| Wed 27 Aug 2003, 13:57 | | REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2003 |
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PRISM HOLDINGS LIMITED REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2003
PRISM HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1998/018949/06
Share code: PIM
ISIN: ZAE000022257 ("Prism" or "the Group")
REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2003
* Return to profitability
* Revenue : + 46%
* Operating expenses : - 30%
* Cash generated by operations: R77 million
FINANCIAL REVIEW
Prism is pleased to report results that indicate a significant turnaround in all
aspects of the Group"s business despite difficult operating conditions in local
and international markets.
Revenue of R304 million was achieved for the financial year, a 46% increase over
the previous year. In excess of 80% of revenue was generated from the sale of
products and services incorporating the Group"s own Intellectual Property
("IP"), as opposed to the re-sale of 3rd party technology.
The introduction of new products, coupled with production efficiencies, resulted
in gross profit margins increasing from 46% to 55%. Cost curtailment and control
resulted in a 30% decrease in the level of operating expenditure. The directors
are pleased, however, to report that the Group retained its focus on developing
secure payment technology that remains both innovative and relevant to customer
requirements. To this end, in excess of R31 million (10% of revenue) was spent
on continued research and development during the financial year.
The strengthening of the Rand had an adverse impact on the Group"s earnings in
the second half of the financial year, as approximately 60% of Prism"s revenue
is currently denominated in United States ("US") Dollars. An average exchange
rate of R8.02 to the US Dollar prevailed in the six months to June 2003, 20%
lower than the average exchange rate of R10.01 to the US Dollar prevailing in
the first half of the financial year.
Exceptional items of R7 million are reported. These mainly comprise a recoupment
on the disposal of PayShop Limited UK (R11 million) and further write-downs on
the proceeds on disposal of investments (R4 million).
Significant emphasis has been placed on improving the Group"s cash position. R31
million was raised through a rights issue in February 2003 and cash generated
from operations amounted to R77 million, reflecting an improvement in working
capital management.
Deferred purchase considerations and non-current liabilities outstanding at the
beginning of the financial year have been settled in full.
Capital expenditure for the year amounted to R9 million. The most significant
item was a new SIM card production line that will better position Prism to meet
its growing customer requirements.
PROSPECTS
Management is satisfied that the issues, which the Group faced during the
previous financial year have been fully addressed, and continued importance will
be placed on cash management and organic growth.
Prism is committed to the ongoing development of IP that meets the secure
electronic payment product, solution and service requirements of its markets and
customers. The Group remains clearly focused on applying its core competencies
to scaleable volume products in smart cards (e.g. SIM cards), card acceptance
devices and transaction security products, and further leveraging the
application and sale of these products through electronic payment solutions and
services.
The Group is equally committed to diversifying risk and minimising the exposure
related to any level of dependency on specific geographic regions and key
customers. New business development will be focused on working with channel
partners to expand Prism technology into new geographical regions. This is being
pursued in parallel with strategies to secure new business and customers in
existing regions. Until such time that these strategies are successfully
implemented, the Group"s revenues will continue to be susceptible to the timing
of large contracts.
Management remains cautiously optimistic regarding Prism"s prospects and trading
performance for the next financial year. Offshore initiatives remain a key
component of the Group"s organic growth strategy and therefore the Group"s
operating profit is sensitive to fluctuations in the level of the Rand compared
to the US dollar. The Rand is currently trading at a level of approximately
R7.50 to the US Dollar compared to an average rate of R9.03 to the US Dollar in
the 2003 financial year, which will have an impact on earnings.
BOARD APPOINTMENTS
Richard Flett and Kevin Pocock were appointed to the Board of Prism during the
year.
ACCOUNTING POLICIES AND REVIEW
The financial information has been presented in accordance with the South
African Statements of Generally Accepted Accounting Practice. The accounting
policies applied are consistent with those of the prior reporting period, with
the exception of the adoption of AC 133 "Financial Instruments Recognition and
Measurement", which did not have a material impact on the results.
The Group"s auditors PricewaterhouseCoopers Inc., have reviewed the preliminary
financial information and their unqualified review opinion is available for
inspection at Prism"s registered office.
DIVIDENDS
No dividends have been declared for the year ended 30 June 2003.
For and on behalf of the board
A.W. Els (Chief Executive Officer)
J. Hnizdo (Executive Director, Finance)
27 August 2003
CONSOLIDATED INCOME STATEMENT
R" 000 Year ended Percentage Year ended
30 June 2003 Change 30 June 2002
Reviewed Audited
Revenue 304 147 46% 208 167
Cost of sales (136 623) (113 231)
Gross profit 167 524 76% 94 936
Operating costs (101 007) (30%) (143 709)
Depreciation (10 722) (10 603)
Amortisation of intangible
assets (6 264) (8 387)
Foreign exchange losses (3 679) (8 588)
Translation gain - 11 948
Bad debt - (32 224)
Operating profit/(loss) 45 852 (96 627)
Amortisation of goodwill (12 506) (23 015)
Profit/(loss) on disposal of
property, plant & equipment 57 (111)
Exceptional items 6 835 (186 545)
Net finance expense (9 009) (16 202)
Share of results of equity
Investments 502 (1 889)
Profit/(loss) before taxation 31 731 (324 389)
Taxation (8 366) 31 978
Profit/(loss) after taxation 23 365 (292 411)
Outside shareholders" interest - 400
Earnings/(loss) attributable
to ordinary shareholders 23 365 (292 011)
Number of ordinary shares in issue ("000)
Shares 580 829 290 194
Weighted average shares 397 032 242 331
Weighted fully diluted shares 505 084 246 552
Unweighted fully diluted shares 688 881 294 414
Earnings/(loss) per share (cents)
- basic 5.9 (120.5)
- headline 7.3 (34.0)
Diluted earnings/(loss) per
share (cents)
- basic 5.0 (118.4)
- headline 6.1 (33.4)
Unweighted diluted earnings/
(loss) per share (cents) *
- headline 4.8 (26.3)
The following adjustments to earnings/(loss) attributable to ordinary
shareholders were taken into account in the calculation of headline earnings:
R" 000 Year ended Year ended
30 June 2003 30 June 2002
Reviewed Audited
Earnings/(loss) attributable
to ordinary shareholders 23 365 (292 011)
Amortisation of goodwill 12 506 23 015
Profit/(loss) on disposal of
property, plant & equipment (57) 111
Exceptional items (6 835) 186 545
Headline earnings 28 979 (82 340)
Rand/US Dollar exchange rates
Opening rate 10.26 8.06
Closing rate 7.44 10.26
Weighted average rate 9.03 9.16
* In addition to GAAP requirements, the Board has disclosed unweighted fully
diluted earnings per share figure, to fully reflect the dilutionary impact of
the rights issue conducted during the year. The calculation has been reviewed by
the auditors.
CONSOLIDATED CASH FLOW STATEMENT
R" 000 Year ended Year ended
30 June 2003 30 June 2002
Reviewed Audited
Cash flow from operating activities 57 732 (17 090)
Cash generated by operations 76 877 9 323
Net interest paid (9 009) (16 202)
Taxation paid (10 136) (10 211)
Cash flow from investing activities (5 419) (60 335)
Cash flow from financing activities 29 051 20 750
Net increase/(decrease) in cash and
cash equivalents 81 364 (56 675)
Cash and cash equivalents at
beginning of the year (56 885) (210)
Cash and cash equivalents at end of
the year 24 479 (56 885)
CONSOLIDATED BALANCE SHEET
R" 000 Year ended Year ended
30 June 2003 30 June 2002
Reviewed Audited
ASSETS
Non-current assets 111 279 147 804
Property, plant & equipment 22 284 25 218
Intangible assets 35 046 53 816
Investments 14 753 21 072
Deferred taxation 38 423 42 136
Other non-current assets 773 5 562
Current assets 62 112 60 644
Inventories 6 039 15 862
Trade and other receivables 31 594 34 457
Proceeds on disposal of investments - 3 617
Cash resources 24 479 6 708
Total assets 173 391 208 448
EQUITY AND LIABILITIES
Capital and reserves 100 964 57 426
Deferred purchase consideration - 13 512
Non-current liabilities - 2 569
Current liabilities 72 427 134 941
Trade and other payables 41 721 42 894
Provisions 18 922 11 366
Current portion of interest bearing
borrowings 2 359 2 030
Banking liabilities - 63 593
Taxation payable 9 425 15 058
Total equity and liabilities 173 391 208 448
Net asset value per ordinary
share (cents) 17 20
STATEMENT OF CHANGES IN SHAREHOLDERS" INTERESTS
R" 000 Year ended Year ended
30 June 2003 30 June 2002
Reviewed Audited
Shareholders" interest at the
beginning of the year 57 426 289 870
Shares issued 291 77
Share premium arising on shares
issued 32 500 60 860
- shares issued 36 059 63 239
- costs (3 559) (2 379)
Movement in foreign currency
translation reserve (12 618) (1 370)
Earnings/(loss) attributable to
ordinary shareholders 23 365 (292 011)
Shareholders" interest at the end
of the year 100 964 57 426
SEGMENTAL ANALYSIS
R" 000 Year ended Year ended
30 June 2003 30 June 2002
Reviewed Audited
Business segments
Software 21 996 20 950
Solutions 12 745 12 998
Products 204 341 114 365
Services 65 065 59 854
304 147 208 167
Geographical segments
Africa 143 415 66 202
South-East Asia 159 152 139 572
Europe 1 580 2 393
304 147 208 167
Registered Office: Building 1, Prism Business Park, Ruby Close, Fourways, 2068,
Gauteng, South Africa.
Transfer Secretaries: Computershare Limited, P.O. 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, R.M.J. Flett, I.N. Matthews (Chairman), K.M. Pocock.
Company Secretary: E.C. de Villiers.
Date: 27/08/2003 12:45:08 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
