JSE-listed secure transactions company Prism Holdings has reported a 21.7% increase in headline earnings per share for the year to June 2005, despite global pricing pressures and rand strength.
The company has also lived up to the promise made at the half-year point, declaring a dividend of 2.3c a share, which is to be paid on 26 September.
Revenue for the period rose by 14.4% from R263.13 million to R301.07 million. However, 55% of the company`s revenues are dollar-denominated, and thus growth in rand terms was slower than in dollars, with the average exchange rate being R6.18 to the dollar compared with R6.85 in the previous year.
In dollar terms, revenue grew 27%.
"The group continues to experience pricing pressure on SIM cards as a result of excess global manufacturing capacity and a reduction in raw material input costs," CEO Alvin Els says in his commentary on the results.
However, the group recorded a 68% increase in combined unit sales volumes of SIM card software licences and physical SIM cards. Prism now holds about 5% of the global SIM market.
A R44.63 million operating profit is 20.4% up on that of the previous year, while pre-tax profit of R37.73 million is 6.6% higher than the previous R35.38 million. Attributable earnings were 15.4% down at R20.31 million, from R23.99 million previously.
An exceptional item of R3.3 million on the income statement relates to the profit made on the disposal of a 30% stake in Telekom Applied Business Sendirian Berhad and Telekom Technologies Sendirian Berhad.
Els says Prism invested R70 million during the year, R22 million of which was used for plant expansions and upgrades to computer systems. Another R22 million was facilitation funding for the group`s black empowerment transaction. The remaining R26 million went to finance purchases by the Staff Trust of Prism shares to cover outstanding share options granted.
Despite this, the group ended the year with cash balances of R63.46 million, compared with R60.24 million previously.
"Prospects for most business units appear favourable considering the prevailing market and economic conditions," says Els. "Trading in the chip and wireless division, however, will remain difficult due to continued pricing and competitive pressures."
However, he adds that provided the rand remains at current levels, the group is confident about prospects for earnings per share growth for the year ahead.
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