlet Road, Ferndale,
Randburg, 2194
P O Box 3386, Pinegowrie, 2123
Telephone +27-11-293-0000
Fax 086-610-1000 / +27-11-787-2137
Directors: Ronald Graver, Ashvin Govan Mancha B Proc * - Chairman, Gaurang
Mooney BA * (Zimbabwe), Robert Russell, Mark Smith BA LLB - Chief Executive
Officer, Gareth Tudor CA (SA) - Financial Director (* Independent)
Company Secretary: G H Tudor CA (SA)
Transfer Secretaries: Computershare Investor Services 2004 (Pty) Ltd
Designated Advisors: Deloitte & Touche Sponsor Services (Pty) Ltd
Date: 21/02/2008 15:02:46 Produced by the JSE SENS Department.
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