| Tue 16 Mar 2010, 9:30 | | FWX - Foneworx Holdings Limited - Unaudited consolidated interim results for the |
|
FWX
FWX
FWX - Foneworx Holdings Limited - Unaudited consolidated interim results for the
six months ended 31 December 2009
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")
Unaudited consolidated interim results for the six months ended 31 December 2009
Revenue up 16.2%
Profit after tax up 11.6%
Cash reserves up 17.8%
NAV up 23.5%
EPS up 11.6%
HEPS up 6.2%
COMMENTARY
The board of directors of FoneWorx ("the board") is pleased to present the
unaudited consolidated interim results for the six months ended 31 December 2009
("the interim period").
These interim results reflect continued positive growth in all key performance
indicators, notwithstanding the recessionary economic climate in the second half
of 2009.
Revenue for the group increased by 16.2% to R45.8 million from R39.4 million in
the previous corresponding period, while gross profit improved from R23.1
million to R28.7 million, a 24.5% increase from the previous corresponding
period. Profit after tax grew by 11.6% to R9.7 million from the previous
corresponding period`s R8.7 million.
The increase in revenue is largely attributable to the group`s business services
which continue to show good growth.
The group`s net cash and cash equivalents increased in the interim period by R10
million to R65.5 million, compared to net cash and cash equivalents in the
previous corresponding period of R55.6 million, which represents a 17.8%
increase. The group remains debt free save for short-term finance leases on
vehicles and capital equipment, and a ten year bond of R9 million on its head
office building in Randburg.
During the interim period, Foneworx`s staff complement was increased in order to
cater for the development of our new solutions, namely IDWorx, DRWorx and
CarbonWorx, as detailed in "Business Overview" below. In addition, contract
staff were employed for the deployment of our IDWorx pilot programme at CIPRO.
The group`s staff complement and staff expenditure accordingly increased by
approximately 20.0% and 25.8% respectively, from the previous corresponding
period. This increase in human resources is essential for the group`s continued
development and the necessity to deploy its new services while continuing to
support the growth in its existing products and services.
With the continued growth, additional space and capital expenditure increased,
depreciation charged for the interim period increased by 33.0%.
BUSINESS OVERVIEW
The group will now be structured in five brands, for branding and marketing
purposes: MediaWorx (infotainment services), BizWorx (business services), IDWorx
(identity access management), DRWorx (disaster recovery) and CarbonWorx (carbon
abatement). These brands are divided amongst 3 segmental divisions for reporting
purposes, which are discussed in more detail under the "Segmental Reporting"
paragraph below.
MediaWorx
The MediaWorx division provides infotainment services, which includes
interactive services such as Short Message Service, Interactive Voice Response
and Multi Media Solutions.
MediaWorx`s services are offered over 70 distinct networks in 34 countries
throughout Africa with over 380 campaigns managed for MediaWorx`s clients which
include advertising agencies, Fast Moving Consumer Goods companies and
corporates in general. Its media clients include the SABC and MultiChoice for
African services.
This client base and the growth thereof, have lead to the continued growth in
both revenue and margins during the interim period.
BizWorx
The BizWorx division, which incorporates business services, has once again
continued to show good growth during the interim period. The variety of services
offered by BizWorx includes, inter alia, Fax2Email, PC2Fax, Document Storage,
Fax On Demand, Auto Receptionist and services specifically designed to meet our
client`s individual needs. Business management courses were also launched during
the interim period, and the training of a number of small and medium enterprises
which took place, resulted in a very positive response.
The uptake in business services is anticipated to continue and we believe will
grow as access to the Internet and more affordable bandwidth become available to
the general population.
Discussions have also commenced in a number of countries throughout Africa for
the deployment of our business services, specifically Fax2Email, which will
further increase our footprint in this particular product.
IDWorx
The IDWorx division provides Identity Access Management, which is the secure
document storage, and anti-money laundering ("AML") solution orientated to
accommodate not only the requirements of local legislation in South Africa, but
similar AML legislation in other countries throughout Africa and the rest of the
world.
The branded product known as "YourIdentity" has been launched as a pilot project
for CIPRO as an enrolment process to identify agents who interact with CIPRO.
The pilot programme has successfully demonstrated the multiple features of
YourIdentity and it is anticipated that this project will continue for the next
six months.
Having identified a number of applications for the YourIdentity solution,
FoneWorx is currently engaging with a number of banks and financial institutions
in designated countries throughout Africa for the adoption of the YourIdentity
solution. We remain confident that because the solution has been designed around
international best practice, this application can be deployed in a number of
territories in Africa that are only just starting to get to grips with the
international requirements of AML.
DRWorx
DRWorx`s service offerings include disaster recovery and workflow continuity
which is targeted at niche markets. FoneWorx has developed a state-of-the-art
hosting environment specifically aimed at the stockbroking and trading
fraternity.
In addition, the hosting environment will be marketed to small and medium
businesses to provide back-up, storage and complete work continuity facilities
in the event of a disaster being declared at a client`s premises.
Preparations commenced in the interim period for the installation of the hosting
environment for FoneWorx`s first stockbroking client. This hosting environment
will be fully operational by April 2010, and thereafter it is envisaged that
additional stockbroking clients will make use of the hosting environment which
will enable them and other small and medium enterprises to continue to operate
their servers, and to back-up critical data from the hosting environment in the
event of a disaster.
CarbonWorx
The CarbonWorx division is primarily orientated around carbon emissions
reductions. This division enables both individuals and corporates to calculate
their carbon footprint and thereafter reduce their emissions by purchasing trees
from CarbonWorx. The primary objective of this division is to re-establish eco
systems on a localised basis in order to re-establish natural flora and fauna.
This re-establishment assists in reconstituting the global climate on a broader
basis. Mechanisms have been developed for the sequesting of carbon through
Voluntary Emission Reductions and the involvement in Clean Development
Mechanisms at a later stage.
During the interim period, FoneWorx developed a card-based mechanism enabling
individuals and corporates to acquire points via different channels with the aim
of redeeming such points for trees. FoneWorx has negotiated with local trusts
who are landowners in South Africa to re-forest land in line with the
reconstitution of the local biosphere.
Trees purchased by individuals or corporates will be planted in designated areas
thereby enhancing the local biosphere and enabling individuals and corporates to
reduce their carbon emissions. It is anticipated that this product will be
launched fully during March 2010.
PROSPECTS
The outlook for the full financial year to June 2010 remains positive,
particularly with regard to the new brands, which although currently in their
infancy, have already started to show nominal revenue streams and positive
market response.
As set out in the abovementioned "Business Overview", FoneWorx has spent both
time and resources in the development of the three new brands: IDWorx, DRWorx
and CarbonWorx. The performance of these brands in the interim period bodes well
for future growth. These new brands will provide FoneWorx with new revenue
streams not traditionally associated with FoneWorx and provide additional
diversity to the group.
A small percentage of the cash resources will be applied to the development of
these three new brands. Thereafter the group will be looking at any appropriate
acquisitions or investment opportunity.
We would like to thank all our directors, management, employees, partners,
dealers and other business stakeholders, including our customers and
shareholders for all their support during the interim period.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
as at as at as at
31 December 31 December 30 June
2009 2008 2009
R`000 R`000 R`000
ASSETS
Non-current assets 21 455 18 936 22 501
Property, plant and equipment 18 089 17 369 18 691
Intangible assets 3 207 730 3 138
Deferred tax asset 159 837 672
Current assets 83 406 67 920 80 544
Inventory 764 240 649
Current tax receivable - - 282
Trade and other receivables 15 693 12 129 18 340
Cash and cash equivalents 66 949 55 551 61 273
Total assets 104 861 86 856 103 045
EQUITY AND LIABILITIES
Capital and reserves 72 441 58 679 68 196
Share capital 134 134 134
Share premium 35 575 35 575 35 575
Accumulated profits 36 732 22 970 32 487
Non-current liabilities 9 029 9 913 10 051
Instalment sale agreements 482 322 909
Long-term loan 8 547 9 120 8 670
Loans payable - 471 472
Current liabilities 23 391 18 264 24 798
Trade and other payables 15 207 12 382 16 026
Provisions 4 976 3 980 4 790
Tax payable 388 377 917
Bank overdraft 1 433 - 1 118
Current portion of non-current 1 387 1 525 1 942
liabilities
Unclaimed dividends - - 5
Total equity and liabilities 104 861 86 856 103 045
Net asset value per share 53.90 43.66 50.74
(cents)
Net tangible asset value per 51.51 43.12 48.41
share (cents)
Number of shares in issue 134 402 041 134 402 041 134 402
041
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited six Unaudited six Audited
Growth months ended months ended 12 months
31 December 2009 31 December ended
R`000 2008 30 June
R`000 2009
R`000
Revenue 16.2% 45 800 39 420 79 288
Cost of Sales (17 026) (16 317) (31 558)
Gross profit 24.6% 28 774 23 103 47 730
Other operating income 473 8 182
Investment income 2 284 3 155 5 857
Staff costs (9 720) (7 722) (14 056)
Depreciation and (1 980) (1 489) (3 201)
amortisation expense
Other operating (5 027) (5 291) (9 379)
expenses
Finance costs (620) (827) (1 611)
Profit before tax 29.7% 14 184 10 937 25 522
Income tax expense (4 498) (2 255) (7 322)
Profit for the period 11.6% 9 686 8 682 18 200
Other comprehensive - - -
income
Total comprehensive 9 686 8 682 18 200
income for the period
Total comprehensive 9 686 8 682 18 200
income attributed to
owners of the company
Headline earning
reconciliation
Profit attributable to 9 686 8 682 18 200
owners of the company
Adjustment for:
Net after tax profit - - (16)
on sale of property,
plant and equipment
Net value gain in the (471) - -
procurement of shares
in subsidiary
Headline earnings 9 215 8 682 18 184
Basic earnings per 11.6% 7.21 6.46 13.54
share (cents)
Diluted earnings per 11.6% 7.21 6.46 13.38
share (cents)
Headline earnings per 6.2% 6.86 6.46 13.53
share (cents)
Weighted average 134 402 041 134 402 041 134 402 041
number of shares in
issue
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 December 31 December 30 June
2009 2008 2009
R`000 R`000 R`000
Share capital 134 134 134
Balance at beginning of 134 134 134
the period
Issued during the period - - -
Share premium 35 575 35 575 35 575
Balance at beginning of 35 575 35 575 35 575
the period
Issued during the period - - -
Accumulated profits 36 732 22 970 32 487
Balance at beginning of 32 486 17 916 17 916
the period
Profit for the period 9 686 8 682 18 200
Dividend paid to (5 440) (3 628) (3 629)
shareholders
Share capital and reserves 72 441 58 679 68 196
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 December 31 December 30 June
2009 2008 2009
R`000 R`000 R`000
Cash flow from operating 13 824 9 855 19 320
activities
Net cash generated from 16 393 10 504 22 694
operations
Finance costs (620) (827) (1 611)
Investment income 2 284 3 155 5 857
Normal tax paid (4 233) (2 977) (7 620)
Cash flow from investing (1 448) (2 142) (7 561)
activities
Purchase of intangible asset - - (573)
Purchase of property, plant and (1 001) (1 737) (4 671)
equipment
Proceeds on disposal of - 164 176
property,
plant and equipment
Proceeds on disposal of - 31 32
intangible assets
Expenditure on product (447) (600) (2 525)
development
Cash flow from financing (1 576) (747) (193)
activities
Dividends paid (5 440) (3 268) (3 624)
Net increase in cash and cash 5 360 3 338 7 942
equivalents
Cash and cash equivalents at the 60 156 52 213 52 213
beginning of the period
Cash and cash equivalents at the 65 516 55 551 60 155
end of the period
BASIS OF PREPARATION
The accounting policies applied in the preparation of these condensed financial
statements, which are based on reasonable judgements and estimates, are in
accordance with International Financial Reporting Standards ("IFRS") and are
consistent with those applied in the annual financial statements for the year
ended 30 June 2009. These condensed financial statements as set out in this
report have been prepared in terms of IAS 34 - Interim Financial Reporting, the
Companies Act, 1973 (Act 61 of 1973), as amended, and the Listings Requirements
of JSE Limited.
The interims have not been audited or reviewed by the group`s auditors.
The following new Standards and amendments to Standards were mandatory for the
first time for the financial period beginning 1 June 2009:
IAS 1 (revised), `Presentation of financial statements`: The revised Standard
prohibits the presentation of items of income and expenses (that is `non-owner
changes in equity`) in the statement of changes in equity, requiring `non-owner
changes in equity` to be presented separately from owner changes in equity. All
`non-owner changes in equity` are required to be shown in a performance
statement.
Entities can choose whether to present one performance statement (the statement
of comprehensive income) or two statements (the income statement and statement
of comprehensive income).
The group has elected to present one statement of comprehensive income. The
unaudited condensed consolidated interim financial statements have been prepared
under the revised disclosure requirements.
IFRS 8, `Operating segments`: IFRS 8 replaces IAS 14, `Segment reporting`,
extends the scope of segmental reporting, requiring additional disclosure. This
Standard requires the company to adopt the `management approach` to reporting
segment information under which segment information is presented on the same
basis as that used for internal reporting purposes.
SEGMENTAL 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 segments:
* BizWorx: the segment focusing on business related products;
* MediaWorx: the segment focusing on information and entertainment services;
and
* Development: consists of the three brands that are still within the
development and piloting phase being CarbonWorx, DRWorx and IDWorx.
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 December 31 December 30 June
2009 2008 2009
R`000 R`000 R`000
Revenue
BizWorx 32 252 28 153 58 231
MediaWorx 12 552 10 526 20 105
Development 996 741 952
45 800 39 420 79 288
Cost of sales
BizWorx (10 745) (9 764) (20 235)
MediaWorx (6 003) (6 310) (10 895)
Development (278) (243) (428)
(17 026) (16 317) (31 558)
Gross Profit
BizWorx 21 507 18 389 37 996
MediaWorx 6 549 4 216 9 210
Development 718 498 524
28 774 23 103 47 730
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 34 African countries ("Africa sales"). Within the
period under review 2.0% (6 months 2008: 0.8%; 12 months 2009 2.4%) 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 73.4% (2008: 74.9%) of its revenue through two
large network service providers and BizWorx generated 94.3% (2008: 93.1%)
through one single land line service provider.
DIVIDEND POLICY
It is the board`s policy to pay annual dividends and therefore no interim
dividend has been declared for this interim period. Dividends paid during the
period relate to dividends declared in prior periods.
POST BALANCE SHEET EVENTS
The board of directors of Foneworx are not aware of any material events that
have occurred between the end of the interim period and the date of this report.
ACQUISITION OF SUBSIDIARY
During the period under review the group procured the remaining shares and a
loan account in SurveyOnline, a subsidiary of FoneWorx Holdings Limited for one
Rand. The net effect of this transaction is that the group reduced its long term
liabilities by R471 975 and the resulting gain was accounted for as revenue.
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 Pieter Scholtz
Chairman Chief Executive Officer Financial Director
Johannesburg
16 March 2009
Directors: Ronald Graver, Ashvin Govan Mancha (B Proc) - Chairman*, Andrew
Conway Molusi*, April Masitwe*, Gaurang Mooney (BA)* (Botswana), Robert Russell,
Mark Smith (BA LLB) - Chief Executive Officer, Pieter Scholtz (CA(SA)) -
Financial Director (* Independent)
Website: www.foneworx.co.za
Company Secretary: P A Scholtz (CA(SA))
Transfer Secretaries: Computershare Investor Services (Proprietary) Limited
Designated Adviser: Merchantec Capital
Date: 16/03/2010 09:30:01 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 the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
