| Wed 29 Aug 2001, 0:00 | | Prism Holdings Limited - Results |
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PRISM HOLDINGS LIMITED
SHARE CODE: PIM
ISIN: ZAE000022257
Condensed consolidated Income Statement
Condensed consolidated Income Statement
Audited % Change Audited
30 June 2001 30 June 2000
R'000 R'000
Revenue 314,639 139% 131,450
Operating profit before depreciation
and amortisation 81,970 114% 38,368
Depreciation (6,258) (1,814)
Amortisation of intangible assets (11,570) (1,165)
Operating profit 64,142 81% 35,389
Net finance income 840 6,168
Share of results of equity investments 2,176 (3,599)
(Loss)/profit on disposal of investments (7,297) 10,462
Profit before taxation 59,861 24% 48,420
Taxation (4,164) (10,349)
Profit after taxation 55,697 46% 38,071
Outside shareholders' interest (189) (145)
Profit attributable to ordinary
Shareholders 55,508 46% 37,926
Number of shares in issue ('000)
Ordinary shares 212,942 16% 183,750
Weighted average shares 205,190 20% 170,980
Weighted potentially dilutive shares 222,502 26% 176,289
Earnings per share (cents)
- basic 27.1 22% 22.2
- headline 32.7 103% 16.1
Diluted earnings per share (cents)
- basic 24.9 16% 21.5
- headline 30.2 93% 15.6
Reconciliation of headline earnings
Profit attributable to ordinary
shareholders 55,508 37,926
Amortisation of goodwill 4,306 -
Loss/(profit) on disposal of investments 7,297 (10,462)
Loss on disposal of property, plant
and equipment 22 -
Headline earnings 67,133 27,464
Condensed Consolidated Balance Sheet
At 30 June 2001
Audited Audited
30 June 2001 30 June 2000
R'000 R'000
ASSETS
Non-current assets 271,657 68,047
Property, plant and equipment 26,038 10,963
Intangible assets 117,267 29,915
Investments 104,558 1,663
Deferred taxation assets 6,444 -
Non-current receivables 17,350 25,506
Current assets 206,852 116,242
Inventories 23,683 8,855
Trade and other receivables 147,669 67,732
Proceeds on disposal of investments 750 10,382
Cash resources 34,750 29,273
Total assets 478,509 184,289
EQUITY AND LIABILITIES
Capital and reserves 289,870 45,305
Share capital and share premium 187,871 184
Foreign currency translation reserve 1,370 -
Accumulated profits 100,629 45,121
Outside shareholders' interest 400 211
Deferred purchase consideration 22,504 101,667
Non-current liabilities 41,899 1,031
Interest bearing borrowings 41,899 -
Deferred taxation liabilities - 1,031
Current liabilities 123,836 36,075
Trade and other payables 65,257 24,702
Interest bearing borrowings 35,555
Taxation payable 23,024 11,373
Total equity and liabilities 478,509 184,289
Condensed consolidated Cash Flow Statement
For the year ended 30 June 2001
Audited Audited
30 June 2001 30 June 2000
R'000 R'000
Cash flows from operating activities
Cash generated by/(utilised in) operating
Activities 29,571 (8,698)
Net interest received 840 7,402
Taxation paid (180) (1,234)
Net cash inflow/(outflow) from operating
Activities 30,231 (2,530)
Cash flows from investing activities
Acquisitions of property, plant and equipment (20,441) (4,238)
Proceeds from disposal of property,
plant and equipment 65 -
Investment in intangible assets (5,943) (3,940)
Acquisition of investments and associates (103,107) (17,977)
Net acquisition of subsidiaries (13,238) (14,772)
Net acquistion of businesses (59,581) 504
Deferred purchase consideration paid (41,764) -
Other investing cash flows 11,378 1,713
Net cash outflow from investing activities (232,631) (38,710)
Cash flows from financing activities
Proceeds from the issue of share capital 137,923 68,154
Interest bearing loans raised/(repaid) 69,954 (71)
Net cash inflow from financing activities 207,877 68,083
Net increase in cash and cash equivalents 5,477 26,843
Cash and cash equivalents at beginning of year 29,273 2,430
Cash and cash equivalents at end of year 34,750 29,273
Condensed Statement of Changes in Equity
For the year ended 30 June 2001
Share Capital Foreign Currency
and Share Translation Accumulated
Premium Reserve Profits Total
R'000 R'000 R'000 R'000
Balance at 30
June 2000 184 - 45,121 45,305
Ordinary shares
issued 189,764 - - 189,764
Share issue
expenses (2,077) - - (2,077)
Currency translation
differences - 1,370 - 1,370
Profit for the
year - - 55,508 55,508
Balance at 30
June 2001 187,871 1,370 100,629 289,870
Balance at 1 July
1999 27,784 - 7,195 34,979
Ordinary shares
issued 107,500 - - 107,500
Share issue
expenses (3,846) - - (3,846)
Write-off of
intangible assets (131,254) - - (131,254)
Profit for the
year - - 37,926 37,926
Balance at 30
June 2000 184 - 45,121 45,305
AUDITED RESULTS FOR THE YEAR ENDED 30TH JUNE 2001
PRISM HOLDINGS LIMITED (registration number 1998/018949/06)
Headline earnings per share up 103% to 32,7c
Revenues up 139% to R314,6m
Operating profit up 81% to R64m
Profit after tax up 46% to R55,7m
62% of revenues now hard currency based
The Prism mission
Prism delivers growing value to stakeholders by developing and deploying
world-class secure electronic payment technologies and services that reduce
the risk and increase the convenience of transacting across physical,
internet and wireless channels.
Financial review
The board of Prism Holdings is pleased to announce headline earnings of 32,7
cents per share for the financial year ended 30 June 2001 representing 103%
growth on the previous year's performance. This means that for the last six
years the group's average annual headline earnings growth has exceeded 100%.
Earnings were driven by revenues of R314,6m, 62% of which were generated
from outside South Africa. Despite competitive pressures in a slowing global
economy, these revenues were 139% up on last year. An operating margin
before amortisation of intangible assets of 24% was achieved - reflecting
strong contribution from proprietary intellectual property and significant
penetration of Prism technologies into the mobile commerce arena, in
particular in the expanding South East Asian mobile telephony markets.
The strategy of attaining Multi-media Super Corridor (MSC) status for Prism
operations in SE Asia, now headquartered in Kuala Lumpur, Malaysia,
continues to deliver material tax benefits. High levels of business from
this region resulted in an effective tax rate for the group of 7%,
substantially down from the effective 21% in the last financial year.
The board anticipates a sustainable future tax rate of approximately 25% as
the five-year MSC tax-free incentive persists and the group's international
business is established out of Dublin Ireland's low-tax jurisdiction during
the next financial year.
Trade receivables at year-end were R136m, reflecting strong last-quarter
sales (now an established phenomenon in Prism markets) and some aggressive
payment terms that were offered in order to successfully compete while
preserving price and margin integrity. Trade receivables as a percentage of
sales reflect a marginal improvement on last year, and the book contains a
higher number of customers compared to last year. The majority of these year-
end receivables are dollar denominated.
R217,7m was spent during the year on acquisitions and settlement of prior
year acquisitions, while R137,9m was raised in the South African market
towards these purchases, the balance has been funded through working capital
and short-term loans.
During the year an additional R5,7m of technology development work was
capitalised.
Cash generated from operations was R30m, substantially up from the net cash
outflow of R2,5m experienced last financial year. Prism closed the year with
R34,8m in cash resources.
Particularly gratifying is the fact that these financial results have been
achieved against a backdrop of difficult trading conditions for IT vendors,
and a global economic slow-down that has hurt some of Prism's major
customers.
This performance is thanks, in the main, to the determination and dedication
of a team of focused professionals at Prism who take pride in the
development and deployment of uniquely competitive offerings in the secure
electronic payments space.
Market development
In the period under review Prism significantly expanded internationally as
planned, and for the first time foreign income exceeded domestic income.
Only 38% of revenues were generated in South Africa, with the balance being
hard currency based revenue (US dollar and UK sterling) from the Asia-
Pacific region (43%), Europe (17%) and the Africa Middle-East region (2%).
Strategic relationships have been established with Philippines cellular
operator Smart Communications for the joint development and exploitation of
phase two of the mobile commerce offering SmartMoney, and with Scandinavian
technology developer SmartTrust for integrating Prism software into their
wireless gateway product. Software license deals have been negotiated with
SIM manufacturers wishing to re-sell the Prism aSIMetrixr product into
international GSM operators.
The Telekom Malaysia joint ventures Telekom Applied Business Sdn Berhad
(TAB) and Telekom Technology Sdn Berhad (TTSB) form an important component
of the group's globalisation plans, as does the well-publicised PayShop
relationship that has opened up relationships with Portugal's largest bill
issuers - Electricidade de Portugal and Portugal Telecom - as well as with
that country's largest retail chains, banks and cellular operators.
These relationships, and others Prism has enjoyed for longer (such as VISA,
Baltimore, MasterCard, and VeriFone) have delivered firm prospects for sale
of Prism technology into a wide geographic base, resulting in a very visible
pipeline for FY2002.
Acquisitions and disposals
The investments in bill payment and transaction service entities PayShop in
the UK and Portugal, and the Telekom Malaysia joint ventures have proved
valuable, with further technology orders placed on Prism and both businesses
becoming fully operational in the first half of the 2002 financial year
after successful controlled-live testing.
The acquisition of the business of LinkData has continued to generate strong
recurring service revenues in Malaysia and holds much promise for further
technology and service revenues in that region.
The acquisition of the security module and intelligent phone card terminal
divisions of Nanoteq from Comparex significantly bolstered Prism's position
as the leading transactional security player in Africa, and has resulted in
a multi-country appointment as consulting integrator for public-key
infrastructures with Baltimore and Dimension Data.
Key individuals who have joined Prism as part of these transactions have
already made a significant impact to Prism's development and support
initiatives around the world.
The acquisition of SJF Limited has been well integrated into the group's
business-to-business development initiative, with ongoing procurement
consulting work into VISA and the UK Government generating meaningful hard
currency earnings well ahead of budget.
Technology acquired through the acquisition of the
m-commerce interests of Accord Technologies lies at the
heart of the Prism SIM-to-server secure transacting
m-commerce solution now being adopted by the world's leading m-commerce
network operator Smart Communications in the Philippines. The Accord
investment will be fully covered by revenues derived from these technologies
less than two years from the date of purchase as Prism deploys the solution
directly and via channel partners into various international cellular
networks.
Future market drivers
The board is pleased to note that the FY2002 revenue pipeline is
substantially more visible than at the start of any previous year. Despite
technology market disappointments, growing demand for secure commerce across
all available electronic transacting channels still underpins Prism's growth
expectations. Network operators are looking for ways to extract value from
2G and 2,5G licenses through value-added services that Prism technology
enables. Consistent, secure payment options across multiple channels are
being demanded in first and third world economies where convenience and
security considerations are both very relevant.
Prism has the capability to deliver on these needs, in South Africa, in
South East Asia, across Africa and the Middle East, and into Europe.
Dividend
The group's policy of retaining attributable earnings to fund future growth
underpins the stated strategy of aggressive organic and select acquisitive
growth, particularly in international markets within the group's narrow
focus on secure electronic transaction enablement in physical, internet and
wireless worlds.
STRATE
Prism moved to the Share Transaction Totally Electronic (`STRATE') system on
14 May 2001. Trading for electronic settlement commenced on 4 June 2001 and
the first electronic settlement of Prism share trades followed on 11 June
2001.
Conclusion
The board sees the attainment of these results as the second step of a long
journey as a listed entity focused in the secure payments space. The group
remains determined to develop meaningful international reach for its
globally relevant technologies and services. The strategies, target markets
and ongoing development of uniquely competitive intellectual property
position the group well for this expansion. Preserving the Prism focus, and
preserving the conservative approach to driving earnings growth remains key
to differentiating the group from competition in global markets.
