Prophecy International Holdings Limited (ASX: PRO) shares jumped 3.5% higher today following a release from the company titled, "RECORD HALF YEAR REVENUE".
The first line of the update read, "The Prophecy accounts for the Half year ending 31/12/15 have been completed and once again show record results for the half."
"These accounts are yet to be fully audited and the final audited half year report will be released later in February."
Companies regularly issue unaudited result announcements to the market ahead of their formal results release in what has become known as confession season. It's called that because the ASX requires all listed companies to report any information that may have a "material effect" on the price of a company's shares immediately.
Naturally, when companies tally up their results, usually a few weeks after the end of the period they will be reporting on, they may need to make a trading or results 'update' informing the market of any material results, like a profit downgrade or upgrade.
Prophecy appears to have used their recent results to make two announcements regarding results for its most recent half-year. On January 15 , Prophecy reported "a great overall result", detailing a 120% jump in SNARE sales and a current cash position of $6.4 million.
Fast forward to this morning, Prophecy reported revenue of $8 million and a profit before income tax, depreciation, amortization and acquisition costs of $3.1 million – up 55% on last year.
Because there were no acquisition costs incurred in the prior period (at least from what I could see), that may mean Prophecy included the revenue result from a recent acquisition but excluded the costs associated with said acquisition in order to release today's second batch of unaudited results. It also said cash at 31 December 2015 was $5.15 million and announced it will declare a two cents per share dividend and hinted at a very positive full year result.
"Our plan is to continue the aggressive sales growth of the SNARE business along with the eMite business and we expect to see a very good full year result both in revenue and profit from our continued combined sales push," the company concluded.
Foolish takeaway
I'm of the opinion that if you're prepared to make an acquisition, management should report both the benefits and costs associated with that transaction. Secondly, when you read an announcement from any company always approach it with a critical eye.
