| Tue 27 Jan 2004, 14:02 | | Unaudited Interim Results For The Six Months Ended |
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Prism - Unaudited Interim Results For The Six Months Ended 31 December 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")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2003
The Group faced several challenges during the reporting period under review.
These included a significant and largely unexpected strengthening of the Rand
and severe global pricing pressure on SIM cards.
As part of addressing these challenges, focus has been placed on pursuing higher
margin business opportunities, continued cost containment, delaying certain
expansionary costs and growing the South African business.
In the context of the unfavorable economic conditions, management is pleased to
report that the business has remained profitable and cash positive.
Financial Review
55% of the Group"s revenue for the period under review was denominated in United
States ("US") Dollars and as a result the stronger Rand has had an adverse
impact on the Group"s earnings. An average exchange rate of R7.06 prevailed
during the period, 29% lower than the average exchange rate of R10.01 to the US
Dollar that prevailed in the corresponding prior year period.
The 23% decrease in turnover needs to be viewed against the Rand"s strength.
After adjusting for the stronger Rand, turnover has marginally decreased by 6%
as a result of a change in the sales mix away from lower-margin, high-volume
sales.
Excess global SIM card manufacturing capacity has led to downward pressure on
the selling price of SIM cards, which in turn has resulted in a decrease in
revenues from the South-East Asian region. Services revenue has, however,
continued to grow primarily due to improved results from Prism TranSwitch
Services (Pty) Ltd ("PTSS").
The Group continued to develop its long-term strategy of focusing on software
sales and services. As a consequence, revenues from these areas have constituted
a higher proportion of the overall sales mix, resulting in an increase in the
Group"s gross profit margins from 51% to 60%.
The December 2002 interim results have been adjusted to account for the Prism
Transactive Malaysia investment as a foreign entity and not as a foreign
operation as previously accounted for. This treatment is consistent with that
adopted for the 30 June 2003 year-end.
Exceptional items of R3.2m comprise further recoupments on disposals of
investments written off in full in prior years.
An interest charge of R0.1 million is reflected despite a positive net cash
position held throughout the period. This is the result of a substantial portion
of cash held being denominated in US Dollars, earning associated US Dollar
deposit interest rates, which was offset by a fluctuating Rand overdraft
position.
The Group continues to generate cash, and the net cash position has improved
from R24 million to R28 million during the period.
Fully diluted earnings and headline earnings per share figures have been
impacted by the application of the appropriate full year"s weighting of the
shares issued during the 2003 rights issue.
Operational Review
In response to the Rand strength during the period, management refined it"s
business models in order to ensure continued profitability at the prevailing
exchange rate levels.
In line with this, internal resources have been reallocated to bolster those key
business areas that offer higher margins.
The Group is also in the process of further refining the product offerings, in
order to allow for the more effective sales of its products and software through
channel partners. New SIM software licensing agreements were concluded during
the period under review.
The Group has continued to invest in the ongoing development of innovative new
products and services, with 12% of sales being reinvested in research and
development activities.
In November 2003 the Group announced that Prism and Gijima Technologies (Pty)
Ltd ("Gijima") had entered into an empowerment transaction in terms of which
Gijima would acquire 25.1% of PTSS for a consideration of R15.3 million payable
in three tranches. The conditions precedent relating to the transaction have
been fulfilled with the exception of Competition Board approval, which is
expected to be attained shortly. PTSS is the largest independent transaction
processor in the South African retail sector, and its technologies are ideal for
the extension of secure transaction services to a broader market.
Prospects
Management remains cautiously optimistic regarding Prism"s prospects for the
second six-month period. New licensing arrangements for Prism SIM software and
continued demand for EMV hardware and software bode well for further sales
growth. Management is also optimistic that the PTSS transaction with Gijima, who
has a significant presence within the government and parastatal sectors, will
create significant opportunities for PTSS to grow its business.
The Rand"s strength and continued volatility have resulted in difficult trading
conditions. The business, however, has been reorganised to ensure sustained
profitability at the current exchange rate levels and any future currency
weakness will be beneficial to the Group"s earnings.
Accounting policies
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 applied in the corresponding previous
reporting period.
Dividends
No dividends have been declared for the interim period ended 31 December 2003.
For and on behalf of the board
A.W. Els (Chief Executive Officer)
J Hnizdo (Executive Director, Finance)
27 January 2004
Consolidated Income Statement
6 months ended 6 months ended Year ended
31 December 31 December 30 June 2003
2003 2002
R" 000 Unaudited Unaudited Audited
Revenue 124,403 162,048 304,147
Cost of revenue (49,189) (79,718) (136,623)
Gross profit 75,214 82,330 167,524
Operating costs (56,375) (57,315) (100,950)
Depreciation (5,231) (5,534) (10,722)
Amortisation of intangible assets (2,585) (3,132) (6,264)
Foreign exchange (losses)/gains (709) 556 (3,679)
Operating profit 10,314 16,905 45,909
Amortisation of goodwill (6,253) (6,071) (12,506)
Exceptional items 3,242 (1,511) 6,835
Net finance costs (109) (6,115) (9,009)
Share of results of associates - 501 502
Profit before taxation 7,194 3,709 31,731
Taxation (2,794) (811) (8,366)
Earnings attributable to ordinary 4,400 2,898 23,365
shareholders
Number of ordinary shares in issue
("000)
Shares 592,191 290,414 580,829
Weighted average shares 588,891 290,414 397,032
Weighted fully diluted shares 688,881 290,414 505,084
Earnings per share (cents)
- basic 0.7 1.0 5.9
- headline 1.3 3.6 7.3
Diluted earnings per share (cents)
- basic 0.7 1.0 5.0
- headline 1.1 3.6 6.1
The following adjustments to earnings attributable to ordinary shareholders were
taken into account in the calculation of headline earnings:
Earnings attributable to ordinary 4,400 23,365
shareholders 2,898
Amortisation of goodwill 6,253 12,506
6,071
Loss/(profit) on disposal of plant 13
and equipment 9 (57)
Exceptional items (3,242) (6,835)
1,511
Headline earnings 7,424 28,979
10,489
Rand/US Dollar exchange rates
Opening rate 7.44 10.26
10.26
Closing rate 6.59 7.44
8.60
Weighted average rate 7.06 9.03
10.01
Consolidated Balance Sheet
31 December 31 December 30 June 2003
2003 2002
R" 000"s Unaudited Unaudited Audited
ASSETS
Non-current assets 98,977 130,643 111,279
Plant and equipment 19,777 20,920 22,284
Intangible assets 26,208 44,613 35,046
Investment in associates 12,706 17,521 14,753
Deferred taxation 38,534 43,788 38,423
Other non-current assets 1,752 3,801 773
Current assets 62,252 36,184 62,112
Inventories 7,707 7,027 6,039
Trade and other receivables 26,869 27,607 31,594
Proceeds on disposal of investments - 1,550 -
Cash resources 27,676 - 24,479
Total assets 161,229 166,827 173,391
EQUITY AND LIABILITIES
Capital and reserves 101,874 56,169 100,964
Deferred purchase consideration - 3,767 -
Non-current liabilities - 1,823 -
Current liabilities 59,355 105,068 72,427
Trade payables and accruals 35,939 49,552 41,721
Provisions 17,655 15,144 18,922
Interest bearing borrowings 1,151 1,492 2,359
Bank overdraft - 26,967 -
Taxation 4,610 11,913 9,425
Total equity and liabilities 161,229 166,827 173,391
Net asset value per ordinary share 17 19 17
(cents)
Cash Flow Statement
6 months ended 6 months ended Year ended
31 December 31 December 30 June 2003
2003 2002
R" 000 Unaudited Unaudited Audited
Cash flows from operating 3,063 38,383 57,732
activities
Cash generated by operations 10,892 50,106 76,877
Net finance expense (109) (6,115) (9,009)
Taxation paid (7,720) (5,608) (10,136)
Cash flows from investing (475) (8,681) (5,419)
activities
Cash flows from financing 609 216 29,051
activities
Net increase in cash and cash 3,197 29,918 81,364
equivalents
Cash and cash equivalents at 24,479 (56,885) (56,885)
beginning of the period
Cash and cash equivalents at end of 27,676 (26,967) 24,479
the period
Statement of Changes in Shareholder"s Interests
6 months ended 6 months ended Year ended
31 December 31 December 30 June 2003
2003 2002
R" 000 Unaudited Unaudited Audited
Shareholders" interest at the 100,964 57,426 57,426
beginning of the period
Shares issued 11 - 291
Share premium arising on shares 1,806 1,500 32,500
issued
- shares issued 1,806 1,500 36,059
- costs - - (3,559)
Currency translation differences (5,307) (5,655) (12,618)
Earnings attributable to ordinary 4,400 2,898 23,365
shareholders
Shareholders" interest at the end 101,874 56,169 100,964
of the period
Segmental Analysis
6 months ended 6 months ended Year ended
31 December 31 December 30 June 2003
2003 2002
R" 000 Unaudited Unaudited Audited
Primary basis-business segments
Revenue
Software 9,524 15,029 21,996
Solutions 2,783 12,745 12,745
Products 72,234 97,879 204,341
Services 39,862 36,395 65,065
124,403 162,048 304,147
Secondary basis - geographical
segments
Revenue
Africa 85,594 59,413 143,415
South-East Asia 37,961 102,635 159,152
Europe 848 - 1,580
124,403 162,048 304,147
Net operating assets
Africa 60,136 9,997 59,881
South-East Asia 41,738 46,172 41,083
101,874 56,169 100,964
Plant and equipment additions
Africa 2,722 1,262 8,456
South-East Asia 2 - 222
2,724 1,262 8,678
Registered office:
Building 1, Prism Business Park, Ruby Close, Fourways, 2068, Gauteng, South
Africa
Transfer Secretaries:
Computershare Limited, PO Box 61051, Marshalltown, 2107, Gauteng
Executive Directors:
AW Els (CEO), J Hnizdo, GR McKay, MP Serrao
Non-Executive Directors:
RAR Bicker-Caarten, AL Bruhns, RDS Came, ORJ da Silva, RMJ Flett, IN Matthews
(Chairman), KM Pocock
Company Secretary:
EC de Villiers
Sponsor:
Standard Corporate and Merchant Bank
(A division of The Standard Bank of South Africa Limited)
Registration number 1962/000738/06)
Date: 27/01/2004 09:40:09 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
