Johannesburg, 04 Jul 2002
JSE-listed secure payments company Prism says its latest profit warning is due in part to it re-aligning its accounts to reflect accurate valuations of its operations.
Yesterday, Prism issued its second trading update in two months, warning investors that it would report a material loss at both a headline and attributable level for the financial year to June. The company blamed continued adverse trading conditions, a R43 million debt provision for its Asian operations and a more conservative amortisation strategy for its intangible assets.
Duncan Todd, Prism director for mergers and acquisitions, says the provision is a re-rating of the valuation of the company`s assets in line with global standards.
"The reduced valuation is appropriate given the climate of accounting practices at the moment," says Todd.
The clean out comes as Prism continues negotiations to sell the company, and Todd says talks continue on several fronts.
The trading update included the news that Prism is also looking to sell certain of its non-core assets, but Todd says he cannot furnish any further information.
Commenting on operations, Todd says it is unlikely that the local market will in the immediate future see similar technology to that which has been rolled out in its Asian operations. In Asia, it is possible to use cellphones to pay for goods and process transactions.
"The local cellphone operators tend to take a proprietary view to the functions available on mobile phones," explains Todd.
He says although Prism technology is built with flexibility in mind, any chance of a local e-wallet in SA rests squarely with the cellphone operators.
However, Todd points out that while its slickest technology is not yet available in SA, local operations still account for about 30% of revenue and Prism is not looking to pull out of the country any time soon.
Prism shares gained slightly in early trade today after losing 5% yesterday on news of the revised profit warning, with shares swapping hands at 39c by 11am.
Todd says he was a little surprised the share didn`t take more of a knock, but believes the market`s calm reaction is due to the fact that investors were already expecting the June results to be below par.
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