With a torrid year behind it, FoneWorx is looking at expanding its current businesses and acquiring new units that align with its basket of offerings.
The group on Friday reported revenue 8.9% higher, at R107.3 million, in the year to June. Most of this came from its MediaWorx unit, which grew its top line from R35.8 million to R42.4 million.
Operating profit gained 9.8%, to R31.4 million, despite R1.4 million being spent on legal fees for a failed deal. Net profit for the year increased to R24.93 million, an 11% gain.
However, the group's full-year saw the collapse of a deal between it and the Kirsh family, which would have created a R478 million company by merging the Kirsh's Value+ Nettwork with FoneWorx.
Caxton and CTP Printers & Publishers have bought the Kirsh family's 32.7% stake, and FoneWorx and Caxton are working together to develop a digital strategy. CEO Mark Smith says Caxton has already become a good client and FoneWorx is helping Caxton with its digital strategy. "It's a very good fit."
FoneWorx says in its results commentary that the Kirsh deal was called off after the FoneWorx board came to the conclusion that continuing with the deal, based on additional revised financial information from Value+, "would be reckless and would significantly endanger the financial stability of the FoneWorx Group".
Sound core
The deal was eventually cancelled by consensual agreement. Smith says the results are good, given what the company has been through in the past year. The cancelled deal cost the company R1.4 million in legal fees and management time, he notes.
Smith says the results show the underlying business, which has been streamlined into two units, has the capacity to carry on and is mostly automated. He is "very positive" about the future.
FoneWorx has been streamlined into BizWorx and MediaWorx, because there was a lot of confusion in the market, says Smith. He explains the company would develop a product under one unit and then spin it out, which created the market complexity.
BizWorx provides Fax2Email, Email2Fax, SMS, interactive voice response, instant messaging and similar technologies. It grew revenue slightly during the year, and gross profit gained from R46 million to R49 million.
MediaWorx offers SMS, MMS, USSD, vMail, IVR, IM, as well as call centre and bespoke services to advertising agencies. FoneWorx also has IDWorx, now under BizWorx, DRWorx and CarbonWorx.
Smith says underlying units may be spun off in future if they reach a size that is sustainable and makes sense.
Growth plans
Smith says the company is on the look out for units that are aligned with what FoneWorx does and its current offerings should grow organically, says Smith. BizWorx is expected to grow at between 7% and 10%, while MediaWorx has the potential, over the next three years, to triple its top line, he says.
Smith explains there is a shift towards one-to-one messaging within communication campaigns, which will be accelerated when the Protection of Personal Information Bill comes into effect. The Bill, which is awaiting president Jacob Zuma's signature, will dictate how companies deal with people and company data.
It also moves to an opt-in regime instead of the current opt-out situation. Smith says MediaWorx is gearing up for a new way to enter the permission marketing sector, which would be more of a consulting role.
The company will invest in database and customer relationship management, and is looking to add five programmers to its team of 30, while growing MediaWorx staff from eight to between 14 and 16, says Smith.
MediaWorx will also look to add onto its current capabilities in the loyalty segment, adds Smith.
In Africa, FoneWorx has several "nice" clients, says Smith. These include Samsung, for which it manages a database against which handsets can be checked to determine whether they are grey, he adds.
Smith says the company is in 26 African countries and, by the end of the year, should be in 32. He explains this is run out of its Johannesburg office, as it is streamlined and can be managed with low overheads.
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