Cognition eyes buys with R95m cash pile

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Cognition Holdings is looking to grow its business throughout 2016 financial year using its R95 million cash pile. By Gugu Lourie


The firm that operates quietly to provide telecoms and IT solutions to big telecommunications operators said on Tuesday it has a strong balance sheet with cash of R95 million, which “will be used to evaluate additional acquisitions in line with our knowledge and data strategy”.

The JSE-listed Cognition Holdings, formerly known as FoneWorx, has successfully traded for the past 19 years, building solid blue chip clients such as Cell C, DStv, MTN, SAB, SABC, Telkom, Unilever and Vodacom.

During the year to end-June 2015, Cognition reported 8.2% decline in headline earnings per share (EPS) to 18.6 cents versus 20.21 cents in the same period last year.

Headline EPS is South Africa’s main profit gauge.

While earnings before interest, tax, depreciation and amortisation dropped 16.3% to R33.4 million.

The company said revenue from the Knowledge Creation and Management unit rose by 250% from R3.7 million to R13.8 million in the year to end June 2015.

“We are very encouraged by this growth as the future of Cognition is based on knowledge creation and management as our anticipated annuity revenue is intended to supplement (in the short term) the decline in faxing ARPU, and in the long term, surpass historical faxing revenue,” said Smith.

Mark Smith, CEO at Cognition Holdings
Mark Smith, CEO at Cognition Holdings

Despite tough trading condition in the core business, Cognition rewarded its shareholders with a dividend payment.

“The group remains positive about its future prospects and has declared a 12 cents dividend,” explains CEO Mark Smith.

Cognition – which is valued at more than R240 million and majority-owned by media group Caxton and CTP Publishers and Printers – plans to pursue further acquisitions to support its Knowledge 350 journey.

Cognition owns Knowledge 350, a specialised consulting services division, which collects data in line with POPI, creates permission-based marketing, and transforms raw data to information and ultimately knowledge.

This division was created to deal with the challenges of companies collecting data while respecting that customers own their data and have rights to privacy around the data.

Knowledge 350 assists companies to manage these challenges and to exploit opportunities.

“We see great potential with our Knowledge 350 strategy, which includes our data warehouse build and business intelligence tool which are linked to marketing dashboards.  This service will benefit our clients by: reducing reporting effort, reducing information bottlenecks and providing clients with a “single source of truth” with actionable data to enable evidence-based decision making,” says Smith.

Post year-end, Cognition formed a new company called Cognition Analytics – a joint venture with qualified and experienced actuaries who will provide the company with the necessary mathematical, scientific and analytic insights to support Knowledge 350 initiatives.

Cognition presently operates in 38 countries in Africa through relationships with 95 mobile networks. It provides SMS campaigns, which are part of its active data exchange services such as SMS, instant/multimedia messaging service (IM/MMS), interactive voice response (IVR), etc.

It operates through three divisions including: MediaWorx that provides services to telecoms operators such as IM, IVR and MMS. It also offers multi-channel services to media houses, digital agencies.

BizWorx provides Fax2Email, Email2Fax, automated receptionists and other range of unified communication services such as instant messaging.

It also provides faxing services in the digital age. Corporate offices, such as those belonging to insurance and legal firms still rely on the trusted fax machine in the course of their business.  Smith is convinced that the fax machine tool will never belong to the dying technologies.

 

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