Strong Second Half Prelude to Growth for 2001
Released 29 August 2000
REVIEW OF OPERATIONS
The 12-month period to June 2000 has brought two distinct phases.
The six-month period to December 1999 was markedly affected by Y2K
concerns, resulting in a significant slow down in buying decisions
for the half. This position was reversed in the second half as pent
up demand saw sales activity accelerate to produce a record second
half revenue of $10.3 million. This compares to last year's result
of $7.5 million for the second half.
Thus the investment in additional sales, marketing and R &
D resources has produced results subsequent to the Y2K slowdown.
We expect the sales activity to remain buoyant and provide a good
foundation for growth in the 2000-2001 year.
In particular, the Framework application is being very well received
with a number of significant licences finalised recently, including
a large deal with a major Australian Banking Group that has provided
another significant local endorsement for this unique technology.
For the six-month period ended 30 June 2000 Prophecy International
Holdings Limited has reported revenues of $10.3 million with an
operating profit after tax of $2.5 million, providing a very pleasing
result for the second half. However with first half revenue of $2.5
million and operating loss after tax of $2.9 million, the consolidated
full year result was revenue of $12.8 million and a small after
tax loss of $0.4 million.
During the course of the financial year, our Balance Sheet was
strengthened as a result of a placement which raised $12 million
for new working capital. At 30 June 2000 total assets stand at $21.6
million with net assets of $17.6 million (compared to $6.3M 12 months
ago). With the expanded number of issued shares, the net tangible
asset backing per share has risen to 38.3 cents compared to 13.7
cents last year.
Our cash position remains very strong with $9.2 million in cash
at the end of the year and a further $8.9 million to be collected
The company is virtually debt free and expects to remain that way
as a result of its strong cash position.
Although the second half showed a very strong result, the full
year resulted in a small loss and the directors have decided not
to declare a dividend, opting instead to retain funds to enable
investment for future growth.
RESEARCH AND DEVELOPMENT
The group embarked on a number of significant projects during the
course of this year. We developed and released our e-business portal
which is completely dynamic and eliminates the need to duplicate
business systems for deployment via the internet. The other major
development which has been embarked on is the complete redevelopment
of our Framework Rapid Application Assembly software utilising the
Java development environment. This is expected to significantly
enhance the market prospects of our Framework product set.
SALES AND MARKETING
During the course of the financial year Prophecy announced the
appointment of Mr Bob Shaw as its non-executive Chairman. Bob has
a very strong background in sales management and has directed that
experience toward achieving growth by increased market penetration
for Prophecy's Framework Rapid Application Assembly software.
Significant progress was made during the course of the year with
our Framework product being utilised in a number of major and strategic
sales situations. Prophecy embarked on the significant development
and implementation of a Framework based solution for the South Australian
Government to manage its "Emergency Services Levy (Fixed Property)"
system. Stage 1 of this project was completed in a very short timeframe,
allowing the production of the first invoices on time and demonstrating
the full power and speed of development utilising the Framework
Rapid Application Assembly software. An additional major project
has been carried out over the course of the year, delivering increased
functionality and relating to legislative changes to the system.
Resources were also invested into a major opportunity for our Framework
software solution within a large Australian bank. New technology
was required as the base for a major new software development project
within the bank. The Prophecy Framework technology was chosen after
lengthy assessment including a comprehensive "proof of concept"
phase which was used to highlight the unique advantages of the Framework
environment for large and complex development projects. The end
result provided a significant new contract for Prophecy's Framework
software, and will involve the company in a major services project
over the course of this financial year, assisting in the delivery
of new systems built on the Framework base.
Another Framework success that is expected to reap on-going rewards
was an evaluation project with the Colorado State Government. The
Framework passed with flying colours and has been licenced to develop
a number of departmental systems. Further opportunities are expected
this year in the State Government market space.
Significant partnerships were signed during the course of the year.
Each of our branch offices signed agreements with Computer Associates
to become ISV partners. This enables the implementation of joint
marketing campaigns to enhance the respective product sales of both
groups on a world-wide basis. Prophecy signed a Partnership for
Development Agreement with Sun Microsystems under which SUN has
provided significant computer hardware resources and services to
assist our R & D team in completing a JAVA version of the Framework
The very pleasing second half recovery in terms of both revenue
and profit, bodes well for the new financial year. Spin off business
from sales activity in the first part of this calendar year is expected
to be reflected in a healthy first half for this new financial year.
Prophecy is actively marketing its products under the e-Foundation
banner, providing complex business solutions that can be rapidly
brought to fruition to satisfy both internet, front office and back
office functionality. Recent major success in this area provides
the platform for significant growth this year.
Targeted partnerships with a number of the world's largest IT companies
continue to be pursued and it is expected that the effort invested
to date will bear fruit during the course of this year. The leverage
of such partnerships can be tremendous in obtaining new markets
and world-wide penetration.
Prophecy expects that given the success of the company's sales
activities and sound trading conditions in the company's major markets,
significant improvement over last year's result is achievable.