| Tue 8 Oct 2002, 13:34 | | PRISM HOLDINGS LIMITED REVIEWED RESULTS FOR THE YE |
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PRISM HOLDINGS LIMITED REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2002
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
Registration number: 1998/018949/06
Share code: PIM
ISIN: ZAE000022257
("Prism" or "the Group")
Financial Review
Shareholders were made aware in the Trading Updates issued on 28 May 2002 and 3
July 2002, that Prism experienced an extremely difficult six month period to 30
June 2002, the extent of which was not anticipated at the time that the company
issued its Interim Results in February 2002.
There are three main reasons for the disappointing results, which are commented
on below. Firstly, in common with many IT companies, Prism experienced a
significant deterioration in trading conditions, with large-scale deferments of
new orders and deliveries. Secondly, the Group has reviewed the carrying value
of its investments in the context of the weak market conditions and within the
current constraints on additional funding, and it has been resolved that
significant impairment in the value of investments has occurred. Thirdly, as
reflected in the Trading Update on 28 May 2002, a significant South-East Asia
debtor was written off.
Results
Revenues of R208 million were achieved for the financial year, a 34% decrease on
the revenues achieved in the previous financial year. Second half revenues of
R67 million were substantially lower than revenues achieved in the first half of
the financial year.
The gross margin for the year was 46%, significantly lower than the 65% achieved
in the previous financial year. This decrease was caused by difficult market
conditions that gave rise to the deferral in particular of high-margin revenue.
A lower gross profit coupled with increased operating expenses, the significant
South-East Asia debtor write-off and high financing costs resulted in a headline
loss of R82 million for the year.
A review of the carrying values of investments and intangible assets has
resulted in the following adjustments:
* A R16 million impairment of intangible assets.
* A R139 million write-down in the value of investments, the most significant
being a R118 million write-off of the carrying value of PayShop Limited UK.
* Losses incurred on the disposal of non-core investments, the most significant
being a R17 million loss on the disposal of SJF Limited UK.
* The write-down of the loan to the share trust to the extent of R9 million.
Balance Sheet Review
The resultant effect of the above-mentioned losses has been to reduce the net
asset value per ordinary share substantially from 136 cents in 2001 to 20 cents
in 2002.
The rights issue undertaken in February 2002 raised R55 million, which was short
of the targeted R90 million. This, in conjunction with the adverse trading
conditions and the debtor write-off, has not enabled the Group to reduce its
borrowings to within desired parameters.
Furthermore, the working capital position of the Group with current liabilities
exceeding current assets, is highly unsatisfactory. The steps being taken to
address this issue are referred to below.
Prospects
There has been a discernable increase in activity in the Group`s focus area of
secure electronic payment in both the physical world, where financial
institutions and retailers are beginning to invest in the upgrade of their
infrastructures for the requirements of EMV (Europay, MasterCard & Visa
standards) and in the mobile world, where successful launches of mobile commerce
initiatives in South-East Asia have resulted in an increasing demand for Prism`s
products.
The Group intends to continue to focus on growing its revenue from the licensing
of its intellectual property, particularly in the global arena. The Group`s
sales pipeline is showing a very positive trend in both the South-East Asia
region and South Africa as a result of strong relationships with
SchlumbergerSema, Telekom Malaysia Bhd, Smart Communications Inc., Petronas
Dagangan Berhad and Mobile Telephone Networks (Pty) Ltd (MTN).
During the latter half of the financial year, the Group`s operational structure
has been "right-sized" to a level appropriate to the current pipeline and sales
projections. The resultant cost savings are expected to contribute positively in
the new financial year.
The directors remain confident of a recovery in the financial year to 30 June
2003. Prism has experienced pleasing results for the first quarter of the new
financial year, reflecting a return to profitability with strong revenue,
earnings and resulting operating cash flows.
Corporate Transactions
Prism has recognised that working capital requirements, and bank obligations
have necessitated a financial restructuring of the Group. To this end, subject
to requisite approvals, the directors of Prism have negotiated the sale of Prism
TranSwitch Services (Pty) Ltd ("PTSS"), a wholly owned subsidiary for a cash
consideration of R47 million with effect from 1 December 2002. Given the new,
narrower focus now adopted by the Group, PTSS is no longer regarded as being
core to Prism`s business.
In addition to the sale of PTSS, the Board is currently considering the terms of
an underwritten Rights Issue, details of which will be announced shortly.
Accounting Policies and Review
The financial information presented has been prepared in accordance with the
South African Statements of Generally Accepted Accounting Practice. The
accounting policies used are consistent with those used in the prior year.
The Group`s auditors PricewaterhouseCoopers Inc. have reviewed the preliminary
financial information in terms of Rule 3.23 of the listings requirements of the
JSE. Their unqualified review opinion is available for inspection at Prism`s
registered office.
Dividend
No dividends have been declared for the financial year ended 30 June 2002.
For and on behalf of the board
I.N. Matthews (Non-executive Chairman)
A.W.Els (Chief Executive Officer)
PRISM HOLDINGS LIMITED
Income statement
Year ended Year ended
30 June 2002 30 June 2001 Percentage
R` 000 Reviewed Audited change
Revenue 208,167 314,639 -34%
Direct costs (113,231) (111,165)
Gross profit 94,936 203,474 -53%
Indirect costs (143,709) (120,076)
Depreciation (10,603) (6,257)
Amortisation of intangible assets (8,387) (7,264)
Translation gains 11,948 -
Foreign exchange losses (8,588) (1,405)
Bad debt (32,224) -
Operating (loss)/profit (96,627) 68,472 -241%
Share of results of
equity investments (1,889) 2,176
Net finance (expense)/income (16,202) 840
(Loss)/profit before taxation (114,718) 71,488 -260%
Taxation 31,978 (4,164)
(Loss)/profit after taxation (82,740) 67,324
Outside shareholders` interest 400 (189)
Headline (loss)/profit (82,340) 67,135
Amortisation of goodwill (23,015) (4,308)
Impairment of intangible assets (15,735) -
Impairment of investments (138,800) -
Write-down of loan to share trust (8,970) -
Loss on disposal of property,
plant and equipment (111) (22)
Loss on disposal of investments (23,040) (7,297)
(Loss)/profit attributable
to ordinary shareholders (292,011) 55,508 -626%
Number of shares in issue (`000)
Ordinary shares 290,194 212,942
Weighted average shares 242,331 205,190
Weighted potentially
dilutive shares 246,552 222,502
(Loss)/earnings per share (cents)
- basic (121) 27
- headline (34) 33
Diluted (loss)/earnings
per share (cents)
- basic (118) 25
- headline (33) 30
Balance sheet
30 June 2002 30 June 2001
R` 000`s Reviewed Audited
ASSETS
Non-current assets 147,804 271,657
Property, plant and equipment 25,218 26,038
Intangible assets 53,816 117,267
Investments 21,072 104,558
Deferred taxation 42,136 6,444
Other non-current assets 5,562 17,350
Current assets 60,644 206,852
Inventories 15,862 23,683
Trade and other receivables 34,457 147,669
Proceeds on disposal of investments 3,617 750
Cash resources 6,708 34,750
Total assets 208,448 478,509
EQUITY AND LIABILITIES
Capital and reserves 57,426 290,270
Shareholders` interest 57,426 289,870
Outside shareholders` interest - 400
Deferred purchase consideration 13,512 22,504
Non-current liabilities 2,569 41,899
Interest bearing borrowings 2,569 41,899
Current liabilities 134,941 123,836
Trade and other payables 54,260 65,257
Current portion of interest
bearing borrowings 2,030 595
Banking liabilities 63,593 34,960
Taxation payable 15,058 23,024
Total equity and liabilities 208,448 478,509
Net asset value per ordinary
share (cents) 20 136
Cash flow statement
Year ended Year ended
30 June 2002 30 June 2001
R` 000 Reviewed Audited
Cash flow from operating
activities (17,090) 30,231
Cash generated by operations 9,323 29,571
Net interest (paid)/received (16,202) 840
Taxation paid (10,211) (180)
Cash effect of investing activities (60,335) (232,631)
Acquisitions of property,
plant and equipment (10,457) (20,441)
Proceeds from disposal of
property, plant and equipment 5 65
Investment in intangible assets (4,277) (5,943)
Net acquisition of subsidiaries,
associates and investments (46,479) (177,330)
(Decrease)/increase in
share trust loan (1,059) 10,998
Decrease in proceeds on
disposal of investments 1,932 1,404
Decrease in amounts
owing by affiliates - 380
Deferred purchase
consideration paid - (41,764)
Cash effects of financing
activities 20,750 172,917
Proceeds from the issue
of share capital 58,645 137,923
Net borrowings (repaid)/raised (37,895) 34,994
Net decrease in cash and
cash equivalents (56,675) (29,483)
Cash and cash equivalents
at beginning of year (210) 29,273
Cash and cash equivalents at
end of year (56,885) (210)
Statement of changes in shareholder`s interest
Year ended Year ended
30 June 2002 30 June 2001
R` 000 Reviewed Audited
Shareholders` interest at the
beginning of the year 289,870 45,305
Shares issued 77 29
Share premium arising on
shares issued 60,860 187,658
-shares issued 63,239 189,735
-costs (2,379) (2,077)
Movement in foreign currency
translation reserve (1,370) 1,370
(Loss)/profit attributable
to ordinary shareholders (292,011) 55,508
Shareholders` interest at the
end of the year 57,426 289,870
Segmental analysis (Note1)
Revenue
Business segments Year ended Year ended
30 June 2002 30 June 2001
R` 000 Reviewed Audited
Sim Software Licensing 20,950 -
Solutions using own intellectual
property 12,998 62,928
Products 114,365 185,637
Services 59,854 66,074
208,167 314,639
Geographical segments
Africa 66,202 124,912
South-East Asia 139,572 135,924
Europe 2,393 53,803
208,167 314,639
Note 1
Segmental disclosure of operating costs, as well as assets and liabilities, has
not been reflected, as such disclosure would not provide meaningful information
given the centralised nature of the Group`s costs.
Registered office: Building 1, Prism Business Park, Ruby Close, Fourways, 2068,
Gauteng, South Africa
Transfer Secretaries: Computershare Services Limited, PO Box 61051,
Marshalltown, 2107, Gauteng, South Africa
Executive Directors: A.W. Els (CEO), J Hnizdo, G.R. McKay, M.P. Serrao.
Non-Executive Directors: R.A.R. Bicker-Caarten, A.L. Bruhns, R.D.S Came, O.R.J
da Silva, I.N. Matthews (Chairman).
Company Secretary: E.C. de Villiers
Date: 08/10/2002 07:21:34 AM Produced by the JSE SENS Department
