Wrap Text
Summarised audited group financial information for the year ended 28 February 2013
Verimark Holdings Limited - Summarised audited group financial information for the year ended 28
February 2013
Verimark Holdings Limited
(Incorporated in the Republic of South Africa)
Registration Number: 1998/006957/06
Share Code: VMK
ISIN: ZAE000068011
("Verimark" or "the Group")
SUMMARISED AUDITED GROUP FINANCIAL INFORMATION FOR THE YEAR ENDED 28
FEBRUARY 2013
HIGHLIGHTS
- Revenues up 0.7% to R454,1 million (2012: R451.2 million)
- Profit before tax R15,3 million (2012: R41,9 million)
- Headline earnings R8.7 million (2012: R26.8million)
- Basic EPS at 8,5 cents (2012: 25,8 cents)
- Headline EPS at 8,4 cents (2012: 25,8 cents)
The year under review has been extremely challenging for Verimark. The rand’s continued
depreciation impacted negatively on sales and margins. In addition, the cost, inefficiencies and
distraction of operating from multiple warehouses; as well as the subsequent move, further reduced
profitability.
We are pleased to report that, after unexpected delays, we have completed the relocation of the
company’s offices as well as our warehousing facilities which are now once again situated at a single
site, after more than two years of disruptions. Moving forward, management focus will be directed at
optimising optimizing the benefits of a single one, double the size head office and distribution centre,
that is double the size of our previous premises. Management plan to accelerate accelerating the
introduction of new products and further entrenching Verimark’s unique business model within the
ever expanding retail environment.
Increasing profitability and creating value for all our stakeholders remains our top priority, as it has
been for the previous 36 years of operation.
OVERVIEW
The group has had to absorb a significant amount of the impact that resulted from the weakening
rand. This had a dampening effect on sales and gross margins for the year.
Gross margins of 36.4% (2012 – 41.9%) came under pressure from the deterioration in the rand
exchange rate and the impact of inefficiencies within the supply chain. It is expected that the
completion of the move to the new warehouse, coupled with improved inventory control systems, will
result in improved operations and cost management in the year ahead. However, the extent of this
improvement could be affected by further changes in the rand exchange rate.
Selling & operating expenses increased by 6.3% for the year. Cost containment initiatives in selling
expenses were offset by cost increases in operating expenses. These increases were mainly due to
the increased cost of operating out of four sites , as well as delays leading up to the relocation to the
new warehouse and head office which was completed in January 2013.
FINAL DIVIDEND
In light of the overall trading results for the year ended 28 February 2013, the Board has considered it
prudent not to declare a dividend.
REPORTING ENTITY
Verimark Group Limited is a company domiciled in South Africa. The summarised group financial
information as at and for the year ended 28 February 2013 comprise the results of Verimark Holdings
limited and its subsidiaries.
BASIS OF PREPARATION
These summarised financial statements have been prepared in accordance with the measurement
and recognition requirements of IFRS, the presentation and disclosure requirements of IAS 34 Interim
Financial Reporting, the SAICA Financial Reporting Guides issued by the Accounting Practices
Committee and Financial Reporting Pronouncements as issued by Financial Reporting Standards
Council, the Listing Requirements of the JSE Limited and the Companies Act of South Africa.
The accounting policies used to prepare this report are consistent with those used in the previous
annual financial statements except for any new standards and interpretations that became effective.
The adoption of these standards has had no material effect on the results for the period nor has it
required the restatement of any prior year amounts. The summarised group financial information has
been presented on the historical cost basis, except for financial instruments and share based
payments carried at fair value, and are presented in Rand thousands which is Verimark’s functional
and presentation currency.
Mr Shaun Beecroft CA (SA), Financial Director, was responsible for supervising the preparation of the
annual financial statements and preparing these summarised financial statements.
These summary financial statements have been extracted from the complete set of financial
statements on which the auditors, KPMG Inc, have expressed an unqualified audit opinion. KPMG
has also issued an unqualified audit report on these summary financial statements stating that these
summarised results are consistent in all material respects with the complete financial statements. A
copy of the auditor’s reports is available for inspection at the Company’s registered office.
To obtain a copy of the annual financial statements that have been summarised in this report, please
go to www.verimark.co.za and click on the Annual Reports hyperlink on the website.
SEGMENTAL ANALYSIS
During the year the Group expanded to Singapore where a company was started. Per IFRS 8
Operating Segments the operations of the Group are now split between South Africa and Foreign.
RELATED PARTY TRANSACTIONS
There have been no significant changes in related party relationships and/or transactions since the
prior year, other than in the normal course of business.
CHANGES TO THE BOARD
Mr Mitesh Patel was appointed as an Independent Non-Executive Director of the Board with effect
from Monday, 28 May 2012.
SUBSEQUENT EVENTS
No events material to the understanding of this report have occurred in the period between the
reporting date and the date of this report.
PROSPECTS
All indications show that consumer spending is unlikely to show significant growth during the year
ahead. Given Verimark’s “different-to-typical-retailers” business model, we will be less impacted by
macro-economic trends and far more by our ability to innovate and be creative.
We will focus on:
• maximising the benefits of the investment in our core operations to further enhance future value;
• ensuring that we remain product-focused as a business and defend our position as leading
innovators;
• our home market and will place extra emphasis on ensuring that costs are contained and that the
local business grows and increases profitability;
• assessing potential regions in which the Verimark business model can be replicated across Africa
and in other international markets;
• recruiting the best available talent to complement our existing management in order to accelerate
growth
We have improved operational efficiencies due to the new headquarter and distribution infrastructure,
as well as introduced new systems. We are now well-positioned to focus on growing sales and
increasing profitability as well as creating value for all of our stakeholders.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended Year ended
28 February 29 February
2013 2012
R’000 R’000
Revenue 454 091 451 150
Gross profit 165 171 188 825
Operating profit before net finance expense and 16 587 48 983
taxation
Finance income 6 390 8 140
Finance expense (7 732) (15 251)
Profit before taxation 15 245 41 872
Income tax (6 367) (15 064)
Profit for the year 8 878 26 808
Foreign currency translation reserve movement 13 -
Total comprehensive income for the year 8 891 26 808
attributable to owners of the Company
Earnings per share (EPS) 8,5 25,8
Diluted earnings per share (EPS) 8,4 25,3
Headline earnings (HEPS) 8,4 25,8
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 28 As at 29
February February
2013 2012
R’000 R’000
Assets
Plant and equipment 18 578 14 298
Intangible assets 14 426 14 663
Deferred taxation asset 3 208 2 295
Non-current assets 36 212 31 256
Inventories 87 494 62 640
Trade and other receivables 77 810 49 188
Prepayments 353 211
Cash and cash equivalents 1 454 12 147
Current assets 167 111 124 186
Total assets 203 323 155 442
Equity and liabilities
Share capital 346 346
Share premium 21 378 21 378
Foreign currency translation reserve 13 -
Share based payment reserve 1 124 788
Retained earnings 64 587 69 734
Equity attributable to the equity holders of the parent 87 448 92 246
Interest-bearing borrowings 5 944 5 645
Non-current liabilities 5 944 5 645
Trade and other payables 59 326 31 024
Preference share liability 17 012 15 857
Current portion of interest-bearing borrowings 3 480 3 689
Bank overdraft 28 463 4 330
Taxation payable 1 650 2 651
Current liabilities 109 931 57 551
Total equity and liabilities 203 323 155 442
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Foreign Share Retained Total
Capital Premium currency based earnings
translation payment
reserve reserve
R’000 R’000 R’000 R’000 R’000 R’000
Balance at 1 March 2011 346 21 378 - 393 58 509 80 626
Total comprehensive - - - - 26 808 26 808
income for the year
Transactions with owners
recorded in equity
IFRS 2 share-based - - - 395 - 395
payment transaction
Contributions by and
distributions to owners of
the Company
Dividend paid to - - - - (15 583) (15 583)
shareholders
Balance at 29 February 346 21 378 - 788 69 734 92 246
2012
Profit for the year - - - - 8 878 8 878
Other comprehensive - - 13 - - 13
income
Transactions with owners
recorded in equity
IFRS 2 share-based - - - 336 - 336
payment transaction
Contributions by and
distributions to owners of
the Company
Dividend paid to - - - - (14 025) (14 025)
shareholders
Balance at 28 February 346 21 378 13 1 124 64 587 87 448
2013
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended Year ended
28 February 29 February
2013 2012
R’000 R’000
Net cash (outflows)/ inflows from operating activities (23 600) 1 761
Cash (utilised by) / generated from operations (1 668) 37 242
Dividends paid (14 025) (15 583)
Finance income 6 391 8 140
Finance costs (6 016) (13 585)
Taxation paid (8 282) (14 453)
Cash outflows from investing activities (10 755) (7 870)
Acquisition of plant and equipment to expand (11 577) (7 596)
operations
Acquisition of intangible assets to maintain (82) (603)
operations
Proceeds from disposal of plant and equipment 904 329
Cash outflows from financing activities (472) (2 743)
Loans receivable collected - 232
Interest-bearing borrowings raised 5 115 1 559
Interest-bearing borrowings repaid (5 047) (3 934)
Preference share liability repaid (540) (600)
Net decrease in cash and cash equivalents (34 827) (8 852)
Cash and cash equivalents at beginning of year 7 817 16 669
Cash and cash equivalents at end of year (27 010) 7 817
SEGMENTAL INFORMATION
South Africa Foreign Group Total
elimination
R’000 R’000 R’000 R’000
Revenue 453 633 2 273 (1 815) 454 091
Profit before tax 15 049 247 (51) 15 245
Profit after tax 8 668 247 (37) 8 878
Segment assets 203 114 3 434 (3 225) 203 323
Segment liabilities 115 875 3 174 (3 174) 115 875
DETERMINATION OF ATTRIBUTABLE EARNINGS AND HEADLINE EARNINGS
Year ended Year ended
28 February 29 February
2013 2012
R’000 R’000
Attributable profit (after tax) 8 878 26 808
(Profit)/loss on sale of plant and equipment (187) 42
Tax on (profit)/loss on sale of plant and equipment 52 (12)
Headline earnings 8 743 26 838
Shares in issue 114 272 328 114 272 328
Treasury shares - VEET (4 000 000) (4 000 000)
Shares held by subsidiary (6 380 870) (6 380 870)
Number of shares at period end 103 891 458 103 891 458
Share options dilutive portion 2 094 538 1 924 393
Diluted weighted average shares 105 985 996 105 815 851
Basic earnings per share 8,5 25,8
Headline earnings per share 8,4 25,8
Diluted basic earnings per share 8,4 25,3
Diluted headline earnings per share 8,2 25,4
Net asset value per share 84,2 88,8
Net tangible asset value per share 70,3 74,7
On behalf of the Board
Michael van Straaten Shaun Beecroft
Chief Executive Officer Financial Director
Johannesburg
27 May 2013
Directors:
Dr J T Motlatsi (Chairman)*, J M Pieterse*, M J van Straaten (CEO), S R Beecroft, M Patel*
*Independent Non-executive
Company Secretary:
S J Preller
Registered office:
50 Clairwood Avenue
Extension 55, Hoogland
Randburg 2194
Postal address:
Verimark Holdings Limited
PO Box 78260, Sandton 2146
Email address:
investors@verimark.co.za
www.verimark.co.za
Transfer Secretaries:
Computershare Investor Services (Pty) Limited
Auditors:
KPMG Incorporated
Sponsor:
Grindrod Bank Limited
Date: 27/05/2013 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
