| Mon 27 Jan 2003, 13:03 | | Prism`s Promised Turnaround Realised In Solid Inte |
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Prism Holdings Limited
(Registration Number: 1998/018949/06)
CODE: PIM
ISIN: ZAE000022257
PRISM`S PROMISED TURNAROUND REALISED IN SOLID INTERIM RESULTS
27 JANUARY 2003
* Headline profit R4,8m (R83m loss for previous 12 months)
* Revenues up 15% to R162m
* Cash generated by operations R50m
* Bank liabilities reduced from R57m to R27m
Secure electronic payments company, Prism Holdings, has turned in a solid set of
results for the six months to end December 2002, reporting headline profits of
R4,8-million in the review period.
This contrasts sharply with the Group`s headline loss of R83-million in the 12
months to end-June 2002.
Prism CEO Alvin Els says the quiet optimism expressed by Prism at the time of
reporting its "disappointing" results for the 2001/2002 year, has been affirmed.
"We spoke of a silver lining to those results because the company`s sales
pipeline was starting to show a strong growth trend in both the Asia Pacific
region and South Africa. This has continued, enabling us to generate positive
cash flows and a marked turnaround to profitability.
"Indeed, not only has Prism shown increased revenues against the previous
comparable period, but revenues achieved in the first six months of this
financial year equate to 75% of revenues achieved for the entire preceding 12
months.
"Even more important is the quality of earnings reported. R50-million cash was
generated by operations - and our headline profit would have been some R5,7-
million higher had the Rand not strengthened to the extent it did in the review
period," he explains.
Prism`s liabilities have also stabilised and bank liabilities have reduced from
R57-million to R27-million while deferred purchase considerations have declined
from R13,5-million to R3,8-million.
The Rights Issue which opened last week (20 January) and which is expected to
realise R33-million, will be used to strengthen the Group`s working capital as
well as to repay banking liabilities and substantially reduce the current R6-
million in interest charges. This should allow the Group to end the current
financial year virtually debt-free.
"It`s clear from these results that our decision to terminate negotiations
around the sale of Prism TranSwitch Services (PTSS) was - apart from the issue
of differences with the proposed purchaser - financially sound. We are
delighted that our return to profitability has enabled us to retain an solid
cash-generating asset," he adds.
Els believes Prism`s turnaround can be attributed to three basic factors:
* Long-standing customers placing new volume orders, specifically in the areas
of crypto and SIM;
* Improved internal housekeeping with an extensive focus on cost rationalisation
and containment resulting in 17% decrease in operating expenses; and
* Increasing international acceptance of Prism`s product and service offerings,
particularly with regard to Prism`s Intellectual Property (IP).
"Some 70% of Prism`s revenues are generated either from the sale of our IP or
services. This trend is likely to continue - and even accelerate - following
the recent conclusion of three more significant licensing agreements with major
SIM vendors. In fact, three of the four largest SIM manufacturers in the world
now license Prism`s SIM technology.
"Prism is therefore cautiously optimistic that the Group`s recovery will be
maintained as our sales pipeline is strong and several contracts underpinning
international and local sales are in hand," Els concludes.
NOTE TO EDITORS
JSE-listed Prism Holdings is a world leader in the secure electronic transaction
market. With a growing presence in Europe and South-East Asia, Prism is one of
the few companies in the world offering services solutions and products that
bridge the following core technologies:
- Security - sophisticated cryptographic security solutions, many developed
using own intellectual property resources;
- Payment solutions in the physical and virtual (Internet and wireless) realms;
and
- Smart card technologies spanning both wireless communications and electronic
payments.
Issued by: Citigate Ballard King +27(0) 11 804 4900
For: Prism Holdings +27(0) 11 548 1000, www.prism.co.za
Contact:
Alvin Els, CEO, Prism Holdings 083 263 2754
Steven Sidley, Group Marketing Director 082 600 6857 or
Marilyn de Villiers, Citigate Ballard King
Prism Holdings Limited - Unaudited Interim Results For The Six Months Ended 31
December 2002
Prism Holdings Limited
Incorporated In The Republic Of South Africa)
Reg. No.1998/018949/06
Share Code: PIM
ISIN: ZAE000022257
("PRISM" OR "THE GROUP")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2002
* Revenues increase by 15% to R162m
* 17% decrease in operating expenses
* Cash generated by operations R50m
* Bank liabilities reduced from R57m to R27m
Prism is pleased to report a turnaround in all aspects of its business and a
return to headline profitability and net cash generation for the six months
ended 31 December 2002.
Financial Review
Revenues of R162 million were achieved for the financial period, a 15% increase
on revenues achieved in the previous comparable period. This was largely
attributable to an increase in the sale of wireless products and licenses into
both local and global markets. In excess of 70% of revenues were either
generated from the sale of Prism Intellectual Property or from Prism services,
as opposed to the resale of 3rd party technology.
The gross margin for the period was 51%. Management considers this to be
satisfactory, despite the decrease from 56% in the previous period.
Extensive focus on cost rationalisation and containment has resulted in a 17%
decrease in operating expenses.
A R4.8 million headline profit was achieved, notwithstanding a R5.7 million
foreign currency translation adjustment, resulting from the strengthening of the
Rand over the period. The headline profits reported reflect a positive
turnaround from the substantial headline losses incurred in the previous
financial year.
The R50.1 million cash generated by operations underpins the quality of earnings
reported, and reflects the increased focus on the management of working capital
for the period under review. Net cash and cash equivalents improved by R29.9
million for the period.
The cash generated by operations has been used to reduce various key liabilities
over the last 6 months, namely:
* Deferred purchase considerations have reduced from R13.5m to R3.8m
* Net bank liabilities have reduced from R56.9m to R27m
* Taxation due has reduced from R15.1m to R11.9m
The Rights Offer, currently in progress, will further improve the working
capital position of the Group. The net proceeds are estimated to be R33 million
and will largely be used to repay banking liabilities. This will also ensure
that the R6 million interest expense for the current period will be
substantially reduced in the next trading period.
Post balance sheet event
Prism has disposed of PayShop Limited (UK) ("PayShop") with effect from 16
January 2003. The reason for the disposal is that PayShop has continued to
sustain losses. Prism as a significant shareholder would have been required to
fund such losses in the future. The PayShop investment was provided for in full
at year-end and no losses attributable to PayShop have been reflected in the
results presented.
The consideration for the sale of PayShop, including recovery of loan and debtor
balances provided for in full in the previous financial year, amounts to R13.2
million. Of this balance, R4.7 million was received in January 2003 and the
remainder is receivable in 18 equal monthly installments, commencing February
2003.
In addition to this, put options of approximately R7 million and deferred
purchase considerations due at 31 December 2002, amounting to R3.8 million, have
been cancelled.
Prospects
Prism`s outlook for the next 6 months remains positive, with a strong sales
pipeline underpinning international and local sales prospects.
Management is satisfied that all of the challenges that faced the company during
the 2002 financial year have been fully addressed, and management remains
cautiously optimistic with regards to the future.
Accounting policies
The financial information has been presented in accordance with the South
African Statements of Generally Accepted Accounting Practice. The accounting
policies are consistent with those used in the prior year.
Dividends
No dividends have been declared for the interim period ended 31 December 2002.
For and on behalf of the board
I.N. Matthews (Non-Executive Chairman)
A.W. Els (Chief Executive Officer)
27 January 2002
Income Statement
6 Months ended 6 Months ended Year ended
31 December 2002 31 December 2001 30 June 2002
R` 000 Unaudited Unaudited Audited
Revenue 162,048 141,035 208,167
Direct costs (79,718) (61,357) (113,231)
Gross profit 82,330 79,678 94,936
Indirect costs (57,324) (69,138) (143,709)
Depreciation (5,534) (4,513) (10,603)
Amortisation of intangible assets (3,132) (3,269) (8,387)
Translation (losses)/gains (5,655) 22,909 11,948
Foreign exchange gains/(losses) 556 - (8,588)
Bad debt - - (32,224)
Operating profit/(loss) 11,241 25,667 (96,627)
Share of results of equity investments 501 3,879 (1,889)
Net finance expense (6,115) (6,626) (16,202)
Profit/(loss) before taxation 5,627 22,920 (114,718)
Taxation (811) (2,248) 31,978
Profit/(loss) after taxation 4,816 20,672 (82,740)
Outside shareholders` interest - (148) 400
Headline profit/(loss) 4,816 20,524 (82,340)
Amortisation of goodwill (6,071) (3,269) (23,015)
Impairment of intangible assets - (11,431) (15,735)
Impairment of investments - (59,404) (138,800)
Write-down of loan to share trust (1,511) - (8,970)
Profit/(loss) on disposal of property,
plant and equipment 9 - (111)
Loss on disposal of investments - (6,133) (23,040)
Loss attributable to ordinary
shareholders (2,757) (59,713) (292,011)
Number of shares in issue (`000)
Ordinary shares 290,414 212,942 290,194
Weighted average shares 290,414 212,942 242,331
Weighted fully diluted shares 290,414 246,243 246,552
(Loss)/earnings per share (cents)
- basic (0.9) (28.0) (120.5)
- headline 1.7 9.6 (34.0)
Diluted (loss)/earnings
per share (cents)
- basic (0.9) (24.2) (118.4)
- headline 1.7 8.3 (33.4)
Balance sheet
31 December 2002 31 December 2001 30 June 2002
R` 000`s Unaudited Unaudited Audited
ASSETS
Non-current assets 130,643 235,503 147,804
Property, plant and equipment 20,920 27,054 25,218
Intangible assets 44,613 103,279 53,816
Investments 17,521 80,504 21,072
Deferred taxation 43,788 7,706 42,136
Other non-current assets 3,801 16,960 5,562
Current assets 36,184 250,050 60,644
Inventories 7,027 36,061 15,862
Trade and other receivables 27,607 169,054 34,457
Proceeds on disposal of investments 1,550 750 3,617
Cash resources - 44,185 6,708
Total assets 166,827 485,553 208,448
EQUITY AND LIABILITIES
Capital and reserves 56,169 276,267 57,426
Shareholders` interest 56,169 275,719 57,426
Outside shareholders` interest - 548 -
Deferred purchase consideration 3,767 26,794 13,512
Non-current liabilities 1,823 33,941 2,569
Interest bearing borrowings 1,823 33,941 2,569
Current liabilities 105,068 148,551 134,941
Trade and other payables 64,696 74,351 54,260
Current portion of interest bearing
borrowings 1,492 - 2,030
Banking liabilities 26,967 46,202 63,593
Taxation payable 11,913 27,998 15,058
Total equity and liabilities 166,827 485,553 208,448
Net asset value per ordinary
share (cents) 19 129 20
Cash flow statement
6 Months ended 6 Months ended Year ended
31 December 2002 31 December 2001 30 June 2002
R` 000 Unaudited Unaudited Audited
Cash flow from operating activities 38,383 (849) (17,090)
Cash generated by operations 50,106 6,897 9,323
Net interest paid (6,115) (6,626) (16,202)
Taxation paid (5,608) (1,120) (10,211)
Cash effects of investing activities (8,681) (47,062) (60,335)
Cash effects of financing activities 216 57,346 20,750
Net increase /(decrease) in cash and
cash equivalents 29,918 9,435 (56,675)
Cash and cash equivalents at
beginning of the period (56,885) 34,750 (210)
Cash and cash equivalents at end of
the period (26,967) 44,185 (56,885)
Statement of changes in shareholder`s interest
6 Months ended 6 Months ended Year ended
31 December 2002 31 December 2001 30 June 2002
R` 000 Unaudited Unaudited Audited
Shareholders` interest at the
beginning of the period 57,426 289,870 289,870
Shares issued - 68 77
Share premium arising on
shares issued 1,500 54,589 60,860
-shares issued 1,500 54,589 63,239
-costs - - (2,379)
Movement in foreign currency
Translation reserve - (9,095) (1,370)
Loss attributable to ordinary
shareholders (2,757) (59,713) (292,011)
Shareholders` interest at the
end of the period 56,169 275,719 57,426
Segmental analysis (Note 1)
Revenue
Business segments 6 Months ended 6 Months ended Year ended
31 December 2002 31 December 2001 30 June 2002
R` 000 Unaudited Unaudited audited
SIM Software Licensing 8,186 - 20,950
Solutions using own
intellectual property 19,588 87,870 12,998
Products 97,879 10,341 114,365
Services 36,395 42,824 59,854
162,048 141,035 208,167
Geographical segments
Africa 59,413 40,900 66,202
South-East Asia 102,635 97,742 139,572
Europe - 2,393 2,393
162,048 141,035 208,167
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.
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: 27/01/2003 12:44:00 PM Produced by the JSE SENS Department
