Wrap Text
Unaudited interim results for the six months
ended 31 August 2012
Verimark Holdings Limited
(Incorporated in the Republic of South Africa)
Registration Number: 1998/006957/06
Share Code: VMK
ISIN: ZAE000068011
("Verimark" or "the Group")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2012
HIGHLIGHTS
- Revenues down 0.8% to R194,6 million (2011: R196,2 million)
- Loss before tax R4,4 million (2011: Profit before tax R13,1 million)
- Basic EPS at (5,1) cents (2011: 7,1 cents)
- Headline EPS at (5,2) cents (2011: 7,0 cents)
- Increased number of new products to be launched in the next 6 months
- On-going focus to protect profit margins by aligning selling prices to the weaker exchange rate and
controlling of costs
- Unexpected supply constraints on two key products have been addressed
- Market leader position maintained
Michael Van Straaten CEO of Verimark said:
This has been a challenging six months for Verimark. Besides the operational and infrastructural
challenges due to the exceptional growth over the past few years, the substantially weakened Rand /
US Dollar exchange rate and certain unexpected non-recurring events had a negative impact on the
results for the period under review.
OVERVIEW
Revenue for the six months period under review was marginally down (0.8%) compared to the same
period last year. This was mainly a result of the unexpected supply challenges experienced on two
key products, a reduction of inventories by customers and initial resistance to the upward adjustment
in selling prices in the latter part of the period under review.
Gross profit was negatively impacted by the weaker Rand / US Dollar exchange rate and certain
operational inefficiencies which have not yet been eliminated.
Concerted efforts to contain costs and selling and other operational costs started bearing fruit and
total expenses increased by only 1% compared to the prior year.
INTERIM DIVIDEND
In light of the overall trading results for the six months ended 31 August 2012 the Board has
considered it prudent not to declare a dividend.
Dividend payments will be reconsidered in accordance with the existing payout policy on completion
of the current financial year.
BASIS OF PREPARATION
The unaudited interim results have been prepared in accordance with the recognition and
measurement criteria of International Financial Reporting Standards (IFRS) and the presentation and
disclosure requirements of International Accounting Standards 34, Interim Financial Reporting, as well
as AC 500 standards as issuedby the Accounting Practices Board, the Listings Requirements of the
JSE Limited and the Companies Act 71 of 2008, as amended.
The accounting policies applied for the six months are consistent, in all material respects, with those
used in the Annual Financial Statements of the prior periods. The results have been prepared on a
going concern basis.
The interim results as reported herein have been prepared by the Financial Director, Shaun Beecroft
CA(SA).
SEGMENTAL ANALYSIS
The directors previously considered the implications of IFRS 8 Operating Segments and are still of the
opinion that the operations of the Group are substantially similar to one another and that the risks and
returns of these operations are likewise similar. Resource allocation and the management of the
operation are performed on an aggregated basis, and as such the Group is considered to be a single
aggregated business and therefore there is no additional reporting required in terms of IFRS 8.
CHANGES TO THE BOARD
Mr Mitesh Patel has been 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 period-
end date and the date of this report.
PROSPECTS
Although the financial performance reported for the first six months was worse than expected,
management believes that the corrective actions taken should result in an improved performance in
the next six months.
The unexpected delay in the completion of our new, double the size Head Office and Warehouse, will
continue to impact negatively on efficiencies and costs until January 2013 when occupation is now
expected.
An increased number of successfully tested new products are to be launched in the current six
months.
Notwithstanding the challenges experienced over the recent period, the medium and long term
prospects of the Group remain positive
The interim results for the period ended 31 August 2012 have not been reviewed or audited by the
Group`s auditors.
Statements regarding the future prospects of performance of the Group have not been reviewed or
reported on by the Group`s auditors.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
six months six months twelve months
ended 31 ended 31 ended 29
August 2012 August 2011 February 2012
R’000 R’000 R’000
Revenue 194 560 196 224 451 150
Operating (loss)/ profit before net finance expense (5 134) 15 555 48 983
and taxation
Finance income 2 504 1 055 8 140
Finance expense (1 802) (3 553) (15 251)
(Loss)/ profit before taxation (4 432) 13 057 41 872
Income tax (**) (848) (5 618) (15 064)
Total comprehensive (loss) / income attributable to (5 280) 7 439 26 808
owners of the Company
Earnings per share (EPS) (5,1) 7,1 25,8
Headline EPS (HEPS) (5,2) 7,0 25,8
** - Income tax reflected in the 2012 results represents the STC payable on dividends declared and
paid and the movement in deferred taxation. No income tax was provided for the six months ended
31 August 2012.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
six months six months twelvemonths
as at 31 as at 31 as at 29
August 2012 August 2011 February 2012
R’000 R’000 R’000
Assets
Plant and equipment 14 353 15 177 14 298
Intangible assets 14 503 14 316 14 663
Deferred taxation asset 2 914 2 643 2 295
Non-current assets 31 770 32 136 31 256
Inventories 61 250 53 860 62 640
Trade and other receivables 72 768 58 392 49 188
Prepayments 206 431 211
Prepaid taxation 1 404 380 -
Short-term portion of loans receivable - 234 -
Bank and cash balances 463 1 055 12 147
Current assets 136 091 114 352 124 186
Total assets 167 861 146 488 155 442
Equity and liabilities
Share capital 346 346 346
Share premium 21 378 21 378 21 378
Share Based Payment Reserve 985 590 788
Retained earnings 50 429 50 366 69 734
Equity Attributable to the equity holders of the 73 138 72 680 92 246
parent
Interest-bearing liabilities 4 918 7 105 5 645
Non-current liabilities 4 918 7 105 5 645
Trade and other payables 40 442 38 381 31 024
Preference share liability 15 872 15 917 15 857
Short-term portion of interest bearing liabilities 2 499 4 183 3 689
Bank overdraft 30 992 8 222 4 330
Taxation payable - - 2 651
Current liabilities 89 805 66 703 57 551
Total equity and liabilities 167 861 146 488 155 442
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Retained Share Total
Capital Premium earnings based
payment
reserve
R’000 R’000 R’000 R’000 R’000
Balance at 1 March 2010 356 25 104 - 31 439 56 899
Total comprehensive income for - - - 33 482 33 482
the year
Transactions with owners
recorded in equity
Treasury shares held by Verimark (10) (3 726) - - (3 736)
(Proprietary) Limited
IFRS 2 share-based payment - - 393 - 393
transaction
Contributions by and
distributions to owners of the
Company
Dividend paid to equity owners - - - (6 412) (6 412)
Balance at 28 February 2011 346 21 378 393 58 509 80 626
Total comprehensive income for - - - 26 808 26 808
the year
Transactions with owners
recorded in equity
IFRS 2 share-based payment - - 395 - 395
transaction
Contributions by and
distributions to owners of the
Company
Dividend paid to equity owners - - - (15 583) (15 583)
Balance at 29 February 2012 346 21 378 788 69 734 92 246
Total comprehensive loss for the - - - (5 280) (5 280)
period
Transactions with owners
recorded in equity
IFRS 2 share-based payment - - 197 - 197
transaction
Contributions by and
distributions to owners of the
Company
Dividend paid to equity owners - - - (14 025) (14 025)
Balance at 31 August 2012 346 21 378 985 50 429 73 138
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
six months six months twelve months
ended 31 ended 31 ended 29
August 2012 August 2011 February 2012
R’000 R’000 R’000
Net cash (outflows)/inflows from operating activities (32 752) (18 410) 1 761
Cash (utilised) / generated by operations (14 461) 7 510 37 241
Dividends paid (14 025) (15 582) (15 583)
Finance income 2 504 1 055 8 140
Finance costs (1 248) (3 007) (13 585)
Taxation paid (5 522) (8 386) (14 453)
Cash outflows from investing activities (3 136) (5 026) (7 870)
Acquisition of plant and equipment (3 854) (5 115) (7 596)
Acquisition of intangible assets - (71) (603)
Proceeds from disposal of plant and equipment 718 160 329
Cash outflows from financing activities (2 458) (400) (2 743)
Loans receivable collected - - 232
Interest-bearing liabilities raised - 643 1 559
Interest-bearing liabilities repaid (1 918) (1 043) (3 934)
Preference share liability repaid (540) - (600)
Net decrease in cash and cash equivalents (38 346) (23 836) (8 852)
Cash and cash equivalents at beginning of year 7 817 16 669 16 669
Cash and cash equivalents at end of period (30 529) (7 167) 7 817
DETERMINATION OF ATTRIBUTABLE EARNINGS AND HEADLINE EARNINGS
Unaudited Unaudited Audited
six months six months twelve months
ended 31 ended 31 ended 29
August 2012 August 2011 February 2012
R’000 R’000 R’000
Attributable (loss)/profit(after tax) (5 280) 7 439 26 808
(Profit)/loss on sale of plant and equipment (after (76) (74) 30
tax)
Headline earnings (5 356) 7 365 26 838
Shares in issue 114 272 328 114 272 328 114 272 328
Treasury shares - VEET (4 000 000) (4 000 000) (4 000 000)
Shares held by subsidiary (6 380 870) (6 380 870) (6 380 870)
Number of shares at period end 103 891 458 103 891 458 103 891 458
Basic (loss) / earnings per share (5,1) 7,1 25,8
Headline (loss) / earnings per share (5,2) 7,0 25,8
Diluted basic (loss) / earnings per share (5,0) 7,0 25,3
Diluted headline (loss) / earnings per share (5,1) 6,9 25,4
Net asset value per share 69,1 68,0 87,2
Net tangible asset value per share 55,4 54,6 73,3
On behalf of the Board
Michael van Straaten Shaun Beecroft
Chief Executive Officer Financial Director
Johannesburg
12 November 2012
Directors:
Dr J T Motlatsi (Chairman)*, J M Pieterse*, M J van Straaten (CEO), S RBeecroft, M Patel*
*Independent Non-executive
Company Secretary:
S J Preller
Registered office:
67 CR Swart Drive
Corner CR Swart Drive and Freda Road Bromhof Extension 48
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: 12/11/2012 08:17:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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