Prophecy Reports Improved Results
Released 05 March 2002
During the 6 months ending 31 December 2001, Prophecy International
Holdings Pty Limited (Prophecy) achieved a 30% improvement in before
tax result when compared to the same period last year. Expenditures
have been well controlled as planned with a 14% reduction against
the same period last year.
Cash reserves remain very strong with $8.3m on hand at the end
of December. Cash flows from the operating activities were a positive
$0.58m for the half. Details of the financials are listed below.
As forecast by the Chief Executive during the annual general meeting
in October 2001, Prophecy secured significant contracts and progressed
significant projects during the period ending 31 December 2001.
Amongst these were:
· A significant partnership agreement with Office Technology
Systems of Colorado USA,
· A joint marketing agreement with SUN Microsystems of California
USA for global promotion of Prophecy's new Java product, Velatte
· A licensing and development systems development agreement
with Department of Water Resources in South Australia for approximately
· Completion of a rapid application development project utilising
our unique Framework technology to produce a substantial computer
software system for the US Education Department
These projects reinforce the growing acceptance of Prophecy's capabilities
in our global markets.
Throughout this period Prophecy has continued to improve its business
on a daily basis.
Actions have been taken to reduce the expense base as announced
at the end of last financial year which have resulted in significant
recurrent expenditure savings.
A number of appointments have also been made to improve Prophecy's
management capability and growth prospects.
These appointments have included:
· David Levin as General Manager of Prophecy Europe
· Peter Barzen as Executive Vice President of Prophecy Americas,
· Burrell Landes as Vice President of Sales for Prophecy
Significant investment was made in the development of Prophecy's
new Java based product, Velatte, during the period.
Velatte is poised to revolutionise the development of large software
systems in Java with substantial cost and time savings over traditional
development processes. This effort will culminate in the release
of the product to all global markets during March 2002.
Velatte was launched to the world markets during the World Congress
of IT in Adelaide on 27/28 Feb 2002. Prophecy was a proud sponsor
of this major international forum.
Velatte is possibly the most innovative product of its type in
the world today and Prophecy has applied for patent protection of
Velatte will be exhibited to the world at SUN's JAVA One conference
in San Francisco in March. This is the largest gathering of Java
software developers anywhere in the world and is an ideal venue
for the US launch of our Velatte product.
In addition we have been invited to present the Velatte product
at the major IBM developers conference in San Francisco in May.
Negotiations are being conducted with a major international computer
company that may result in a global distribution agreement for this
Notwithstanding the potential of Velatte, the delayed release date
will result in lower than planned revenues in the current financial
For the period ending 31 December 2001, Prophecy reported a modest
increase in sales revenue to $4.2m ($4.0m in previous comparable
During the period a before tax loss of $1.6m was incurred but this
compares most favourably with the loss of $2.2m suffered in the
previous comparable period. The result showed a 30% improvement.
The company decided in June 2001 that it would no longer recognise
deferred tax assets that related to tax losses, and as a consequence
the tax loss in the half year has not been tax effected, whereas
in the previous comparable period it was.
The cash reserves at 31 December 2002 were over $8m and have been
maintained at this level since 30 June 2001.
No interim dividend payment will be made.
During the period, a long serving executive of the company, Ed Reynolds
elected to retire from his executive role. Ed will remain as a non-executive
director and the Chairman of Prophecy recognised his contribution
during a recent Board meeting.
The Board expects improved trading conditions in all of our global
markets during the next 6-18 months.
The release of Velatte will offer the potential for substantial
new revenue streams with exciting interest already expressed from
major world players.
The trading conditions over the past 6 months have been difficult
with IT expenditures generally reduced. Considerable effort and
resources have been applied to bring Velatte to market and the product
is now ready for launch.
As a result, the Board expects a further modest increase in revenues
for the full year.
The success of Velatte is expected to produce substantial revenue
and profit growth in 02/03.