Secure electronic payments group Prism Holdings` revenue slipped to R263.13 million in the year to 30 June, 13.5% down on the R304.15 million of the previous year, despite an increase in sales volumes.
"Although the group has experienced a significant increase in demand for SIM products and software, the increase in sales volumes was offset by a reduction in global pricing and the effects of an appreciation in the South African rand relative to the US dollar," says CEO Alvin Els.
The strength of the rand had a negative impact on earnings, as 60% of Prism`s revenue for the period was denominated in dollars. Els says that on a currency-adjusted basis, revenue increased by 14%.
"Excess global SIM card manufacturing capacity has continued to result in downward pressure on the selling price of SIM cards. The effect of pricing pressure has to some extent been offset by the significant improvement in unit volumes in both SIM software licensing and SIM card production."
Prism directly or indirectly sold 22 million SIM cards during the year, compared with six million the previous year.
Operating profit fell by 19.3% from R45.91 million to R37.07 million, although pre-tax profit was up 11.5% from R31.73 million to R35.38 million. After-tax profit increased 7.5% from R23.37 million to R25.11 million and attributable profit rose by 2.7% from R23.37 million to R23.99 million.
Headline earnings per share fell by 37.8% from 7.4c to 4.6c while basic earnings per share were 31.7% down from 6c to 4.1c.
Els says worldwide payment trends indicate an accelerating move away from paper and magnetic card-based payments to secure electronic-based payments.
"Demand for Prism`s offering is forecast to grow, particularly in the telecommunications, retail, banking and petroleum sectors for which the group has developed a comprehensive product and services offering."
The approaching deadlines for the Europay, MasterCard and Visa smart card implementation will also continue to drive demand.
However, Els says while demand will continue to grow, and the prospect for earnings per share growth remains favourable, the level of the rand remains a cause for concern.
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