Prophecy Looks to a Brighter Future
Released 11 September 2001
Prophecy International Holdings Limited has announced revenues
for 2000/1 of nearly $11 million. In common with many IT vendors,
the company attributes the downturn in revenue to a general slow
down in the IT marketplace and the deferral of purchasing decisions
in a number of the company's major sales opportunities.
The board has reviewed the balance sheet and taken a number of
conservative judgements that have produced a one-off result in the
year just completed. These include:
1. a change in Foreign Exchange recognition policy resulting in
a negative effect of over $400,000,
2. the reversal of a Future Income Tax Benefit in respect of tax
losses resulting in a negative impact of almost $2,300,000 and
3. a doubtful debt provision related to an overseas debtor that
appears unable to meet its obligations resulting in a negative impact
of almost $1,500,000.
As a result of these judgements an after tax loss of $4.9m was
recorded for the full year.
The company is well positioned to take advantage of expected improved
trading conditions in the 2001/2002 year with cash reserves of $8.5m
as at the reporting date (and over $9m as at today's date).
For the 2000/1 year the company has reported a positive net operating
cash flow of over $0.5 million.
The positive operational cashflow together with tight operational
expenditure controls positions the company for a return to profit
in this year.
Since joining the company in April, CEO Bruce Lakin has implemented
a number of functional organisation changes which will focus the
company on its strategic direction of provider of unique rapid software
solutions in its target markets.
In addition Bruce has implemented a plan to reduce the expense
base of the company.
These actions included a redundancy program of a number of non-critical
positions which reduced the headcount by over 10% with effect from
July 2001, a reduction in executive salaries and moving toward a
more indirect model in Asia.
The Board believes that the North American market in particular
will provide major growth opportunities and Bruce is now based in
the USA to drive the expansion in this region and in Europe.
The recent signing of an order l with global IT services provider
EDS to utilize e-Foundation to rapidly develop a solution for a
major US Federal Government client is evidence of the potential
that can be achieved in this market. Our technology is particularly
attractive in the climate of reducing costs being faced by business
today and this, along with our next generation of technology is
expected to dramatically improve this year's revenue.
In addition Prophecy has undergone a strategic change of direction
from that of an ERP vendor to software solutions provider with e-Foundation,
its rapid application assembly technology. Prophecy has also made
a considerable investment in its future during the year by producing
a world-class replacement to its existing Framework technology.
The company will launch its new rapid software solution technology
Written in Java, the world's most accepted software development
language, this new technology will be targeted at the rapidly growing
Java based software development industry. Java's wide acceptance
has in itself caused a problem to business with a scarcity of Java
programmers and high costs for those who are experienced. Our new
technology is perfectly positioned for this market as it will allow
the rapid assembly of 100% Java based software solutions without
the need for Java programmers and database experts.
Our new technology is capable of saving millions of dollars and
many months of elapsed time in large software development projects.
As an example, a major customer recently reported a productivity
increase of a factor of ten resulting in considerable savings of
dollars and time for our client.
With the current focus on reduction of costs and efficiency of
operations by business worldwide, we expect this new product to
rapidly stimulate demand for our technology during this year.
Return to Profits Predicted
The Board consider the current market price to be well undervalued
when compared to the company's asset backing and the expected substantial
increase in revenue and return to profits this year.
Prophecy has unique intellectual property that is very relevant
to major business operations today that are searching for competitiveness
in slowing economies.