VERIMARK HOLDINGS LIMITED - Trading Statement

Trading Statement

Verimark Holdings Limited
Incorporated in the Republic of South Africa
Registration number: 1998/006957/06
JSE share code: VMK
ISIN number: ZAE000068011
("Verimark" or "the company")

TRADING STATEMENT

It is anticipated that the Group will record earnings of between R5.5
million and R7.0 million for the year ended 28 February 2013 compared to
earnings of R26.8 million reported on in the previous corresponding period.
Headline earnings per share and earnings per share for the year ended 28
February 2013 is expected to be in the range of 5.3 and 6.8 cents per share
compared to the headline earnings per share and earnings per share of 25.8
cents per share and 25.8 cents per share respectively, as reported on in
the previous corresponding period.

The lower profit is attributable, mainly due to the following factors:
*     The impact of the earnings loss of R5.3m (5.1 cps) incurred for the
      six months ended 31 August 2012, as reported upon per the interim
      results announced on 12 November 2012
*     The weakening of the rand during our peak sales period (October 2012
      to February 2013) resulted in narrower gross margins.
*     Certain once off events:
      - The impact of once off costs for the relocation into our new
        warehouse and head office facility
      - Legal costs incurred in the successful enforcement of a restraint
        of trade on two employees that joined our competitors
      - The uninsured portion of the loss incurred as a result of a large
        once off robbery at our distribution centre
      - The consolidation of the various warehouses brought about improved
        inventory visibility and control. This however also highlighted
        certain inefficiencies, which once rectified, resulted in a higher
        than expected inventory loss
*     As mentioned in previous communications, the business efficiencies
      were negatively impacted due to the sales and operations that have
      outgrown the infrastructure. Whilst concerted efforts have been made
      to improve the operational efficiencies and contain costs, these were
      unfortunately not realised during the year under review, due to the
      delay in the completion and relocation to the newly custom built,
      double the size warehouse & head office at the end of January 2013.

FUNDING

The group remains favourably geared and adequately funded to continue on
the Verimark group’s growth path.

PROSPECTS

The Board remains confident that the medium and long term prospects of the
group remain positive.

We believe that the anticipated operational efficiencies of operating out
of our new premises will begin to deliver results in the year ahead. In
addition, we do not anticipate a repeat of the various once off events
noted above.
The information on which this trading update has been based has not been
reviewed or reported on by the company’s auditors.

14 March 2013

Sponsor
Grindrod Bank Limited

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