Secure electronic payments and transactions technology group Prism increased attributable earnings by 51.8% to R4.4 million in the six months to 31 December.
<B>Salient figures</B>
Prism`s results for the six months to 31 December 2003.
Figures for the prior-year period in parentheses.
Revenue: R124.4m (R162.05m)
Operating profit: R10.31m (R16.91m)
Profit before tax: R7.19m (R3.71m)
Attributable earnings: R4.4m (R2.9m)
EPS: 0.7c (1c)
HEPS: 1.3c (3.6c)
Current assets: R62.25m (R36.18m)
Cash resources: R27.68m (-)
Current liabilities: R59.36m (R105.07m)
NAV per share: 17c (19c)
Cash flows from operating activities: R3.06m (R38.38m)
Cash generated by operations: R10.89m (R50.11m)
This is despite a 23% reduction in revenue, which is mainly the result of the strength of the rand against the dollar. CEO Alvin Els says 55% of the group`s revenue for the period was denominated in dollars.
He says headline earnings per share (HEPS) were affected by the application of the appropriate full year`s weighting of the shares issued in last year`s rights issue. HEPS fell by 63.9% from 3.6c to 1.3c.
"The group faced several challenges during the reporting period under review," Els says. "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."
He says Prism continued to develop its long-term strategy of focusing on software sales and services, with the result being that revenue from these areas constituted a higher proportion of the overall sales mix. This increased the gross profit margin from 51% to 60%.
"In response to the rand strength during the period, management refined its 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."
Els says while the business has been reorganised to ensure sustained profitability at the current exchange rate levels, any future currency weakness will benefit the group`s earnings.
The Prism share was trading at 39c on the JSE this morning, 3c down from yesterday`s close.
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