| Thu 19 Aug 2004, 13:01 | | Reviewed Results For The Year Ended 30 June 2004 |
|
Prism - Reviewed Results For The Year Ended 30 June 2004
PRISM HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1998/018949/06
Share code: PIM ISIN Code: ZAE000022257
(`Prism` or `the Group`)
- Profitability sustained
- Cash on hand: R60 million
- Operating expenses: + 4.8%
REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2004
The Board of Directors of Prism is pleased to announce the Group`s results for
the year ended 30 June 2004. Although the Group has experienced a significant
increase in demand for SIM products and software, the increase in sales volumes
was offset by a reduction in global pricing and the effects of an appreciation
in the South African Rand relative to the United States (`US`) Dollar.
FINANCIAL REVIEW
60% of the Group`s revenue for the period under review was denominated in US
Dollars and as a result, the stronger Rand has had an adverse impact on the
Group`s earnings. The average exchange rate of R6.85, which prevailed during the
year, was 24% lower than the average exchange rate of R9.03 to the US Dollar in
the previous financial year.
Group revenues for the period under review declined by 14% when compared against
revenues in the previous corresponding period. It is noteworthy that on a
currency-adjusted basis, revenues during the period under review increased by
14%.
Excess global SIM card manufacturing capacity has continued to result in
downward pressure on the selling price of SIM cards. The effect of pricing
pressure has to some extent been offset by the significant improvement in unit
volumes in both SIM software licensing and SIM card production. Prism directly
(through local manufacture) or indirectly (through SIM card licensing) sold 22
million SIM cards in the year under review, which is a substantial improvement
on the 6 million and 4 million sold during the previous two years respectively.
The impact on revenues of this significant increase in volumes has been offset
by the effects of the appreciation of the reporting currency, SIM card pricing
pressure and pricing concessions in licence fees that have been necessitated by
competitive market forces.
The Group, in line with its strategy, continued to increase the proportionate
contribution of revenues from the sale of software and services. This has
assisted in increasing the Group`s gross profit margin to 61% from the level of
55% achieved last year.
The continued implementation of cost control measures has resulted in cost
increases for the year being contained at 5%.
Prism continued to focus on developing secure payments technology, in order to
ensure that its product offering will remain relevant in a dynamic market space.
To this end R31 million was spent on continued research and development during
the financial year, which amounts to 12% (2003:10%) of revenue.
The continued appreciation of the South African Rand against the US Dollar has
resulted in the Group incurring foreign exchange losses amounting to R2.3
million.
Exceptional items of R9.7 million are reported. These comprise a profit on the
disposal of 25.1% of Prism TranSwitch Services (Proprietary) Limited (R13.3
million), recoupments on disposals of investments written off in full in prior
years (R9.4 million) and a write off of the investment in an associate (R13
million).
Interest income of R1.1 million is reported. A substantial portion of the
Group`s cash resources are denominated in US Dollars, and earn the associated US
Dollar deposit interest rates.
Reported headline earnings have decreased by 7% from R29 million to R26.9
million. Furthermore, the 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 rights issue concluded in February
2003.
The Group ended the financial year with a strong balance sheet. Net current
assets have increased by R57.2 million during the year. Strong cash conversion
coupled with improved management of inventories, debtors and creditors has
resulted in the net cash position improving significantly from R24.5 million
last year to R60.2 million at year-end.
PROSPECTS
Prism continues to be well positioned in the area of secure electronic payments,
in both its domestic and international markets. Worldwide payment trends
indicate an accelerating move away from paper and magnetic card based payments
to secure electronic based payments. Demand for Prism`s offering is forecast to
grow, particularly in the telecommunications, retail, banking and petroleum
sectors for which the Group has developed a comprehensive product and services
offering.
Approaching Europay, MasterCard and Visa (`EMV`) deadlines will continue to be a
catalyst for demand for Prism products and services. The Group has developed an
EMV compliant petroleum payment terminal that it is marketing to multinational
petroleum companies.
Demand for value-added SIMs, the associated SIM software and back-end mobile
payment software, which allows for mobile operators to increase subscriber
revenues, continues to improve.
The executive management expects that demand will continue to grow and the
prospect for earnings per share growth appears favourable. The level of the Rand
remains a cause for concern, and a further strengthening from the current levels
may necessitate a re-evaluation of certain initiatives and expansion plans.
BOARD COMPOSITION
Llewellyn Walters was appointed to the Board of Prism on 27 January 2004.
Leonard Bruhns, a representative of the Archway Technology Venture Capital Fund
(`Fund`), resigned on 19 August 2004 following the distribution in specie of
Prism shares to the Fund`s investors.
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 applied in the corresponding previous
reporting period with the exception of the consolidation of the Prism Holdings
Limited Share Incentive Scheme. The effects of these changes were not material.
The Group`s auditors, PricewaterhouseCoopers Inc., have reviewed the preliminary
financial information and their unqualified opinion is available for inspection
at Prism`s registered office.
DIVIDENDS
No dividends were declared during the year ended 30 June 2004.
For and on behalf of the board
A.W. Els (Chief Executive Officer)
J Hnizdo (Executive Director, Finance)
19 August 2004
CONSOLIDATED INCOME STATEMENT
Year ended Year ended
30 June 2004 Percentage June 2003
R` 000 Reviewed Change Audited
------------------------------------------------------------------
Revenue 263 130 -13.5% 304 147
Cost of revenue (102 864) (136 623)
------------------------------------------------------------------
Gross profit 160 266 -4.3% 167 524
Operating costs (105 811) 4.8% (100 950)
Depreciation (9 967) (10 722)
Amortisation of intangible assets (5 171) (6 264)
Foreign exchange losses (2 251) (3 679)
------------------------------------------------------------------
Operating profit 37 066 -19.3% 45 909
Amortisation of goodwill (12 506) (12 506)
Exceptional items 9 667 6 835
Net finance income/(expense) 1 149 (9 009)
Share of results of associates - 502
------------------------------------------------------------------
Profit before taxation 35 376 11.5% 31 731
Taxation (10 265) (8 366)
------------------------------------------------------------------
Profit after taxation 25 111 7.5% 23 365
Minority interest (1 120) -
-----------------------------------------------------------------
Earnings attributable to ordinary 23 991 2.7% 23 365
shareholders
-----------------------------------------------------------------
Number of ordinary shares in issue (`000) Note
Shares 580 643 575 942
Weighted average shares 579 522 392 146
Weighted fully diluted shares 631 446 395 762
Earnings per share (cents)
- basic 4.1 -31.7% 6.0
- headline 4.6 -37.8% 7.4
Diluted earnings per share (cents)
- basic 3.8 -35.6% 5.9
- headline 4.3 -41.1% 7.3
-----------------------------------------------------------------
The following adjustments to earnings
attributable to ordinary shareholders
were taken into account in the
calculation of headline earnings:
Earnings attributable to ordinary
Shareholders 23 991 23 365
Amortisation of goodwill 12 506 12 506
Loss/(profit) on disposal
of property, plant and equipment 31 (57)
Exceptional items (9 667) (6 835)
------------------------------------------------------------------
Headline earnings 26 861 -7.3% 28 979
------------------------------------------------------------------
Rand/US Dollar exchange rates
Opening rate 7.44 10.26
Closing rate 6.27 7.44
Weighted average rate 6.85 -24.1% 9.03
------------------------------------------------------------------
Note
In terms of the latest rules of the JSE Securities Exchange South Africa,
companies are obliged to consolidate share incentive trusts under certain
circumstances. Comparative figures have been restated accordingly. The 11 547
563 (2003: 4 886 492) ordinary shares held in the trust for participants are
accounted for as treasury shares and are deducted from the number of shares in
issue in determining the weighted average number of shares. The cost price of
these treasury shares has been deducted from the Group`s equity.
AC 104 `Earnings per Share`, was incorrectly applied in the prior year with
respect to the dilution effect of outstanding share options, when calculating
fully diluted shares. The correct application has resulted in basic diluted
earnings per share increasing from 5.0 cents to 5.9 cents and diluted headline
earnings per share increasing from 6.1 cents to 7.3 cents. The underlying
earnings and headline earnings numbers remain unchanged.
-----------------------------------------------------------------
STATEMENT OF CHANGES IN SHAREHOLDERS` INTEREST
Year ended Year ended
30 June 2004 June 2003
R` 000 Reviewed Audited
Shareholders` interest
at the beginning of the year 100 178 57 426
Shares issued 11 291
Share premium arising on shares issued 1 807 32 500
-------- ---------
- shares issued 1 807 36 059
- costs - (3 559)
-------- ---------
Treasury shares (1 011) (786)
Currency translation differences (6 328) (12 618)
Earnings attributable
to ordinary shareholders 23 991 23 365
------------------------------------------------------------------
Shareholders` interest
at the end of the year 118 648 100 178
------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET
Year ended Year ended
30 June 2004 June 2003
R` 000 Reviewed Audited
-----------------------------------------------------------------
ASSETS
Non-current assets 72 576 110 506
-------- ---------
Plant and equipment 18 522 22 284
Intangible assets 17 369 35 046
Investment in associates - 14 753
Deferred taxation 35 150 38 423
Proceeds on disposal of investments 1 535 -
-------- ---------
Current assets 112 894 62 112
-------- ---------
Inventories 5 778 6 039
Trade and other receivables 45 263 31 594
Proceeds on disposal of investments 1 612 -
Cash resources 60 241 24 479
-------- ---------
------------------------------------------------------------------
Total assets 185 470 172 618
------------------------------------------------------------------
EQUITY AND LIABILITIES
Capital and reserves 119 496 100 178
--------- ---------
Shareholders`interest 118 648 100 178
Minority interest 848 -
--------- ---------
Current liabilities 65 974 72 440
--------- ---------
Trade payables and accruals 58 034 58 156
Provisions 3 000 2 500
Interest bearing borrowings - 2 359
Taxation 4 940 9 425
--------- ---------
------------------------------------------------------------------
Total equity and liabilities 185 470 172 618
------------------------------------------------------------------
Net asset value per ordinary share (cents) 20 17
------------------------------------------------------------------
CONSOLIDATED CASH FLOW STATEMENT
Year ended Year ended
30 June 2004 June 2003
R` 000 Reviewed Audited
------------------------------------------------------------------
Cash flow from operating activities 24 309 57 654
---------- ----------
Cash generated by operations 34 398 76 799
Net finance income/ (expense) 1 149 (9 009)
Taxation paid (11 238) (10 136)
---------- ---------
Cash flow from investing activities 15 013 (5 341)
Cash flow from financing activities (3 560) 29 051
------------------------------------------------------------------
Net increase in cash and cash equivalents 35 762 81 364
Cash and cash equivalents at beginning
of the year 24 479 (56 885)
------------------------------------------------------------------
Cash and cash equivalents at end of the year 60 241 24 479
------------------------------------------------------------------
SEGMENTAL ANALYSIS
Primary basis - business segments
Revenue Year ended Year ended
30 June 2004 June 2003
R` 000 Reviewed Audited
------------------------------------------------------------------
Chip and Wireless products and software 116 085 160 042
Secure solutions and third party payment
Terminals 43 442 35 888
Transaction security products and software 21 998 43 152
Services 81 605 65 065
------------------------------------------------------------------
263 130 304 147
------------------------------------------------------------------
Secondary basis - geographical segments
Revenue
------------------------------------------------------------------
Africa 173 649 143 415
South-East Asia 87 192 159 152
Europe 2 289 1 580
------------------------------------------------------------------
263 130 304 147
------------------------------------------------------------------
Net operating assets
------------------------------------------------------------------
Africa 91 958 59 095
South-East Asia 27 538 41 083
------------------------------------------------------------------
119 496 100 178
----------------------------------------------------------------
Plant and equipment additions
-----------------------------------------------------------------
Africa 6 247 8 456
South-East Asia 33 222
------------------------------------------------------------------
6 280 8 678
------------------------------------------------------------------
Registered Office: Building 1, Prism Business Park, Ruby Close, Fourways, 2068,
Gauteng, South Africa. Transfer Secretaries: Computershare Investor Services
2004 (Pty) Limited, P.O. Box 61051, Marshalltown, 2107, Gauteng, South Africa.
Executive Directors: A.W. Els (CEO), J. Hnizdo, G.R. McKay, M.P. Serrao, L.F.
Walters. Non-Executive Directors: R.A.R. Bicker-Caarten, 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: 19/08/2004 12:45:11 PM Produced by the JSE SENS Department
